Group Assignment 3

Each group should read “Company Case Alibaba: The World’s Largest E-tailer Is Not
Amazon” (pp. 538-539, Kotler and Armstrong, 2018).
Then, answer the following questions:
1. As a digital retailer, how does Alibaba provide value to Chinese consumers? What sets of
values are unique to the Chinese market?
2. Given that Alibaba does not own or distribute any of the merchandise exchanged on its
sites, describe what factors had to develop for the company to succeed.
3. Analyze Alibaba’s business model relative to all the different forms of digital and online
marketing covered in this chapter?
4. Can Alibaba succeed in countries outside of China? Why or why not?

Next, each group should think of a Vietnamese business that you know and analyze the
corresponding content as above to indicate the managerial implications for that business.

1.
Alibaba runs their business in a different direction than Amazon and the other U.S. e-tailers.
Alibaba’s open market platform simply connects buyers with sellers. “Our biggest advantage is
abundance—with 100 million products, we have more options for customers who can buy our
products cheaper and at high quality”, says Joe Yan, director of international B2C in Alibaba’s
export division. 
Alibaba.com is suitable for experienced businesses: want to sell their own customized products at
the lowest prices, want to have a competitive advantage and existing audience, and keep risks to a
minimum. Moreover, the use of Alibaba.com also helps businesses do not need to meet face-to-
face, save time and costs. Alibaba has succeeded in stimulating consumption from customers,
improving the interaction between customers and the Web. Therefore, the number of consumers
participating in Alibaba's system is increasing.

Compared to smaller retail platforms, Alibaba.com has many advantages, such as:
- The availability of different products according to the needs of customers at low price
seems worthy for both, the management customers.
- Create your own custom products from scratch using your own designs
- The penetrating pricing strategy:  Lowest selling cost for each product.

E-commerce in China has become the main course of retailing in China market, unlike being just
supplementary to the main business in the US. “E-commerce in the U.S is like a dessert. It’s just
supplementary to your main business. In china, because the infrastructure of traditional retail
commerce is so bad, e-commerce becomes the main course”, said Jack Ma. Besides, by
understanding the China market and people, Alibaba provides the domestic market more than any
other foreign competitors with offering a variety of product choices for everyday class of in
timely delivery and fast product exchange.

2.
Alibaba has been able to engage countless SMEs, support businesses to operate, maintain and
create outstanding values not only for the local economy but also promote international business.
It's a platform for businesses to develop different products and use Alibaba to make a difference.
Through Alibaba, brands can identify and convert potential customers. At the same time, they
also continue to interact with customers to maintain loyalty. To do this, they leveraged
omnichannel consumer insights. Moreover, Alibaba has created a new business model that
transforms the insights data generated in its ecosystem, both online and offline, into product
innovation, from idea initiation to prototyping, from demand forecasting to product launch
promotion.

Since they do not own the products, Alibaba can cut down the cost on the contribution centers,
delivery and employees. For that reason, they do not have to control the products and pay less
during the operations. Legal issues are also avoided because they are not fully responsible for the
goods. Alibaba just needs to focus on their main strategy, which is connecting consumers and
providers. In another word, they will have more resources to promote, encourage sellers to create
value, increase trust throughout their customer, advertise and communicate their brand. The key
factor may be the vision of the owner to have a keen eye on changes and a sharp mind to be
aware of the trend of the market.  
3.
Jack Ma spent the early years developing the identity of the Alibaba.com Website, building
Taobao and Tmall to target the domestic market and business units, expanding influence through
the acquisition of Websites, other companies in the field of entertainment, media, electronic
payment gateway, etc. Alibaba’s business model utilizes digital marketing strategies such as
social media marketing, mobile marketing and online marketing. Alibaba is most successful with
their websites, online advertising and integrated social media.

The business model of Alibaba differs much from leading e-commerce businesses such as
Amazon and eBay. Alibaba’s business model is a blend of Amazon.com, eBay and Paypal with a
slight touch of the diverse culture along with the higher market values of China. Connecting
international buyers and manufacturers through the single platform is the basic purpose of the
business of the company.

Whereas Amazon is a mix of online and offline stores, with revenue coming from major brands,
personal sales, subscription services, and advertising, Alibaba appears to be an online
marketplace - an intermediary environment where manufacturers and customers can get in touch
with one another instead of selling directly to consumers. Alibaba offers business to business
approach while Amazon is more like the business to consumer online retailer.

Amazon and eBay own their warehouses, while Alibaba with no massive distribution centers
works without warehouses and inventories. The company has higher operating and profit margins
as compared to Amazon.

Alibaba does not strictly control the charging of sales fees. This is reflected in the fact that the
Taobao website of Alibaba Group is free for sales booths. However, it's not entirely free because
they make money when vendors pay to rank higher in Taobao's internal search. Unlike eBay,
sellers of Taobao “pay only for the advertised promotion.”

The service of Alipay is similar to Paypal. However, there is no dominance of state-run banks is
observed in Alipay.

Tmall is much more similar to Amazon, which pairs customers with big named corporations,
including global corporation such as “Nike, P&G, and even retailers like Costco”. For instance,
all of these sites cater to its business model of catering to the needs and not the product because
the product is not Alibaba’s worry.

Despite having a fierce competitive environment, with this business model, Alibaba is offering
the best platform for small e-retailers to enter the market. Since then, making Alibaba extremely
convenient, attracting many businesses, distributors, as well as consumers from around the world.
4.
Alibaba is likely to have a hard time breaking its way and making a name outside of China.

First, Alibaba could face some difficulties in the complex retail environment outside its mother
country due to the difference in the business. Other retail giants contain the direct sales of product
and services, and it seems tough for this company to emerge with its existing business model.
China is the largest commodity-producing market in the world, where production is concentrated
for all kinds of commodities. China’s manufacturing advantage is something that no country can
learn from, because other manufactures cannot offer the same fair price as Chinese producers.

Second, Alibaba has to compete fiercely with a lot of other retailers such as Walmart, Amazon
and eBay. Customers outside China are interestingly quite loyal to different brands, and despite
having the low prices, people are certain of their brand preferences, which make it difficult for
Alibaba to convey all these customers. The current business model might not be able to help
Alibaba achieve such a success like in China since there would be a significant competition
among a rising number of foreign competitors, and other countries would expect something more
localized and more suitable for their nations.

Last, it seems that part of the reasons why Alibaba is so successful and popular amongst China
has to do with Jack Ma himself. It is stated that “The Chinese love Jack Ma”, the man who
“turned a local underdog into a dominant giant with revenues bigger than Amazon, Facebook,
Google, and Apple combined.” That might partly be why they keep on supporting Jack Ma and
Alibaba, but other countries may not see that and Jack Ma would have to offer something else,
something more attractive than what Amazon and eBay already did. So it would be hard for
Alibaba to compete.

Next, each group should think of a Vietnamese business that you know and analyze the
corresponding content as above to indicate the managerial implications for that business.
(Tiki)
1. How does Tiki provide value for Vietnamese consumers? What sets of values are unique
to the Vietnamese market?
2. What factors had to develop for the company to succeed?
 3. Analyze Tiki’s business model relative to other different forms of digital and online
marketing?
4. Can Tiki succeed in countries outside of Vietnam? Why or why not?

1.
Tiki invests heavily in promotions and discounts, as these are tactics that can be implemented
quickly and easily to increase the number of customers. Tiki also focuses on investing in many
other areas to create the most comprehensive and best experience for customers. They always
guarantee genuine products, fast and reliable delivery service, easy return policy..., aiming to
build trust and long-term engagement with customers.

Tiki is the fastest and most trusted B2C e-commerce platform in Vietnam. Tiki is well-known for
its own world-class customer service, particularly TikiNow service (2-hour delivery). Moreover,
Tiki has an extremely low return rate compared to e-commerce brokers of the same size and
operation. As announced by Tiki itself, the rate of return is always limited to an average of about
1% and is always stable below 3%. In addition, Tiki has implemented multi-device and
application-based marketing solutions to improve the efficiency of switching between computers
and mobile phones.

Tiki is the only e-commerce platform in Vietnam which has policies to protect the sellers. Strict
regulations being imposed such as the requirement of reliable origins of the products and valid
documents etc. would enable the sellers to be more secure to develop their business on Tiki.

With the tough competition between e-commerce and retailers in the Vietnamese market, Tiki
has made a difference with other company by choosing an exceptional path to win the game:
delivering outstanding customer experience.

2.
Tiki can search for products with a sudden spike in demand in a short time. This is considered a
form of "temporary" sales, it will trade a product that is "hot" at that time. Although it can only
be sold for a short period of time, it will attract a lot of customers.

Tiki can reduce the costs of donation centers, delivery, and employees. They do not have to
control the products and pay less during the operations. Tiki focuses on product diversification
and quality control of incoming products, while improving professional and enthusiastic
customer service. Consequently, customer experience when using products on Tiki increases. A
report from Euromonitor indicates that up to 75% of survey respondents prefer to shop online.
The reasons are: fast and easy payment, time-saving, door-to-door delivery, easy price
comparison, etc. Tiki has implemented multi-device and app-based marketing solutions to
enhance high efficiency in switching between PC and mobile phone. Tiki has built and
implemented its unique point of sale (USP) with a fast delivery service with an average
nationwide delivery time of only 1.6 days, allowing customers to receive goods in 2 hours in
Hanoi and Ho Chi Minh City, and ensure the quality of goods when they reach users.

3.
Emphasizing making online shopping easier for customers, since the beginning Tiki has started to
apply the B2C business model, importing goods on its own, monitoring quality and selling to
customers. In order to achieve this, the company acted as a mediator in the value chain between
various suppliers (for books, Kindles, gifts, and souvenirs) and Vietnamese consumers.

Tiki’s digital marketing strategies are social media marketing, KOI/Influencer marketing and
applying marketplace business model. Tiki is widely known for its website and social media
marketing campaign which is appearing commonly in famous singers’ music videos.

From the beginning, Tiki’s most popular product has been books. In this field, vinabook.com,
fahasa.com, nhanvan.vn, etc.are the big competitors of Tiki.vn. What makes Tiki different is the
variety of books from difference sellers. Buyers can choose to buy books provided by Tiki itself
(Tiki Trading) or by other sellers. Unlike Fahasa and other book sellers, Tiki also provides other
goods from various suppliers, for example: household appliances, beauty products, food, etc.

With the competition of other e-commerce brokers such as Shopee, Lazada, Sendo… Tiki has
been combined with the Marketplace model. Businesses register sales on Tiki with various types
of products, while Tiki owned products are sold on Tiki Trading. Tiki is in a difficult situation
when faced with fierce competition from foreign brands with abundant capital, on the other hand,
it must retain the title of "brand for Vietnamese people". Tiki's strongest opponent is Shopee.
Because they offer many offers such as shipping support for orders, shipping policies for
extremely attractive retailers, links with major carriers; there are attractive promotions and
subsidies for retailers and consumers; actively organize promotions, free delivery codes, fast
delivery in 4 hours; diversified goods and cheap prices. Lazada is also an opponent that Tiki
looks out for. They have had the advantages over Tiki such as: dynamic, powerful marketing
activities, many promotions to attract users such as Lazada to go shopping, combining
entertainment withreamream programs with artists, celebrities and minigames, etc. Lazada
further allows customers to check the product before receiving it.

Tiki’s advantage is the reliability of the products as Tiki has stricter policies about the products’
quality, especially books; as well as its own customer service and delivery service. Tiki also has a
service called Tiki Care which helps customers in any available cases by hotline 19006035 and
After Sale Service to make sure that customers are satisfied by products from Tiki.vn.
Furthermore, Warranty terms are showed in any product, Tiki.vn makes it clear and simple to
customers.
4.
Vietnam's production capacity is not strong. Tiki has also seen this when there are almost no B2B
e-commerce platforms, but mainly B2C (businesses selling to end users) and C2C (users selling
to each other). The lack of production capacity makes Tiki lose its competitiveness.

Tiki's heavy losses show an increasing trend over the years of operation. According to the
financial statements of Tiki Joint Stock Company, this enterprise recorded an accumulated loss of
nearly VND 308 billion at the end of 2016. If the loss of VND 282 billion is included in VNG's
2017 annual report, the accumulated loss of This e-commerce site has reached nearly 600 billion
VND after 7 years of operation.

For the rapid development of the current e-commerce market, Tiki has many competitors worth
worrying about such as Lazada, Shopee, Sendo, etc.

Tiki is unlikely to succeed in other markets other than Vietnam. Because Tiki has to compete
with many big e-commerce platforms such as Alibaba, Amazon, eBay, etc. In the Vietnamese
market, the appearance of too many e-commerce platforms such as Sendo, Lazada, shopee ...
makes the supply larger than the market’s demand. The brand loyalty of foreigners is quite high,
so it is difficult for them to convert to an e-commerce platform.