Alibaba enducted IPO in 19th December in America, and its stock value is about 34 billion dollar.This demonstrates the huge success for Alibaba and for the E-commerce industry as well. The invent of E-commerce is the excellent use of disruptive innovation. It applies the high technology of internet and allows people to shop online which can be regarded as customers’ pain reliever, as it brings numerous convenience to customers.
The emerge of E-commerce is main drive force for Alibaba to stand out in market by the cost leadership strategy. The retailers on Alibaba can sell at low price due to the availability of its low cost and following three mesures.The first is It directly sells products online and reduce retailers’ fixed cost about using a non-virtual stores. The second is Alibaba doesn’t have any inventory.Based on the inventory turnover ratio(=costs of goods sold/inventory),the higher the results,the faster cash flow can be turned over .Without inventory, producers can be more flexible to give expense in the purchasing and selling(operating) activity,which decrease the risk of shutting down.Since inventory is current asset ,Alibaba also allows retailers to reduce liquidity ratio(CA/CL) to ensure high ability of paying off debt.Lastly , alibaba ’s delivery channel is through mailing which is cheaper than traditional company’s delivery department. By using E-commerce, alibaba can also have opportunity about cooperating with online banking like Paypal and other companies through the wide-spread internet.E-commerce have high potential to achieve largest profitability in nowadays business.
reference :http://www.chinadaily.com.cn/china/2014-03/16/content_17350114.htm
http://www.chinadaily.com.cn/bizchina/tech/2014-02/12/content_17278121.htm