Here in the United States when we think of e-commerce our minds go toward sites like eBay and Amazon. In fact, Amazon controlled almost 40% of the e-commerce market in 2019. Now, a majority of American households, a whopping 62% in fact, have a subscription to Amazon Prime. Amazon is such a massive company that it even influences other places in the world. But, when we view the world as a whole, we’d find that Amazon is not number one in the e-commerce industry. In reality, Amazon has around a 10% share of the global market for the e-commerce industry. They fall behind Chinese-based companies Tmall and Taobao who have a 13% and 16% share of the global market respectively. Both are also subsidiaries of Alibaba Group. But is Alibaba legit?
Alibaba Group is the largest in the global e-commerce industry. This article will explain to you what Alibaba Group is all about and what the pros and cons are of having business with them.
Founding of Alibaba
Alibaba was created in 1999 by 34-year-old entrepreneur Jack Ma. He got the name from the old folk tale of Arabian origin known as “Ali Baba and the Forty Thieves”. With so many people in the world familiar with this story, he chose that name for that reason.
A year later, Jack Ma had raised $25 million in venture capital to help get it to 1 million users in 2001. As the years went by, Ma had several important subsidiaries created.
- In 2003, Taobao was launched
- Alipay (A similar service to PayPal) in 2004
- Tmall in 2008
- AliExpress in 2010
Alibaba finally went public back in 2014 at the New York Stock Exchange. It was there that it had an IPO of $25 billion, the largest in history at its time.
As of the year 2020, Alibaba Group had a market cap of around $615 billion.
Alibaba and Subsidiaries
Despite being Chinese in origin, Alibaba is not a Chinese-focused group. That is more reserved for Taobao and Tmall The site has everything laid out in English for those in English-speaking countries. In fact, a third of those who use the site are from the US.
It was not until the summer of 2019 that Alibaba allowed Americans to use the site as both sellers and buyers. This has presented a business opportunity to sell to Chinese companies as well as other countries that use Alibaba. Some of these countries include Canada, Brazil, and India.
Pros and Cons of Alibaba.com
Americans have several advantages to using the website. This includes:
- Overseas costs are less than domestic sourcing.
- A small operation can find overseas suppliers that have a smaller minimum order threshold.
- The website provides multiple options for overseas sourcing.
Here are the cons of the website.
- Overseas products can be perceived as of poorer quality than those made domestically.
- Little to no convinces to visit the site before making a purchase.
- The shipping takes much longer due to overseas.
The Pros and Cons of Taobao
Taobao is the number one site in the world for e-commerce sales. Not to mention it is ranked 8th as the most visited site of 2020.
The name itself means “finding a diamond in the rough”. Meaning, users can find great-quality products for low prices. Even small businesses can have their own storefronts where their items are sold at fixed prices.
The pros of Taobao are as follows:
- One has an opportunity with the massive Chinese e-commerce market
- Putting items up for sale does not cost anything.
- Built-in security system for payments
There is however one main drawback to using Taobao and that is that the business has issues regarding counterfeit goods, making competition difficult.
The Pros and Cons of Tmall
Tmall is also a lucrative e-commerce site but requires payment. Those who are selling like merchants have to make a one-time security deposit of $7,300 to $43,750 as collateral in case of damages.
Not to mention, there is an annual fee between $4,400 to $8,800. Plus, each sale has a commission.
So is Alibaba legit? As you can see, Alibaba has a large presence both online and in the world. Having started almost 30 years ago, Alibaba continues to be a huge presence today.
The website has started to cater to English-speaking countries including America where it has a surprisingly large presence.
Alibaba also has several subsidiaries that have made it quite powerful. These include Taobao, Tmall, AliExpress and more.
Some of the subsidiaries are harder to navigate and expensive like Tmall, while others like Taobao and AliExpress are more lucrative, while also having several issues that can be a pain to deal with.
Fortunately, you don’t need Alibaba to buy and sell overseas. Nonetheless, Alibaba is legit. It’s a wonderful location to begin exploring the Chinese market and other international markets.