Easier Trade All Over the World - the Inspiration of Alibaba’s Success for Canada’s E-Commerce Development

Easier trade all over the world

—The inspiration of Alibaba’s success for Canada’s E-Commerce development

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MEMORANDUM

Here is the report, which you authorized at course outline, about the suggestion for Canada’s E-commerce development. The report involved a further analysis of the giant E-commerce platform that Alibaba created and the business model behind it. With the introduction get the clues for Canada E-commerce market’s future.

In last Sep 19, Alibaba’s IPO became the biggest IPO forever in American market, which attract our sights. This project will analyze the critical factors behind its success. Besides the economic and infrastructure consideration, the business model is most important, it is an information platform based on internet. This project compares the Alibaba and Amazon, the different business models behind these two. This project could show the inspiration for Canada’ e-commerce based on own situation.

It is my hope that this report will provide you and the college board with the clues and reasons behind my suggestion that Canada’s E-commerce should choice Alibaba’s model. Please let me know if you have any question about this report or if you need any further information. I may be reached at (514) 659-5215 and by e-mail at . I look forward to discussing the report recommendation with you.

Thank you for your patience and review.

Enc.

TABLE OF CONTENTS

Executive Summary        

Introduction        

BACKGROUND        

PURPOSE        

Critical factors for Alibaba’s success        

Economic Factors Considerations        

Infrastructure Consideration        

Business Model Consideration        

Comparison with Amazon        

Model Comparison        

Future Concern        

Suggestion--Canada E-commerce’s futures        

Conclusion        

References        

EXECUTIVE SUMMARY

Global online retail has grown at a 17percent CAGR over the past five years; it’s still a hot industry in latest years. Canada has great development potential in online retail, but the reality is less than satisfactory if we compare to the neighbor America. Canada looking forward to find own industry path. At this point, a giant E-commerce company Alibaba enters into globe’s sight. After its $21.8 billion initial public offering in September 19, Alibaba has move over Amazon as the largest e-commerce company in the world. With analyze of this company’s success path, we can get some inspiration of Canada e-commerce’s future development.

Alibaba’s success may have several critical factors. The China’s nice economic factors give the basement for its development; the underdevelopment infrastructure drives the opportunities. And foremost factor is its business model, it has created an e-commerce platform that helps small businesses as well as branded manufacturers reach consumers. Alibaba operates an “open marketplace” that connects buyers with sellers.

In contrast, another giant e-commerce America company, Amazon much likes an online marketplace that is closer to traditional retailing. These two business model all achieve a great success but they all based on their native environment, which model is suitable for Canada?

Based on these two models’ characteristics and Canada’s own situation, we suggest Alibaba’s model. The reasons are showed below:

1. Canada’s population is not being large enough to render some business profitable, which may lead to many small or median size companies. “Calibaba” may give great opportunity for these companies.

2. More job opportunities. The jobs created by small or median size companies take a great part in country’s job market. “Calibaba” give more opportunities to these companies.

3. “Calibaba”s characteristic helps businesses alleviate the challenges and pressure in a relatively small domestic marketplace; it can be used to expand their global footprint.

 INTRODUCTION

BACKGROUND

With the improved access to international broadband, internet users are growing quickly. More and more people like to purchase online, this lead to a rapid growth rate in E-Commerce. With the public information, global online retail has grown at a 17percent CAGR over the past five years, with growth particularly strong in Latin America (27 percent) and Asia Pacific (25percent).

               Figure 1.1 Global online retail sales since 2007

Source: Euromonitor[pic 1]

In this E-Commerce trend, A China E-Commerce Company attracted global investors’ sight, Alibaba, a new e-commerce leader in global market. After its $21.8 billion initial public offering in September 19, Alibaba has move over Amazon as the largest e-commerce company in the world. Actually, Alibaba is more valuable than Amazon and eBay combined if we just based on the first day of trading.

The E-commerce company consist consumer-to-consumer shopping site Taobao, business-to-consumer online retail platform Tmall, as well as the business-to-business site Alibaba.com, generated $248 billion in online sales last year alone.

PURPOSE

Since the company founded in Jack Ma’s apartment in 1999, Alibaba are already be the largest online and mobile commerce company in the world in 2013. In trace the Alibaba’s success path, it can shows the critical reasons to the success of this giant e-commerce company, and a general concept of its business model, one e-commerce model adopted in China’s economic environment.

Then, with the comparative between Alibaba and another giant e-commerce company, Amazon, we will get familiar with their two e-commerce business model, the different choices in different economic environment, China and America. Then based on Canada’s own economic basics, we can supply some clues or suggestion for Canada’s own e-commerce development.