Careers at Alibaba Group
Alibaba Group’s mission is to make it easy to do business anywhere.
Jack Ma was a former English teacher in China who was inspired by the introduction of the Internet and the rise of eCommerce. He saw the World Wide Web as a powerful means for small businesses to expand their reach. So in 1999 he partnered with 17 other people to found Alibaba – a website that would enable small Chinese firms to sell their goods and services to overseas buyers.
The name Alibaba is a reference to the character Ali Baba in the fictional work “One Thousand and One Nights.” Ma felt the name choice was appropriate for several reasons. The character is a smart businessman who helps his village. The story is known for the phrase “open sesame”, which Ma felt reflected the increased access he wanted to provide. Lastly, the story has universal appeal.
Between 1999 and 2000, Alibaba raised $25 million from several investors, including Fidelity and Goldman Sachs. Over time it grew in popularity, and by 2001 it achieved profitability. In September 2014 it completed the biggest U.S. IPO in history. Alibaba now provides B2B, B2C, and C2C sales services, as well as a shopping search engine and electronic payment and cloud computing services.
Business model of Alibaba Group
Alibaba has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate: buyers and sellers. These groups include consumers and businesses in different combinations (Business-to-Business, Business-to-Consumer, and Consumer-to-Consumer).
Alibaba offers five primary value propositions: accessibility, customization, convenience, risk reduction, and brand/status.
The company creates accessibility by enabling buyers and sellers to connect. The most difficult connection it facilitates is enabling Chinese small businesses to sell to buyers overseas.
The company enables customization by personalizing the shopping experience. Its data analytic/management capabilities enable it to predict buyer needs and preferences and tailor product offering displays accordingly, matching shoppers with relevant sellers.
The company offers convenience by making its service easy to use. It reduces buyers’ wait times by shipping a high volume of products, delivering an average of 24 million packages daily. It provides valuable infrastructure support services for sellers, including cloud computing services for CRM and ERP systems hosted on the platform and web-based and mobile interfaces to manage listings.
The company reduces risk by maintaining high standards. It requires sellers to offer consumer protection programs such as product warranties and guaranteed returns. It also enables buyers to provide feedback on sellers and products so future buyers can be adequately informed. Lastly, it utilizes technology to track and trace counterfeiters in order to remove them from the site.
The company has established a powerful brand due to its success. It is the world’s largest online and mobile marketplace in terms of gross merchandise volume. It has more than one billion product and service listings offered by over 10 million active annual sellers. It has more than 350 million annual active buyers who place an average of 58 orders.
Alibaba’s main channel is its website. It also utilizes a sales team consisting of field sales and telephone sales personnel who sell membership packages to registered members of its wholesale marketplaces. The company promotes its offering through its social media pages.
Alibaba’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website provides self-help resources such as videos and answers to frequently asked questions. That said, there is a personal assistance component in the form of phone, e-mail, and live chat support.
Alibaba’s business model entails maintaining a robust common platform between two parties: product/service buyers and sellers.
Alibaba maintains the following types of partnerships:
- Marketing Affiliates – Firms that promote the company’s sellers by placing marketing displays on their platforms (websites, mobile apps, etc.); they receive a payment from sellers
- Logistics Service Providers – Firms that provide logistics services; they include line haul service providers, warehouse operators, and express delivery service providers.
- Retail Operational Partners – Firms that handle certain functions outsourced to them by sellers; functions include product planning, supply chain management, inventory storage and fulfillment, marketing and storefront management, customer relationship management, and customer service.
- Independent Software Vendors – Firms that provide software tools and systems integration services to sellers; services include assistance in management of CRM and ERP systems on the platform.
- Professional Service Providers – Firms that offer a wide range of services; examples of these companies include photography specialists, customer service agents, professional buying agents, Internet marketing consultants, and models for clothing and accessories.
Alibaba’s main resource is its proprietary software platform. It depends on human resources in the form of more than 12,000 engineering and data analytic employees that maintain and update the platform, as well as develop new mobile and online products.
Lastly, as a startup it has relied heavily on funding from outside parties, raising $8.91 billion as of June 2016.
Alibaba has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of revenue, a variable expense that includes staff, maintenance, and traffic acquisition costs. Other major drivers are in the areas of sales/marketing and product development, both fixed costs.
Alibaba has three revenue streams:
- Commissions – Revenues generated from fees charged to sellers for each sales transaction.
- Advertising Fees – Revenues generated from fees charged to advertisers for online marketing services. These account for the vast majority of company revenues.
- Service Fees – Revenues generated from fees for various online services.
info: Jack graduated from Hangzhou Teacher’s Institute with a degree in English Language Education. He previously served as Chief Executive Officer of Alibaba and as an English teacher and is Chairman of the China Entrepreneur Club.
info: Joe earned a Bachelor’s degree in Economics and East Asian Studies at Yale College and a J.D. from Yale Law School. He previously served as Chief Financial Officer of Alibaba and as General Counsel at Rosecliff, and worked at Investor AB.
info: Daniel earned a Bachelor’s degree in Finance at Shanghai University of Finance and Economics. He previously served as CFO of Alibaba, as CFO and Chief Operating Officer of Taobao Marketplace, and as General Manager of Taobao Mall.
info: Michael earned a Bachelor’s degree in Politics from Princeton University. He previously held many executive positions at Goldman Sachs, including Vice Chairman, Global Head of Growth Markets, Global Head of Equity Capital Markets, and Chairman of Asia Operations.
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