Sunday, April 30, 2017

Alibaba, a great company creating and benefiting a lot from shared value

As the biggest E-Commerce company in the world, Alibaba Group has been benefiting a lot from shared value it created.

Starting as a B2B E-Commerce platform providing business information to companies, Alibaba has changed their business strategy since 2003, launching online C2C platform, Taobao. The C2C business model helped millions of people and even changed their lifestyles. First, as an information platform with great market influence, a lot of people started their online stores on Taobao. The number of online stores operated by individuals had reached up to 6 million since the beginning of 2016, which greatly helped a lot of people. For example, people in poverty or lacking knowledge could sell some special local products online, with no burden of rent for warehouse or retail store; people seeking for part-time job opportunities could provide service like typing files with many pages for people, or translating articles for people do not know foreign languages.

Taobao not only helped the owners of online stores but also customers buying stuff from Taobao. They could buy almost everything they want from Taobao's online store. The price of goods sold online may also be cheaper than in physical stores because of the savings of storage, logistics. In addition, the express mail service industry has flourished because the huge amount of transactions created the great demand for mail services. Apart from the societal value Alibaba created, this great corporation has earned more than 1.075 billion of USD net income in the first quarter of fiscal year 2017 from the advertising fee it charges and the time value of money during the time between customers paid and sellers receives (Taobao's role is to guarantee the transaction and release the money to seller after transaction).

Considering that the fee charged for inter-bank transfer, and people do not want to take wallets everywhere, Alibaba launched a third-party online payment platform, Alipay, which is an APP could be installed on cell phones. Alipay users could use a cell phone to make almost every kind of payment in China, such as for taxi fee, movie ticket, fines charged by police, credit card payments and so on. Because of the convenience, more and more people combine their bank cards to Alipay. And since the network externality, the product could be more valuable as more people use. A virtuous circle created. Nowadays in china, even some beggars have adopted Alipay on a cell phone as the tool to accept people's donations. Alibaba earned a lot from this convenient payment platform. Alipay attracted billions of dollars deposited money, which could improve the financial liquidity and provide adequate money for the company to make an investment in bonds or securities.

Last but not least, Alibaba is good at taking advantage of its innovative online payment platform from various perspectives. Alibaba always tries to popularize the online payment, introducing the benefit of energy saving compared to traditional payment method to the public. The company has launched an activity, encouraging people to use Alipay which do not produces receipts in the physical paper because all the transaction records could be retrieved from Alipay APP. As people use more times of online payment tool, they have made more contribution to our environment. As a user has accumulated contribution reaching a certain limit, Alibaba Group will plant a tree in the forestry farm, and that tree will be named after the use's name. Such an activity could not only provoke people to reduce consumption of paper and pulps but also encourage people to use Alipay more frequently, which is obvious a good example of shared value.

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