Ecommerce: Tool www.alibaba.com
Electronic commerce is changing the way companies around the world business by making easier and cheaper for them to buy and sell to each other. Before the internet tracking down a product to import or finding foreign customer to export to were daunting challenges for the typical small and medium-sized enterprise (SME). Often these companies had to rely on the occasional trade shows, followed by expensive and time consuming travels to foreign lands to identify possible products.
Consequently, international trade was largely limited to those companies who cold afford to attend expensive trade shows, publish costly brochures, travel internationally, and hire agents and export trading companies.
Now the internet provides a cost-effective way for SMEs, even those on a shoestring budget, to jump these hurdles. Indeed, the internet has opened up a new era of business opportunities.
The US small business administration estimates that the number of small businesses exporting goods or services tripled from 1994 through 2004. Many companies are taking advantage of online technologies and starting or expanding their international trade. They rely on the internet as their primary channel for getting information, sourcing products or services, finding suppliers and marketing their products, and tapping into new markets.
Increasingly, as more firms throughout the world access the internet, many entrepreneurs and trading companies use this technology as their primary means to develop their import and export business.
Recently, the emergence of country ??“ specific portals and web exchanges has accelerated this process, as eBay has done for consumer-to-consumer e-commerce, several sites have created online bazaars for international traders. Where exporters can lay out their wares and haggle with potential buyers from the far corners of the world. For instance potential importers looking for products from Korea can access www.global.kita.net, those targeting India can check out www.trade-India.com , and those fixed on Europe need only visit www.europages.com to tap into high-quality electronic trade boards. This goal leads these sites to provide a variety of direct services to big and small international traders, such as trade consulting, export training cyber trade infrastructures, international special exhibitions, virtual trade shows, and new trade strategies,
Like many parts of the global economy, this sort of e-commerce is having big impact in chine. Spearheading this effort is Alibaba.com, a Chinese internet company that specializes in introducing manufacturers across China with buyers in China and also around the world.
Founded in 1999 by Jack Ma, who has been dubbed the father of the Chinese Internet Alibaba.com has three parts ??“ Alibaba China is China??™s largest online marketplaces for domestic trade, Alibaba International is its English-language site that hosts traders from more than 200 countries, and TaoBao ( which meads ???digging??? ) is a consumer site now free to all users.
Jack Ma has always stressed that his target customers are small businesses around the world ??“ in his own words, ???shrimp??? not ???whales???. On a typical day, the online community trading on Alibaba.com contains around 50,000 buyers and 120000 sellers from more than 200 countries who are looling to initiate an import or export transaction. Acting as an online global trade fair, Alibaba allows many smaller companies with export and import ambition but shoestring budgets to reach the global market. More specifically, most Alibaba??™s 500000 members are SMEs in developing countries around the world. They are located in rural areas, as well as large cities, in countries such as Kyrgyzstan, Sierra Leone, and Peru.
The lure of Alibaba is compelling: Importers around the world can request bids from Chinese manufacturer for a mind-boggling array of goods, such as cookware, poker chips washing machine, or mp3 players. In addition, Alibaba offered new channels to trade services. For example, The classic garage inventor in Chicago now had option to design a product and then use Alibaba to find Chinese factories eager and able to manufacture and ship it to customers worldwide. So, for example, and enterprising Argentinian looking to buy 500 DVD players need only visit Alibaba.com. Search among the dozens of potential suppliers.
Historically, an importer often worried that the unknown supplier might defraud her ??“ after all, she is in Buenos Aires, the supplier is in Guangzhou, and she has heard horror stories of export fraud. Buyers can worry less about fraud. Specifically, users of Alibaba, like those on similar e-commerce sites, can past information about their companies on the site as well as access information about the reliability of other users. Buyers also have the option to access Alibaba??™s basic screening and background checks on its registered users. Finally, they can access the seller??™s posted references, say one from this bank, to verify his status.
It offers the basic service of listing a company and its products on its Web site free of charge. It then generates revenue from the 85000 members who pay $250 to $10000 a year for services such as personalized Web pages and certification.
So, as in has in other parts of the business world technology has opening new opportunities for international traders. Technology is opening new opportunities for international traders. Historically globalization had given a disproportionate amount of power and benefits to large companies.
Now, though, Internet and telecommunications advancements were spreading trade opportunities throughout the world, both in the wealthier nations as well as deep in developing countries.
1. List, in separate columns, the benefits and costs of using sites like Alibaba??™s to trade internationally. What does your analysis say to companies like Grieve (in our opening case) as they think about their export strategy
??? Low cost
??? Access to many suppliers/buyers
??? Quick transaction time
??? More transparency in transaction
??? Lower risk of fraud
??? Easy to make contacts with SMEs
??? Listings are free
??? Searches are free
??? Personalized Web pages cost additional
??? Certification costs some
Companies like Grieve need to make web sites such as Alibaba.com a central part of their export strategy. The benefits of using these services overwhelm the costs.
2. Is it reasonable to speculate that eventually most trade between small- and medium-sized firms might take place in the context of sites like Alibaba.com If so, does that influence your inclination to consider importing and exporting
With the rapid growth of the use of these sites and the corresponding increase in trade among SMEs, it is very reasonable to speculate that eventually most trade between SMEs might take place in this context. My inclination to consider importing and exporting rises dramatically with powerful tools such as these at my disposal.
3. Visit www.alibaba.com, www.trade-india.com, and www.europages.com. Compare and contrast these Web sites.
Alibaba has a Chinese emphasis and focus, while Trade-India is of course directed to India and Europages to Europe. Of the three, Alibaba has the most broad appeal, but all are very useful. Trade-India gives more direct access to product catalogs for some companies, but does not have the certification and authentication features of Alibaba. Also, the Alibaba contact templates are much more user friendly than both Trade-India and Europages. Europages is available in many different languages, while the others are more limited and are mostly in English.
4. Visit www.alibaba.com, go to ???Advanced Search,??? and enter the product you seek in the relevant box. Select required criteria and click on ???Search.??? Review the list of companies that qualify and find a suitable one. Analyze this process for ease, usefulness, and potential value.
This process is very easy, useful, and has tremendous potential value. It takes only seconds to find a long list of potential suppliers. One drawback is the urge to contact too many suppliers to find the best possible terms. The method of contact is made very easy by the use of templates and drop-down menus that help to standardize requests. If the suppliers will respond to these requests in a timely manner, the process has huge potential value.
5. How transparent do sites like Alibaba.com make the import-export transaction Would you still worry about fraud
These sights increase transparency and reduce the risk of fraud. Alibaba allows suppliers to post information about their companies, including video tours of their facilities. In addition, Alibaba has developed the Trust Pass designation. In order to obtain this designation, companies must pass an authentication and verification test from a third-party credit agency. Also available is the ???Gold Supplier??? designation, which also requires third party verification of trustworthiness. These mechanisms greatly reduce the risk of fraud, but do not eliminate it entirely. Mechanisms such as letters of credit should still be used to safeguard transactions from commercial risk.