Alibaba: The House That Jack Ma Built
by Duncan Clark
Although it sickened thousands and killed almost eight hundred people, the outbreak had a curiously beneficial impact on the Chinese Internet sector, including Alibaba. SARS validated digital mobile telephony and the Internet, and so came to represent the turning point when the Internet emerged as a truly mass medium in China. The virus gave a major boost to texting, which increased business for cellular companies like China Mobile. “If you can’t tolerate your opponents, you will be definitely beaten by your opponent. . . . If you treat your opponents as enemies, you have already lost at the beginning of the game. If you hang your opponent as a target, and practice throwing darts at him every day, you are only able to fight this one enemy, not others. . . . Competition is the greatest joy. When you compete with others, and find that it brings you more and more agony, there must be something wrong with your competition strategy.”
How could eBay be so inefficient? There are two explanations. First, eBay had an effective monopoly in the States, and this bred complacency. Second, despite its Silicon Valley aura, eBay was never very strong at technology. One eBay executive famously once said, in public, “Even a monkey could run this business.” After the embarrassing site outages, stability and process trumped technology.
Without the low-cost delivery that the courier services provide, Alibaba would not be the giant it is today. To survive in a cutthroat industry, some of the courier firms have adopted clever methods to keep costs at rock bottom. In Shanghai, for instance, couriers shuttle back and forth on the subway, passing packages over the barriers to one another to avoid buying multiple tickets.
Today JD has built up the largest warehousing capacity29 of any e-commerce company in China, offering speedy delivery services including same-day30 delivery in forty-three cities. JD.com runs a truly end-to-end system, controlling its own procurement, inventory, distribution, and warehouse systems, with goods delivered to customers by uniformed couriers riding JD-branded vehicles.
Although it sickened thousands and killed almost eight hundred people, the outbreak had a curiously beneficial impact on the Chinese Internet sector, including Alibaba. SARS validated digital mobile telephony and the Internet, and so came to represent the turning point when the Internet emerged as a truly mass medium in China.
“I’ve seen lots of people yelling ‘Fight the Shaolin Temple!’ at the foot of the Shaolin Temple; that’s complete nonsense. However, if I reach your doorstep to challenge you, I pretty much know that I will defeat you. In the future there will be no need to yell; as soon as you stand on the doorstep, people will be scared.”
"Although it sickened thousands and killed almost eight hundred people, the outbreak had a curiously beneficial impact on the Chinese Internet sector, including Alibaba. SARS validated digital mobile telephony and the Internet, and so came to represent the turning point when the Internet emerged as a truly mass medium in China. The virus gave a major boost to texting, which increased business for cellular companies like China Mobile."
"“If you can’t tolerate your opponents, you will be definitely beaten by your opponent. . . . If you treat your opponents as enemies, you have already lost at the beginning of the game. If you hang your opponent as a target, and practice throwing darts at him every day, you are only able to fight this one enemy, not others. . . . Competition is the greatest joy. When you compete with others, and find that it brings you more and more agony, there must be something wrong with your competition strategy.”"
"As a consequence, there has been far less investment in marketing, customer service, human resources, or logistics in China’s traditional retail sector than in the West. The result? China’s retail market is highly fragmented and inefficient. In the United States, the top three grocery chains account for 37 percent of all sales. In China, they account for just 7 percent. The largest department stores in the United States represent 44 percent of total sales in that segment. In China? Just 6 percent."
"“If you can’t tolerate your opponents, you will be definitely beaten by your opponent. If you treat your opponents as enemies, you have already lost at the beginning of the game. If you hang your opponent as a target, and practice throwing darts at him every day, you are only able to fight this one enemy, not others. Competition is the greatest joy. When you compete with others, and find that it brings you more and more agony, there must be something wrong with your competition strategy.”"
"How could eBay be so inefficient? There are two explanations. First, eBay had an effective monopoly in the States, and this bred complacency. Second, despite its Silicon Valley aura, eBay was never very strong at technology. One eBay executive famously once said, in public, “Even a monkey could run this business.” After the embarrassing site outages, stability and process trumped technology."
"Without the low-cost delivery that the courier services provide, Alibaba would not be the giant it is today. To survive in a cutthroat industry, some of the courier firms have adopted clever methods to keep costs at rock bottom. In Shanghai, for instance, couriers shuttle back and forth on the subway, passing packages over the barriers to one another to avoid buying multiple tickets."
"Today JD has built up the largest warehousing capacity29 of any e-commerce company in China, offering speedy delivery services including same-day30 delivery in forty-three cities. JD.com runs a truly end-to-end system, controlling its own procurement, inventory, distribution, and warehouse systems, with goods delivered to customers by uniformed couriers riding JD-branded vehicles."
- →Because it has access to the entire trading history of its customers, Alibaba is in a much better position to assess credit risk than the banks. A new business, Sesame Credit Management, provides credit ratings on consumers and merchants to third parties.
- →“Everything I’d learned in China was that China was the richest country in the world,” Jack later said. “When I arrived in Australia, I realized it was totally different. I started to think you have to use your own mind to judge, to think.”
- →Alibaba’s B2B business was vulnerable. It had an impressive sounding 25 million registered users, but only a handful paid to use the website. Just 22,000 subscribers of its Gold Supplier service accounted for 70 percent of total revenues.
- →“Masters of negotiation always listen, don’t talk. Those who talk a lot only have second-rate negotiation skills. A true master listens, and as soon as he moves his sword, you pretty much collapse.”
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