Case Analysis of “Alibaba and the 2,236 cyber thieves

Case Analysis of “Alibaba and the 2,236 cyber thieves
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Case Analysis of “Alibaba and the 2,236 cyber thieves
Electronic commerce, commonly known as e-commerce involves the transaction of information via the internet. This process enables businesses and consumers to comfortably buy and sell goods and services which cannot be possible due to geographical limitation or cost of the middleman. E-commerce has become the most convenient means of trading and one of the leading players in this industry is Alibaba.
Alibaba is an online portal that connects manufacturers to various businesses all over the world which was founded in 1999 by Jack Ma. Alibaba has since become an overnight success as it connects both consumers to consumers through its Taobao.com platform and businesses to the consumer through it Tmail.com platform (Indvik, 2012). Its innovative strategies allow users to register on its online shop using ID and debiting or crediting funds in these accounts on its Alipay program (Indvik, 2012).
Alibaba launched its B2B marketplace in 1999 investing $ 60,000 as a team of 18 people led by Jack Ma. Alibaba was established to assist Chinese companies to connect with other business all over the world. Alibaba platform targeted companies in Europe, the US who wanted to buy from low-cost manufacture in China and other Asian countries (Marinova, 2017). Since buyers were small companies who could not cover for costs of traveling and other manufacturing-related costs, most of them preferred using Alibaba service which was free after using an ID to set up an online shop (Marinova, 2017).
With time, many businesses have turned to Alibaba for their transaction enabling the company to take control of eighty percent of China e-commerce market. However, with all the success, the company has faced several challenges. Having been operating in a country rife with fraud, its growth has stagnated, more than 56 million people using its business to business website Tmail and 370milion using Taobao, it’s online mail was affected by online fraud (Ramzy, 2011). There is an increased prevalence of faking orders known as sales brushing on Taobao. Professional brushers, include those who place fake orders to assist merchants to increase their sales volume. Brushing is a process that involves paying those who pretend to be customers to write positive reviews in order to increase vendor’s online presence in various marketplaces (Ramzy, 2011).
Brushing activities on Alibaba were first noted in 2009 and the company set up a compensation fund paying out buyers, however, more claims became inevitable as it almost damaged the company's reputation to find reliable Chinese suppliers and buyers online. The scandal generated conflicting reactions from stakeholders (Ramzy, 2011). The company has since changed the way of conducting its global business based on its fast growth by developing a unique business model; there are several factors that will contribute to the success of its unique model especially from most western companies as it expands to the rest of the world.
Normally traders using these sites and pay for a fee and submit to third-party checking to ensure that buyers feel secure; hence verification of the system is important. However, online fraud became rampant and was used as a short-term financial gain by others more so salespeople. Fraud emerged during a time when Alibaba was in the process of its global expansion. Even though the company tried to woo new consumers, the online scandal affected its market position. However, Alibaba had several features that worked to its advantage.
Unlike other e-commerce platforms like E-bay, Alibaba does not charge commissions on its lies instead the company generates income from fees from the gold status. The company's market share and scale of operation are some of its biggest strengths. By 2015 Alibaba’s market share increased to 58 percent, with his rival being at 22 percent (Indvik, 2012). The constant market share index comes from its loyal manufacturers who manufacture products in huge volumes supplying across the globe. China is the leading economy, it has a stronghold on the market, and this is the trajectory Alibaba needs to succeed (Indvik, 2012).
According to the general online market environment, small and medium enterprises contribute to 68 percent of China's GDP, SME is estimated not increase from 31.5 million to 50 million in 2012 (Indvik, 2012). Alibaba launched several other sites using different national languages to cater for the increasing global demands for online services. The fact that Alibaba offers a wide range of products and services using its Alipay, allowing customers without credit or debit cards to fund their account, makes it attractive for many consumers (Indvik, 2012).
The fact that buyers use Alibaba platform for free, allowing potential customers to easily access the site, making it an ideal platform. It's not surprising it IPO in the US rose from $ 68 to 93 generating g$ 25 billion dollars (Indvik, 2012). Although Alibaba operates in an environment driven by fake online activities, its financial strength and market share have enabled it to commit a vast amount of resources to increase its customer's levels of satisfaction. For example, in 2009 the company managed to redeem its image by setting up a compensation fund whereby it paid $ 1.7 million to 2,249 buyers and by 2014 the company spent $ 160.7 million to combat fake goods shop (Marinova, 2017).
Due to its financial strength, Alibaba recruited more than 2,000 cyber security staffs which later it increased the number to 3,000 to combat fake goods. Having a vast amount of resources helped the company combat online fraud that bore fruits. By 2015, Alibaba reported to have scanned 10million products listed in a day. The company later detected brushing, employing 17 differen...