What makes Internet giant Alibaba so successful?

As Chinese e-commerce giant Alibaba prepares for what is likely to be the biggest IPO of a technology firm in the US on record, analyst Yan Anthea Zhang speaks to DW about the secrets behind the company's success.

Deutsche Welle, 9 Sep 2014

Chinese e-commerce giant Alibaba is planning a record initial public offering (IPO) on the New York Stock Exchange. The company, a rival of Amazon.com and eBay, plans to offer more than 320 million shares sometime this month at a price between 60 and 66 USD. This would give the company - which could raise as much as 21 billion USD in its IPO - a total market value of 163 billion USD. In comparison, Facebook raised 16 billion USD in 2012, the most for a technology IPO so far.

Founded by former English schoolteacher Jack Ma, Alibaba accounts for about 80 percent of all online retail sales in China, where Internet usage is expanding. Yan Anthea Zhang, professor of strategic management at Rice University in the United States, says in a DW interview the secret to the company's success lies in a mixture of factors she sums up as AHIS - availability, habit, infrastructure and scale.

Zhang adds that once Alibaba is listed in New York Stock Exchange, transparency will be improved as the firm will need to disclose more information to the regulators and investors.

DW: What makes Alibaba so successful?

Yan Anthea Zhang: The company's successes can be summarized with the letters AHIS. "A" stands for "availability." With two flagship websites - Taobao for consumer-to-consumer and later Tmall (or "Tianmao" in Chinese) for business-to-consumer, Alibaba makes e-commerce very accessible to consumers in China.

Zhang: 'As Alibaba gets bigger, it becomes
 harder for other firms - online or offline - to
compete with it'

For instance, many private store owners at Taobao offer their merchandise part-time - or at least they started as part-time before their businesses took off. The reason for this is that sellers don't need to pay Taobao to set up an Internet store there. However, if store owners want to stand out among the millions of Taobao sellers, they have to pay the website for advertisements.

So given the low set-up cost, Taobao attracts many people willing to give it a try and sell a vast array of products there. The fact that there are millions of people selling a variety of products at Taobao increases the "availability" of merchandise and generates traffic to the website. This large traffic then allowed Alibaba to successfully launch Tmall for businesses to set up stores at the Alibaba website.

What do the other letters stand for?

"H" stands for "habit." The wide "availability" of products at Taobao and Tmall attracts buyers to these websites. To many consumers, when they want to buy something, they - especially the young generations - search on Taobao and Tmall, instead of going to bricks and mortar stores.

In this sense, Alibaba has not only the functions of Ebay or Amazon, but also takes the (product) search function of Google in China. This variety of functions builds consumers' "habits" of searching and shopping at Alibaba websites.

"I" stands for infrastructure. The huge amount of product transactions at Taobao and Tmall calls for the support of infrastructure. Two types of infrastructure are particularly important: online payment system and fast delivery system.

Alibaba Group owns China's largest online payment system - Alipay (or "Zhifubao" in Chinese). Indeed, Alipay has become one of the most important assets in the Alibaba Group, which is hard for other competitors to match or imitate. Alibaba also works closely with the major fast delivery companies throughout China to make sure that logistics will be carried out smoothly, particularly during holidays.

"A", "H" and "I" together contribute to "S", which stands for "scale". A large scale in transactions at Taobao and Tmall further attracts more sellers and buyers to these websites, leading to a positive reinforcing effect on "A," "H" and "I." As a result, the industry becomes a situation where the "winner" takes all. As Alibaba gets bigger, it becomes harder for other firms - online or offline - to compete with it.

Once Alibaba is publically listed, transparency will improve as the firm will
need to disclose more information, says Zhang

How transparent is Alibaba in the way it conducts business as compared to, say, Amazon, eBay or PayPal?

Once Alibaba is listed in New York Stock Exchange, transparency will be improved as the firm will need to disclose more information to the regulators and investors. Nevertheless, Alibaba's business is more complex than Amazon or Ebay, partially due to its recent acquisitions. It would be hard for analysts and investors to understand its businesses and find an appropriate comparison group.

What is your long-term outlook for the company?

Jack Ma is the visionary leader, the image,
and the ambassador for Alibaba, says Zhang

With such a high valuation, investors would expect Alibaba to continue to grow. However, e-commerce in China and the US is hyper competitive. The company would need to find new paths for growth. Some of the recent acquisitions can allow Alibaba to experiment in new businesses and new geographic markets.

As for company founder Jack Ma, I believe he will continue to play an important role. Although Alibaba has successfully groomed a team of leaders, nobody at this stage seems to be able to replace him. Jack Ma is the visionary leader, the image, and the ambassador for Alibaba.

Yan Anthea Zhang is a professor of strategic management at the US-based Jesse H. Jones Graduate School of Business, Rice University. Dr. Zhang's areas of specialization include CEO succession and dismissal, and foreign direct investment and technology entrepreneurship in emerging

Pierre Omidyar commits $250m to new media venture with Glenn Greenwald

Omidyar says decision to set up news organisation fuelled by 'concern about press freedoms in the US and around the world'

theguardian.com, Dominic Rushe, Wednesday 16 October 2013

Pierre Omidyar said he hoped the project would promote 'independent journalists
 with expertise, and a voice and a following'. Photograph: Bloomberg/Getty Images

Pierre Omidyar, the founder of eBay, has revealed more details of the media organization he is creating with journalist Glenn Greenwald.

Greenwald announced on Tuesday that he was leaving the Guardian, where he has broken a series of stories on the National Security Agency, based on documents from whistleblower Edward Snowden.

In an interview with Jay Rosen, media critic and NYU professor of journalism, Omidyar said he was committing an initial $250m to the as-yet-unnamed venture. Omidyar told Rosen the decision was fuelled by his “rising concern about press freedoms in the United States and around the world”.

Omidyar said he hopes the project will promote “independent journalists with expertise, and a voice and a following” while using Silicon Valley knowhow to build an audience. “Companies in Silicon Valley invest a lot in understanding their users and what drives user engagement,” Omidyar said. The company will be online only and all proceeds will be reinvested in journalism.

In a blogpost, the eBay billionaire revealed that he had been exploring a purchase of the Washington Post, which was ultimately bought by Amazon founder Jeff Bezos.

“That process got me thinking about what kind of social impact could be created if a similar investment was made in something entirely new, built from the ground up. Something that I would be personally and directly involved in outside of my other efforts as a philanthropist,” wrote Omidyar.

“I developed an interest in supporting independent journalists in a way that leverages their work to the greatest extent possible, all in support of the public interest. And, I want to find ways to convert mainstream readers into engaged citizens. I think there’s more that can be done in this space, and I’m eager to explore the possibilities,” he wrote.

Omidyar said he was in the “very early stages of creating a new mass media organization. I don’t yet know how or when it will be rolled out, or what it will look like.” He said the organization would cover general news as well as investigative journalism.

“As part of my learning process, I recently reached out to Glenn Greenwald to find out what journalists like him need to do their jobs well. As it turns out, he and his colleagues Laura Poitras [video documentarian] and Jeremy Scahill [author and national security expert], were already on a path to create an online space to support independent journalists. We had a lot of overlap in terms of our ideas, and decided to join forces,” wrote Omidyar.

“I have always been of the opinion that the right kind of journalism is a critical part of our democracy,” he told Rosen.

Related Articles:

Greenwald quits Guardian for 'dream' project

WeFightCensorship publishes banned articles

Washington Post sold to Amazon founder Jeff Bezos for $250m

"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

“…6 - The News

Number six. I'll be brief. Watch for your news to change. It has to. When the media realizes that Human Beings are changing their watching habits, they're going to start changing what they produce for you to watch. Eventually, there's going to be something called "The Good News Channel," and it will be very attractive indeed. For it will be real and offset the drama of what is today's attraction. This is what families at night, sitting around the table, will wish to watch. They'll have something where the whole picture of a situation is shown and not just the dramatic parts. You will hear about what's happening on the planet that no one is telling you now, and when that occurs [we have no clock, dear one], it's going to compete strongly with the drama. I keep telling you this. Human nature itself is starting to be in color instead of black and white. Watch for it. And that was number six ….”

"The Recalibration of Awareness – Apr 20/21, 2012 (Kryon channeled by Lee Carroll) (Subjects: Old Energy, Recalibration Lectures, God / Creator, Religions/Spiritual systems  (Catholic Church, Priests/Nun’s, Worship, John Paul Pope, Women in the Church otherwise church will go, Current Pope won’t do it),  Middle East, Jews, Governments will change (Internet, Media, Democracies, Dictators, North Korea, Nations voted at once), Integrity (Businesses, Tobacco Companies, Bankers/ Financial Institutes, Pharmaceutical company to collapse),  Illuminati (Started in Greece, with Shipping, Financial markets, Stock markets, Pharmaceutical money (fund to build Africa, to develop)), Shift of Human Consciousness, (Old) Souls, Women, Masters to/already come back, Global Unity.... etc.) - (Text version)

“…  Government

Let us speak of government. We're not speaking of your government, but of any government - the way it works, how it survives, how it has survived, the way it campaigns, and how it elects leaders. It's going to change.

Years ago, I told you, "When everybody can talk to everybody, there can be no secrets." Up to this point on this planet, government has counted on one thing - that the people can't easily talk to each other on a global scale. They have to get their information through government or official channels. Even mass media isn't always free enough, for it reports that which the government reports. Even a free society tends to bias itself according to the bias of the times. However, when you can have Human Beings talking to each other all at once, all over the planet without government control, it all changes, for there is open revelation of truth.. …”