Startup Sunday Season 3 Episode 14(Alibaba Group – Jack Ma’s Exit)

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The Alibaba Group, commonly referred to as Alibaba, is a conglomerate consisting of multiple companies, which provide a variety of internet features. Alibaba is often seen as the combination of Amazon, eBay, and PayPal; however, it offers much more. Alibaba primarily focuses on its function as an e-commerce marketplace but is also involved in adjacent markets, such as cloud computing, mobile chatting, and personal financing. The journey of Alibaba, led by its founder Jack Ma is often celebrated as an example of how the vision of social inclusion can build a small startup into one of the highest valued companies of the globe. Recently Jack Ma has announced that he is going to retire as the Executive Chairman of Alibaba Group in exactly one year from now. This news has led to the speculation as to how the company will perform once its most influential personality takes a backseat and hands over the reins to a new individual, Mr.Daniel Zhang, Alibaba’s financial whiz.

This week’s Startup Sunday sheds light on the emergence of Alibaba as a conglomerate, discusses its business model and value proposition and speculates the future of the Group, with its charismatic leader making an exit from the role of the Executive Chairman.

The Rise of Alibaba Group

Alibaba Business

1999: Alibaba Group is established by its 18 founders, led by Jack Ma, working out of Jack Ma’s apartment in Hangzhou. Its first website is English-language Alibaba.com, a global wholesale marketplace.

2002: Alibaba Group successfully becomes a cash flow positive company for the year.

2003: Online shopping website Taobao Marketplace is founded, again in Jack Ma’s apartment.

2004: Alibaba Group organizes its first Entrepreneur Summit, a gathering of Internet entrepreneurs, and honours the first 10 Entrepreneurs of the Year.

2007: Alibaba.com completes its initial public offering on the Main Board of the Hong Kong Stock Exchange.

2008: Alibaba Group establishes an R&D institute, a big milestone that shows the growing size and operations of the company.

2009: Alibaba.com announces the acquisition of HiChina, China’s leading Internet infrastructure service provider.

2010: Alibaba.com announces the acquisition of One-Touch, a provider of one-stop services for exporters in China.

2011: Alibaba Group establishes the Alibaba Foundation with a sizeable fund dedicated to social causes.

2013: Alibaba Group officially launches its mobile social networking app, Laiwang (currently known as DianDianChong).

2014: Alibaba Group starts offering mobile virtual network operators (MVNO) services in China under the Ali Telecom brand.

2015: Alibaba Group and Suning enter a strategic alliance to build on synergies in e-commerce, logistics and O2O Initiatives.

2016: Alibaba Group announces the formal establishment of the Alibaba Digital Media & Entertainment Group.

2017: Alibaba Group officially launches Tmall World, an initiative to serve the 100 million-strong overseas Chinese market worldwide.

2018: Jack Ma announces retirement. In the letter entitled “Happy Teachers’ Day,” Ma said he would retire as the chairman of the board on Sept. 10, 2019, Alibaba’s 20th anniversary.

Business Model

Alibaba Revenue

Alibaba

It is a business-to-business trading platform, connecting manufacturers from countries such as China, India, Pakistan, the United States, and Thailand with international buyers. Merchants can list their products for free on Alibaba.com but also have the option to pay for a range of benefits such as greater exposure on the site and unlimited product listings.

Taobao

In Chinese, Taobao means “search for treasure.” Taobao.com has grown to become China’s largest shopping website and is ranked the ninth most popular website in the world by Alexa.com. Launched in 2003, Taobao lists hundreds of millions of products and services from millions of sellers. Taobao doesn’t charge transaction fees and the site is free to join for merchants, a policy which helped the site gain its enormous user base in China.

While Alibaba.com is business-to-business, Taobao is business-to-consumer or consumer-to-consumer focused, enabling small businesses and individuals to open online stores.

Merchants have the option to buy advertising and other services to help them stand out on the website and boost sales. Advertisers can choose between pay-for-performance and display marketing. These ads are the primary means through which Alibaba makes money from Taobao.

Tmall

Tmall.com, launched in 2008, offers a wide selection of branded products oriented towards China’s growing middle class. Tmall is focused on larger companies, including multinational brands such as Nike, Inc. (NKE) Apple Inc. (AAPL). Tmall has grown to host over 50,000 merchants selling to over 180 million active users.

Tmall charges merchants a deposit, an annual fee, and a commission fee on transactions. In this way, it bears some resemblance to eBay Inc. (EBAY) and Amazon, which also collect transaction fees from third-party merchants. Sellers on Tmall have access to analytic tools showing the number of visitors, page views, and customer ratings, which serve to help guide their business decisions.

Software vs. Warehouses

Unlike Amazon, Alibaba Group holds no inventory. Rather, Alibaba has created software platforms that facilitate the exchange of goods and services. While Alibaba’s revenues are only a fraction of Amazon’s, it has higher operating margins and profit margins. The reason for this at large is that Amazon has to manage the expensive and complex logistics of developing and maintaining a network of warehouses to ship products directly to shoppers. In short, software is easier to scale than warehouses.

Investments

Alibaba Group has made major investments in Sina Weibo, a Chinese micro-blogging website similar to Twitter Inc. (TWTR), and YoukuTudou, China’s answer to YouTube. Alibaba has also invested in several US startups, including video messaging application Snapchat and Lyft, a peer-to-peer ridesharing application. In 2014 it even bought a 50 per cent share of Guangzhou Evergrande Football Club for $192 million.

Value Proposition

Alibaba provides a platform for buyers and sellers, proposes news, analysis and timely price lists, development team works on the research of new technologies and functions to support their website which helps to enhance their services and reduce operating costs and gain large profits.

Its business model aims to create an efficient, flexible and responsive structure in front of a demanding customer and information society opportunities. Its business model entails its network of partners for creating, marketing and delivering value and relationship capital to one or several segments of customers under B2B to generate profitable and sustainable revenue streams.

The Future, without Jack Ma?

Jack ma

The founder, Jack Ma, has been a charismatic leader for the company and a champion for Chinese industry, connecting businesses and consumers at home and abroad with merchants of all sizes through Alibaba’s different e-commerce marketplaces, including Taobao, Tmall and Aliexpress. The company’s stock has risen 87% over his tenure and Alibaba now has a market value of about $420 billion, eclipsing WeChat operator Tencent Holdings Ltd.

Mr.Ma said in the open letter that he wants to return to education, which gives him excitement and blessings. He said he has prepared a 10-year succession plan to develop a system of corporate governance based on culture and mechanism for developing consistent talent and successors.

Alibaba and Mr.Ma portrayed the succession plan as a sign that the company isn’t dependent on one person. Mr.Ma’s involvement in the company isn’t likely to end with his resignation. He has a stake of more than 6 per cent in the company’s shares. Crucially, he will also have considerable sway in the company and its affiliates.

Much remains unclear about the structure in the new era. Alibaba was unable to say, for example, if Mr Ma has or will retain control of Ant Financial, the payments affiliate which is undergoing an ownership restructuring that will see Alibaba swap its profit-sharing agreement for a 33 per cent stake in the company.

All this being said, we look forward as to how things really shape up after Jack Ma retires next year and hands over the reins of Alibaba to his successor, Mr.Daniel Zhang, in a business environment that is very much different from what it was 20 years ago. Only time will bear witness to the journey of the Chinese business giant in the years to come.

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Startup Sunday Season 3 Episode 6 (HUMhain)

Let’s face it: In such a fast-moving world where everyone is so busy and performance pressure is everywhere, we often forget small things and sometimes even the most important of the things! Imagine yourself going out on an important presentation and you reach the venue just to realize that you forgot to bring your pen drive. Another scenario where it’s your anniversary and you forgot to bring the cake for your wife (you’re already in danger). Who can possibly help you in no time?

HUMHain is the name!

Three years back, a boy who observed these scenarios, got a small idea which then got converted into a business model called ‘HUMHain’. Their tagline goes like this “Deliver anything from anywhere”, which itself explains the very motives of the company.

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Continue reading “Startup Sunday Season 3 Episode 6 (HUMhain)”

Startup Sunday Season 3 Episode 3 (Swiggy)

The first wave of unicorns (a privately held startup company valued at over $1 billion) was created across e-commerce (Flipkart, Shopclues, Snapdeal) and ride hailing (Ola). With the recent funding round, the tide has turned towards food-tech with Swiggy joining the coveted club along with its closest competitor – Zomato. Let’s unwind the journey of this Bangalore based startup that brings restaurants into your pockets!

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Founded in 2014, Swiggy is a food ordering and delivery company. Inspired by the thought of providing a complete food ordering and delivery solution, Swiggy brings the best neighborhood restaurants to the urban foodies. With the expanded reach in 15 cities, Swiggy has over 35,000 restaurant partners and a diligent delivery fleet of over 40,000. Continue reading “Startup Sunday Season 3 Episode 3 (Swiggy)”

Startup Sunday Season 2 Episode 12 (CARNOT)

The “Internet of things” (IoT) is becoming an increasingly growing topic of conversation both in the workplace and outside of it. It’s a concept that not only has the potential to impact how we live but also how we work.

Today, there is data generated everywhere – when you purchase a drug over the counter, disembark a taxi or even when you pass a toll-way. IoT gives us the opportunity to capture this data, analyze it and take action, to make our lives better by being more connected.

Needless to say, this wave of connectivity will transform the auto sector dramatically. Unlike autonomous driving and ridesharing which threaten to disrupt the industry and challenge the incumbents, IoT offers an opportunity, a tool that every auto ecosystem player can leverage to drive the next wave of improvement in efficiencies across all functions and for all stakeholders.

With IoT, car owners will be able to connect their cars with the rest of the digital world. For the most expensive “tech gadget” surprisingly little “consumer tech” has crept into our car. A majority of our cars have worse UI than a smartphone costing INR 10k. Our cars still communicate with us through lights and sound on the dashboard.

And this Sunday we bring you story of “CARNOT” A smart car device made by Carnot Technologies Pvt. Ltd. which with the help of IoT is set to address the above issue and Change our experience of a car drive.

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Startup Sunday Season 1 Episode 24 (Tapzo)

1Did you know that most smartphone users in India uninstall nearly 75 percent of apps soon after they download them? Many cite the limited memory on their phones as a reason. Then there are those who either avoid using these apps or even downloading them, because of the high data costs they may incur. This is where an app like Tapzo (previously Helpchat) aims to step in and solve these pain points.

Tapzo does this by integrating the APIs of other apps onto a single platform in a unique proprietary format. By using a single window to access multiple apps, users can save upto 100 MB worth of data costs each month as there is no need to download and update multiple apps. It also helps free upto 500 MB of space with multiple apps being replaced by a single app. Continue reading “Startup Sunday Season 1 Episode 24 (Tapzo)”