Response to “Alibaba’s World Debut”
by EvaLiu
In Gaurika Sharma’s blog post, “Alibaba’s World Debut,” Sharma believes that Alibaba, a Chinese e-commerce company that aroused much attention for having the largest IPO, will be able to successfully enter the global market.
My opinions differ from Sharma’s as I do not believe that Alibaba will have a such easy time entering the global market. The main reason is due to the extremely high barriers of entry already in place. The United States, for example, already heavily relies on online retailers, like Amazon and Ebay, who basically provide the same service as Alibaba. It would hard for Alibaba to compete in the same market as these retailers who already have a great competitive advantage from being the industry for so long, providing them with a strong and loyal customer base, as well as strong partnerships with national companies (for shipping and supply). If Alibaba is offering basically the same service, I personally do not believe that consumers or product suppliers will be willing to suddenly want to change online retailers.
This case can also be compared to when Amazon tried to enter the Chinese market. Amazon failed miserably, only attaining less than one percent of China’s huge e-commerce market, as Alibaba, being the first e-commerce company in China, already had a competitive advantage that was unchangeable.
Amazon’s small market share in China shows that just because a large company is successful in one part of the world does not mean it will be equally successful in another. I strongly believe that the same problems Amazon faced might also apply to Alibaba’s entry in the global market.
References:
http://www.tutor2u.net/blog/index.php/business-studies/comments/alibaba-beats-amazon-to-the-e-commerce-prize-in-china
http://www.stockwatchweekly.com/wp-content/uploads/2014/09/about_alibaba_logo11.jpg