The benefits and cost of use Alibaba.com
|Several manufacturers’ bids on a customer order placed online, as well as a wide range of customers’ products offered by many sellers.||Premium charged to use a site like Alibaba online.|
|Manufacture of products designed by the company based in different locations by posting the design in business-to-business sites.||Cost of posting the design on the sites. This may include the time which the post stays on the company’s sites.|
|Direct interaction between buyers and sellers through online sites eliminates brokerage and intermediaries.||Membership cost for using the site levied on both, the buyer and seller.|
|Buyers make a price comparison of the same products, but different manufacturers.||Cost may include the charges for numerous visits to the business-to-business site in use.|
Grieve company’s goal is to create industrial heat processing equipment and sell it to customers. The export strategy relies on the existing untapped global market. Locating customers, informing them on product features and shipping sends a challenge to Grieves’s global business. The sale of finished products includes several relevant steps of realizing returns on investment. Using business-to-business sites is a good way of presenting information on new products, and it becomes easy to circulate it online for potential buyers to view. Interested customers place their orders using the same sites. Besides, the company does not need to have many regional offices since customer interaction is through the site.
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Shipment service providers locate manufacturers such as Grieve on the same online trade sites. The company has the opportunity to compare the prices of the competitors using posts placed on the sites. Pricing information is vital to any competitive market. The cost of doing business reduces significantly. Grieve company only needs to be a member of any of the online trade sites by paying the required premiums. Finally, Grieve stands to benefit from a growing market that would be difficult without the sites that make it easier to locate a new market.
All companies have high traffic with millions of visitors daily. This is a key indicator that the online trade venture has experienced massive growth over the years. All sites are business to business targeting customers ranging from small business to big manufacturers. The sites have prioritized buying and selling a concept that aims at connecting buyers and sellers globally. All companies generate revenue in membership charges, as well as advertisements on their sites. There are membership premiums as well.
As opposed to this, Alibaba has a greater global outfit than both TradeIndia and TradeKey together, it is evident from its traffic and several different buyers and sellers. TradeIndia has focused mostly on the Indian market as opposed to other new entities. Both TradeIndia and TradeKey have a better new product update than Alibaba. Alibaba has clear safety and security centers to ensure that the users remain safe from fraudulent activities on the sites, more than the other two entities that have no elaborate security details.
The cost of doing business has reduced greatly after the entry of online trade sites. Companies reported reduced expenditure on global missions to expand markets. Entry into a new market became much easier with little infrastructure development in the new market. Since the global trend is going online, companies are shifting to online trade to be part of this new development. Companies left out risk loss of market among other grave losses in the future.
The short period of doing business makes online trade between companies the most suitable. Loss of person-hours faces a downward trend in the future as companies conduct their transactions in the comfort of their mother locations. Meanwhile, due to a reduction in the cost of doing business revenues increase. This invites competition: putting companies without proper online structures at risk of loss of business.
Impact of the global financial crisis
The global financial crisis has recently hit the money markets hard. Established markets, such as the European market, emerged as there was a threat of the crisis that could ruin former big economies. Following this change in business activity, Alibaba stands to benefit from the investors fleeing European markets to stable locations such as the Far East. The new entities provide opportunities for the growth of online trade.
Emerging economies, such as Africa provide great opportunities to Alibaba business models. Alibaba is located in the world’s fastest-growing economy by trade-China. After the global financial crisis turbulence shook the West, Alibaba tremendously experienced growth in traffic as more customers opted for Chinese products.
On the other hand, Alibaba faces competition from other established online companies that have shifted attention from its areas of operation. After the crisis, firms directed resources to the stable markets in a bid to rescue their business entities. Competition by these firms brings a major threat to Alibaba as they compete for market share. New entries often satisfy demand if the existing companies are overwhelmed.
Otherwise, the new entities set in competition to the existing firms in new markets. Alibaba also faces a loss of business in the crisis-prone markets. Less traffic flows from such areas due to reduced business potential and reduced activity. However, with the resolution of crises such as the Eurozone debt, Alibaba may continue experiencing an upward trend in its online trade growth.