Being one of the greatest businesses of the world, Alibaba is a name that carries on itself a lot of weight and power. The great success it has obtained has always been the study subject for a wide variety of experts. Many call it the “Amazon” of China, but this is a misperception. This business differs greatly from the rest and today we’ll see why.

Alibaba and its beginnings

In 1999, the Alibaba website was founded by businessman Jack Ma and 17 other people. During that year, its goal was to connect Chinese manufacturers with international buyers. Which in time, began to bear fruit. In later years, they became known simply as Alibaba Group.

One of the things that made this business grow so much was the development and acquisition of a conglomerate of entities. As well as its affiliation to various sub-companies. Among them, the most famous are two online markets: Taobao and Tmall.

Jack Ma Business Model
The founder of Alibaba, Jack Ma, is one of the richest men in China and seen as a global ambassador for business in this country. Source: Dineroclub.net

Taobao is an online market that allows sellers to assemble their shop windows on the Internet and offer their products. It’s a leading platform in the Chinese market and one of the most visited on the Internet. On the other hand, Tmall is a specialized market for business to consumers, where brands and high quality products are present.

Alibaba’s main sources of income come from various sales and services. Mainly through e-commerce from business-to-business, customer-to-customer and business-to consumer.

Its business model: How does it work?

Contrary to many popular beliefs, Alibaba is not the same as Amazon. It has a business model that differs significantly from it. First of all, it’s not a retail company like Amazon. Likewise, it’s not an online store since it doesn’t sell products nor does it have an inventory of them.

Alibaba operates online markets where millions of merchants assemble their own shop windows and product lists. Within these, there are brands and merchants that sell their products to all kinds of consumers. And as said before, this is one of its main sources of income.

Alibaba Search Engine
Alibaba is an e-commerce platform that has its own search engine just like Google. For example, typying “headphones” will show the products of sellers who have invested more money to position themselves better. Source: A Better Lemonade Stand

They focus more than anything on trade between companies and businesses. In Alibaba, there are suppliers that sell their products at wholesale prices, both to medium and small companies in the world. Usually, these companies resell what they buy at their local stores to get money.

Traditional commerce is not the only strength of this consortium, it also has its own e-commerce platforms for Internet business. And as we already mentioned, Taobao and Tmall are its two main subsidiaries in this field. Which also equals an income entry for Alibaba.

What are its main sources of income?

We already understand how Alibaba’s business model works, but what entity of theirs serves as a source of income for them? We say this because Alibaba, in addition to its own page, Taobao and Tmall, has subsidiaries (spin-off companies) that make money.

They have a great variety of subsidiaries that have been acquired or developed over the years. Among them, we can highlight the following: Alibaba Cloud, Alimama.com, AliExpress, Alipay, 1688 and many others. Each of these companies is well-integrated into the Alibaba Group system, for which they generate income.

Alibaba Subsidiaries
Alibaba Group owns several sub-companies (subsidiaries) that make up its general ecosystem. Source: The Maosuit

Alibaba, through its companies and services, connects exporters from China and other parts of the world with buyers. Brands and merchants that use their platform, can pay to obtain better positioning on the site or lists of unlimited products.

This Chinese company is undoubtedly a giant of business in the world. It was known that in 2017, its annual income reached 158.3 billion CNY. Which makes it one of the most successful businesses that exist today.

Did you like this post? We invite you to share it on your social networks! We would greatly appreciate it!

Related: Digital and Printed Journalism: What’s More Profitable?

There’s much that can be learned from Alibaba!

Photo used for the entry’s featured image by charles chan * in Foter.com/CC BY-ND