Alibaba: Launching a Direct Online Retail Model

In May 2021, Alibaba Group Holding Limited (Alibaba), China’s biggest e-commerce company, faced a number of challenges. Alibaba, which operated under a platform business model, was confronted with weakened consumer spending due to the coronavirus pandemic as well as increased competition from JD.com Inc. (JD.com) and other e-commerce entrants. To boost business growth and strengthen Alibaba’s leading position in China’s e-commerce market, Daniel Zhang, the company’s chief executive officer, would need to evaluate the possibility of adding a direct online retail model to complement the operations of its flagship platforms Taobao and Tmall. What challenges could Alibaba potentially face in its e-commerce business expansion?

This case is suitable for undergraduate- and graduate-level courses in operations management, marketing, e-commerce, supply chain management, and strategy management, particularly in a section that discusses operational and marketing strategies for e-commerce. This case will also be helpful for classes that discuss brand management and channel strategies. This case asks whether a leading e-commerce company should add a direct online retail business to manage challenges and boost business growth. By working through the case and assignment questions, students will have the opportunity to do the following:<ul><li>Understand the development status and characteristics of the Chinese e-commerce industry.</li><li>Understand the pros and cons of the platform business model and the direct online retail business model.</li><li>Explain the factors driving a leading e-commerce company to add a direct online retail business.</li><li>Identify the opportunities and challenges faced by an e-commerce company in retaining user traffic and expanding its business.</li><li>Consider and discuss how an e-commerce company should implement a direct online retail strategy.</li></ul>

• operations
• marketing strategies