Have you ever heard of Singles’ Day? I found the concept extremely interesting, especially because it doesn’t truly celebrate singles. Instead, millions of Chinese shoppers dive deep into online shopping, which I suppose is one way to celebrate. Alibaba is a company that is directly associated with this festive day. The company reached record-breaking sales of $9.3 billion on November 11th and I’ve derived a few reasons:
Firstly, Alibaba saw opportunity in Singles’ Day and adopted a direct business model, obtaining customers without needing to leave the comfort of home. The company is able to reach its customers through a computer and cater to their needs. They cut out the middle man of retail stores and reduce costs of rent, labour, and inventory. Without needing to worry about running stores across the country, Alibaba can focus on improving product and efficiency. Also, having an online store allows accessibility to consumers international, broadening their market base.
Secondly, the company is successfully keeping up with the competitive market. While they are a retail brand, their strategy is catered towards technology innovation in China. Since the middle class is expanding, more homes can afford computers, creating direct links to online shopping. Furthermore, increasing real income provokes shopping all together, and adding those two factors together you get Alibaba’s success.
![Alibaba - www.creditwritedowns.com](https://blogs.ubc.ca/wongsam/files/2014/11/index.jpg)
Alibaba – www.creditwritedowns.com
While the company is currently reaping large profits, I fear eventually the firm will no long prosper. Alibaba will most likely begin producing new ways to create innovative product, perhaps increasing their costs to better technology. While they may be able to afford it now, what will happen if China’s economy falls? What will happen when consumers’ purchasing power begins to diminish and no one can shop online? I hope the company is strategic with its amount of risks and doesn’t solely rely on China’s expanding middle class.
References: