Alibaba Group Holding Limited

Course: Marketing 3500

Case: Alibaba

ALIBABA GROUP HOLDING LIMITED

Alibaba Group founded in 1999. It’s a Chinese multinational e-commerce, retail, Internet, AI, and technology conglomerate that provides consumer-to-consumer, business-to-consumer and business-to-business sales services, also electronic payment services, shopping search engines and cloud computing services. It owns and operates a diverse array of businesses around the world in numerous sectors. It is named as one of the world's most admired companies by Fortune magazine. Alibaba has three major business which are Taobao, T-mall, and Alipay.

Alipay is the most popular mobile payment app in China, and it starts to available in the United States at 2017. It allows Alipay service to be used at point-of-sale with more than four million retail partners in the United States. Alipay also partnered with SnapPay which gives convince to Canadian to receive Chinese currency from Chinese shoppers. Now, there are many merchants in Canada that supports Alipay.

The mission of the company is “To make it easy to do business anywhere.” Taobao and TMALL are biggest online shopping website in China also in the world. Now Taobao has more than 580 million monthly active users. Many companies are open official stores sell their products in TMALL which is very similar to Amazon. The Taobao is more likely to eBay, and it's more focus on the secondary market and small business. Amazon and eBay are also Alibaba’s competitors. Now, Alibaba's current core business in the United States is Alipay.

Situational Analysis:

Currently, Alipay is widely used in people's lives. In 2016, Alipay used 54% of China's total payment market share. Alipay provides credit card bill payment, personal transfers, prepaid mobile phone recharge, public transport ticketing, food orders and more. In cooperation with First Data in 2017, it is allowed to be used by more than 4 million retail partners. Alipay is now accepted in 70 countries, Apple Pay is accepted internationally in 15 different countries, while Android Pay is supported in 10. PayPal currently leads globally, with the service supported in 200 countries and 25 currencies.

Alibaba did not put the Taobao and TMALL into America market but do the new online shopping website in the overseas market called AliExpress. Compare to the local companies such as Amazon and eBay, Alibaba still does not have any advantage in America market. Especially for Ant Finance which includes Alipay service.

It is difficult for Alipay to enter the U.S. market at present. First of all, it has to obtain U.S. government certification, otherwise, it is difficult to become one of the mainstream payment methods in the United States. Second, it needs to reach a cooperation agreement with banks and retailers, and Alipay can gain the trust of consumers after it has been promoted by major banks. Finally, China and America both have currency regulation, China also tries to prevent cash outflow. For example, each person can only transfer up to USD $50,000 to foreign country per year. Also, Alipay has no authority to transfer money into American Bank account without limitation and regulation.

Marketing Problem Statement:

There are several reasons why Alipay has difficulty entering the US market. First, In the US market, Alipay faces many competitors, such as Visa, Mastercard, American Express, Discover, Apple Pay, Samsung Pay, and PayPal. Basically, all American consumers are more accustomed to using only Apple Pay and PayPal as mobile payment methods, and currently many mainstream banks. Personal transfers can be made directly. The second is that Alipay cannot currently support or certify with the U.S. government. This has led many large companies or retail stores to believe that Alipay has the ability to become one of the company's payment methods, including data circulation and personal information collection.