On November 11 (known as Single’s Day in China), the total volume of merchandise handled by Taobao and Tmall, the Alibaba’s two main shopping sites, topped 35 billion yuan ($6 billion). This day became a shopping day five years ago when many online shop offered bargain on Taobao and Tmall.

It’s a win-win for both buyers and sellers. The merchants on Taobao and Tmall are able to sell a considerable amount of goods on that day and Alibaba receives huge profits from this for the merchants pay Alibaba when every single transaction is made. Consumers, on the other hand, take this chance to probably stock up for the following whole year.

Even though the price is lower, consumer surplus and producer surplus both increase, considering that people might not even think about buying certain goods at their original prices. It’s a successful tactic for Alibaba because it gives an incentive to purchase and create an environment where people are willing to spend money.

SWOT Analysis for Alibaba

Strengths:

– advanced search tool, providing recommendations based on purchase history and view history

– own payment system, Alipay, which uses an escrow system to ensure payment security

– a gigantic marketplace with seven million merchants and 800 million item listings

– creative idea of promotion

– low prices

– a broad range of goods, wide selections

– relatively easy entry and exit for merchants

– overseas dealing system

Weaknesses:

– customers cannot see the goods with their own eyes or try the goods

– customers have to pay for shipping fees

– no examinations for sellers, hard to manage the reputation of the large amount of merchants

– sellers need ads to stand out in the crowd, which raises costs and thus prices

Opportunities:

– large marketplace in China

– increase demand for e-commerce

– overseas market needs exploiting

Threats:

– strong competitors such as Beijing Jingdong with it’s own delivery service

– might be hit by economic crisis