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Alibaba SWOT & PESTLE Analysis

ID : 52379153| Mar 2019| 18 pages

COMPANY PROFILE -Alibaba

Business Sector :E- Commerce, Consumer Goods

Operating Geography :China, Global

About Alibaba :

Alibaba is an e-commerce giant that markets, sells and operates different businesses globally. It was founded in 1999 and is headquartered in Hangzhou, China. It supports merchants, brands and other businesses with its technology and helps them leverage their operations through internet as it engages more users. It offers online shopping platform through Tmall.com and Taobao (for non-branded products sold by smaller-unknown merchants), cloud computing and data management services through Alibaba Cloud Computing, digital media and entertainment, online wholesale market on Alibaba.com, online and mobile payment solutions through Alipay and partnership with Ant Financial Services. Alibaba launched its first website with an aim to help petite Chinese exporters, manufacturers, and entrepreneurs to sell globally. Today Alibaba Group has grown into a global leader in e-commerce, the company and its subsidiaries operate in wholesale and retail online marketplaces, cloud computing, digital media and entertainment and various other sectors. Its market Cap as of July 2018 is close to $495 Billion. It ranks 63 in Forbes’ growth champions. It is listed on New York Stock Exchange (BABA). As of 2018 the Chinese E-commerce giant has 66421 number of full time employees. Strong earnings, a promising growth story and possibility of a stock listing in China in the near future has driven Alibaba stock to all time high in 2018.

Alibaba's mission statement is “to make it easy to do business anywhere”.Alibaba’s Vision statement reads “We aim to build the future infrastructure of commerce. We envision that our customers will meet, work and live at Alibaba, and that we will be a company that lasts at least 102 years.”Alibaba’s USP or Unique selling proposition is that it is the world's largest retailer, one of the largest Internet and AI organizations, one of the biggest venture capital firms, and one of the largest investment corporations in the world.

Alibaba Revenue :


$9,873 million - FY ending 31st March 2018 (y-o-y growth of +61%)
$5,605 million - FY ending 31st March 2017 (y-o-y growth of +60%)
$3,511.54 million - FY ending 31st March 2016

Ownership / Major shareholders :

The top 4 Alibaba shareholders as of November 2017 are Softbank (30.07%), Yahoo (15.34%), Jack Yun Ma (Executive Chairman) (7.0%)and Joseph C. Tsai (Vice-Executive Chairman) (2.5%).

Competitive Analysis of Alibaba

SWOT
PESTLE

The SWOT / TOWS analysis of Alibaba is a framework to assess the internal and external factors that influence the company’s micro and macro environment. The SWOT analysis is a handy technique to analyze the present strength, weakness, opportunity, and threats alongside their impact on the current business model of Alibaba group. Alibaba is the largest e-commerce organization and the strongest brand operating as the leading intermediary organization in C2C, B2B and B2C segments, with 58% market share in China. A major strength of Alibaba is the market it operates in, China which is the most populated nation and the second largest economy of the world, both of which accounts for the success of Alibaba Group. A qualitative strength of Alibaba is its founder, Jack Ma; his strong presence, ideas and vision are adding to Alibaba’s growth trajectory. Other significant strengths of Alibaba are strategic partnerships, broad product portfolio coupled with growing demand for wholesale and retail business; these have help in preserving its market share.

One of the major weakness of Alibaba is that it has too many merchants on board, the consequence of which led to good brands calling off due to high competition, sellers not being able to make good profits and counterfeit products from local sellers flooding the markets. Alibaba cloud bagged the 2018 MySQL award for the second time. In 2015, it became the first Asian company to be cited as the WebScaleSQL contributor. This accounts for a huge opportunity for Alibaba to become a market leader in the cloud computing space. While global players like Amazon and eBay are a major threat to Alibaba’s e-commerce segment, it also faces stiff competition from local players like JD.com and Tencent. Other key threats to Alibaba are cyber security, economic recession and weak demand in the international market.

The SWOT/TOWS analysis for Alibaba is presented in a nutshell below followed by the detailed analysis:

Strengths
Weaknesses
1. Well Segmented Product Portfolio
2. Large and growing customer base of TMall
3. Growing Demand for Marketing Services
4. Taobao, China’s largest C2C sales channel
5. Strategic Partnerships to create value propositions globally
6. Strong Growth in Wholesale & Retail business
1. Decreasing EBIDTA margins affecting core competency
2. Over dependence on Chinese economy
Opportunities
Threats
1. Opportunity to capture greater market share with Lazada and AliExpress
2. Potential of becoming market leader in cloud computing
1. Stiff Competition in E-Commerce
2. AliPay may lose global market share to pre -existing local players
3. Increasing number of fakes may affect core competency
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Detailed SWOT Analysis of Alibaba

Strength

1. Well Segmented Product Portfolio: Alibaba has wide range of services that are offered globally depending on the demand in the geography. It offers agriculture products, food, textile, fashion accessories, automobile and their parts, electronics, health and beauty products on the online wholesale and retail marketplace in more than 200 countries. It also offers cloud computing to merchants, corporate, governments and start-ups. It offers marketing services through Alimama which plants its clients’ products and services on third party websites and apps for greater market reach. It also offers logistics services through Cainiao Network to leverage supply chain between merchants and consumers at a larger scale. It financially supports small and micro enterprises through Ant financial. Alibaba’s diverse portfolio ensures top of the mind recall and make it the emerging leader in each of these segments.

2. Large and growing customer base of TMall: TMall is the largest B2C online platform for imported goods in China. It mainly sells premium products across the border. Its presence is strengthening especially in Australia as demand for their health and nutritional supplements is growing in China, as indicated by 515 million active annual users there. Its platform has 75% of Forbes Top 100 World’s Most Valuable Brands. GMV’s transactions on Tmall in FY 2017 rose to $227 billion recording a 29% increase as compared to FY 2016.An increase in the merchants using TMall will increase the revenue from annual service fee. Tmall charges merchants an annual service fee. As well, for each transaction, it charges a commission fee based on the category of product sold

3. Growing Demand for Marketing Services: There was a 67% jump in Alibaba’s total revenue (in commerce retail business) from China in 2017, recording US $3,750 million. This growth was driven by its robust online marketing services which also had positive impact on online marketing inventory. The demand for its services is due to Uni Marketing suite of tools which consists of Brand Databank, Brand Hub, Uni Desk and Uni Strategy. It has fetched Alibaba 450 million active consumers in China’s online retail space. TMall enables brand-building for domestic and international products as it gives a large market. This increase leads to more value added services on Alibaba’s platform and drives in more businesses globally to use its services for greater market penetration. Its marketing strategies increase customer engagement and increase revenue.

The remaining section under "Strength" is available only in the 'Complete Report' on purchase.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

  • Amazon
  • Ebay
  • Tencent
  • JD.com
  • Baidu
  • The Bottom Line
  • Vipshop Holding Ltd.
  • Gome Electrical Appliances Holding Ltd.

Major Brands :

  • Alibaba.com
  • Guangzhou Evergrande Taobao F.C.
  • Taobao
  • Tmall
  • UCWeb
  • Daraz
  • AliExpress
  • Juhuasuan.com
  • Alimama.com
  • Ant Financial
  • Cainiao
  • Lazada
  • Youku Tudou
  • Alibaba Cloud
  • Fliggy Corporate
  • 11 Main
  • AliGenie
  • AliOS
  • Alipay
  • AliMusic
  • Alibaba Pictures
  • Youku Tudou
  • Aliwangwang
  • AliHealth
  • AliSports
  • AutoNavi
  • Yahoo! China
  • Laiwang
  • South China Morning Post
  • Ali Venture Capital

Key Business Segments / Diversification :

Alibaba
E-commerce Retail Internet AI and technology
Online auction hosting Online money transfers Mobile commerce

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Daraz.pkRocket Internet2018AcquisitionAlibaba, through the deal, plans to expand its e-commerce empire into South Asia.
Ejoy TechnologyOnline Gaming2017AcquisitionThe group desired ramping up its online game business through this deal, at the price of $26.2 million.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The SWOT and PESTLE Analysis reports provides strategic intelligence on the following:
• Utilizes strategic tools, SWOT and PESTLE, to study the major internal and external factors influencing Alibaba.
• Provides a brief overview of Alibaba’s history, founders, its corporate headquarters, owners, stakeholders and revenue jumps.
• Overall company analysis to gain acquaintance about company information, company profile, business model, business plans and marketing strategy.
• Understanding of Alibaba’s USP or unique selling proposition, mission statement and vision statement that has set a benchmark in the e-commerce industry.
• Use of SWOT/TOWS Analysis- A technique to analyze the present Strengths, Weaknesses, Opportunities, and Threats of Alibaba Ggroup.
• Core competitive advantages enjoyed by Alibaba over its rivals and competitors from the E-commerce industry.
• Intelligence on Alibaba's share price, mergers and acquisitions, strategic partnerships and alliances, capital raising, and their impact on the Company’s growth trajectory.
• Insights about its major competitors, brands, key locations, and subsidiaries, business segments/ diversification.
• Utilizing PESTLE/ PESTEL/ STEEPL Analysis for in-depth analysis of all external factors namely, political, economic, social, technological, legal and environmental and highlighting their impact on the operation of Alibaba.
• Summarization of Alibaba’s business model, along the further diagnosis of key business segments and business case study>
• A peek into the Alibaba’s key performance indicators, success factors, value proposition and core competencie.
References used in Alibaba Analysis Report

1. Umeng - https://techcrunch.com/2013/11/20/umeng-alibaba/
2. Ejoy Technology - https://www.crunchbase.com/organization/ejoy-technology
3. Rocket Internet - https://techcrunch.com/2018/05/08/alibaba-buys-rocket-internets-daraz/
4.10 Companies Owned by Alibaba - https://www.investopedia.com/insights/10-companies-owned-alibaba/

Copyrights and Disclaimer

Alibaba SWOT and PESTLE analysis has been conducted by Kanupriya Sheopuri and reviewed by senior analysts from Barakaat Consulting.

Copyright of Alibaba SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Alibaba SWOT & PESTLE Analysis
Price : USD 12.53