While all eyes were on the company in the months leading up to its initial public offerings in New York, China saw a wave of e-commerce startups that benefited from easy access to capital and the recognized growth market in its booming home country. The potential is so strong that Alibaba and its competitors could grow for years. However, the ever-fast growing e-commerce market is attracting more competition.
Alibaba’s growth is one reason for new competition. For small-business owners that sell on Taobao and Tmall, Alibaba’s main e-commerce sites, it is getting harder to compete for attention among a rapidly increasing number of active sellers. Sellers have to bid up the price of some of the marketing services to allow them stand out on the site. For buyers, the sites can appear overwhelming. Therefore, this would be a potential problem for Alibaba to optimize its content presentation for the site.
As Alibaba kept pushing sellers to offer discounts, life became harder for the sellers. As such big promotional events like Nov. 11 “Singles Day” that breaks sales records every year, sellers are getting pressured on prices. This may push some sellers to go off on their own or switch to a competitor that is trying to carve out a niche by specializing in one particular category. The reason behind is that while Alibaba provides a large range of variety that customers don’t need to go anywhere else for their needs to be fulfilled, affluent Chinese consumers don’t just want hypermarkets or a generalist. They now want boutiques that are authentic to give trustworthy recommendations. It is also a well-known fact that China has now been leading in terms of exporting low-cost manufactured goods and services which pushing down e-commerce sites’ listing prices, Alibaba should recognize that the west market and the business environment are very different from that of China. It is important to be aware of eBay’s failure in eastern market. Westerns are product-centric while Chinese markets are more customer-centric.
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