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Home » SWOT articles » SWOT analysis of Alibaba

SWOT analysis of Alibaba

November 30, 2018 By Hitesh Bhasin Tagged With: SWOT articles

Alibaba.com is a very well known brand and is involved in acting as an intermediary for consumer to consumer, business to consumer and business to business e-commerce.

This name has a very stronghold in China and is now looking to expand to other countries by acquisitions and also setting up its own name in foreign land.

SWOT analysis of Alibaba

This article does a SWOT analysis of Alibaba, which is a major brand in the e-commerce industry.

Strengths in SWOT analysis of Alibaba

Scale of operations – One of the first strengths of Alibaba that come to my mind is the sheer scale of operations and the market which it majorly operates. China is the most populated country in the world and is one of the leading economics and to have a strong hold in such a market and be a market leader is no mean feat. This kind of a success story is sure to go a long way in scripting Alibaba’s growth trajectory.

Market Share – As of 2015, Alibaba had a market share of 58% in China and its closest rival was far away at 22%. One of the major strengths of China is that this market share dominance comes because of the backing of solid manufacturers who are capable of manufacturing at mass levels and supplying across the world.

Marketing mix of Alibaba

Visionary Leader – Another strength, though qualitative in nature, is the presence of a visionary like Jack Ma at the helm of the company. We all have heard the visionary ideas of Steve Jobs and many often attribute Apple’s success to him. It’s important to have an iconic founder/leader who can lead from the front and Jack Ma’s popularity and visions for the company are not letting them down on this count.

Good relationship with partners – Alibaba also provides a very conducive environment to all those who participate in scripting its success. Merchants, Consumers, third party dealers etc. all get access to financial schemes, scalable platforms, cloud storage and real time access to all information. This makes it very attractive for more and more partners to join hands with Alibaba.

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Weaknesses in SWOT analysis of Alibaba

Way too many sellers – Alibaba is not putting a cap on the number of sellers who register to partner up with the company. This has resulted in a huge number of sellers competing in the online market place. While this is good for the buyers, it might not be so good to the buyers. Not being able to taste success because of the huge competition will make the sellers withdraw from the contract. When Alibaba went public a couple of years ago, there were more than 8.5 million active sellers and the number has only been going up ever since. Because of this, a few reputed brands have pulled out from selling their products on Taobao and Tmall, the two websites by Alibaba.

Very high discounts – Not being able to allow sellers to sell at fair and profitable prices is another weakness that the company has. It makes most of its revenues by selling advertising spaces for the sellers. The sellers are being suppressed now and do not have the freedom or opportunity to sell at profitable rates.

Opportunities in SWOT analysis of Alibaba

SWOT analysis of Alibaba

Experience in China – The opportunities that Alibaba has in store are immense. Most of these result from the strengths. Since it has a sound base in the Chinese market and an in-depth understanding of the e-commerce business, it has immense opportunities in term of tapping other markets. Thought the Indian market has two dominant players, a big blown entry by Alibaba sure has the ability to create ripples.

Rising Investments and demand of E-commerce portals – Very few E-commerce portals garner the amount of trust which Alibaba has. Naturally, when Alibaba expands to a new country, it comes with the years of trust on the brand. And hence, it gives tough competition to the local e-commerce players. Plus, it has the backing of the manufacturers.

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Aggregator based model – Its aggregator based model helps it reduce costs and keep its operations lean. This also presents an opportunity to replicate the model in other markets.

Threats in SWOT analysis of Alibaba

Flipkart & Amazon in India – If Alibaba is looking to expand its operations to other countries, particularly to India, then the biggest threat will be the presence and solidified establishments of Flipkart & Amazon. The time that Alibaba will take to set up its full functionality will be long and the two major players of the Indian E-Commerce industry will start adopting new strategies to ward off competition.

Overall rising competition – Other entities like Tencent and JD.com are local competitors to Alibaba in China while Amazon and eBay are the global threats.

Stability of the economy – The stability of the Chinese economy will also play a role in deciding the success of the business. But since almost all of Alibaba’s business comes from within China, the global markets will have an impact only in dire situations.

Dropping profitability – With rising demand in service levels from E-commerce portals, the profitability of most E-commerce firms is dropping which is a point of worry for Alibaba as well.

Other reads – SWOT analysis of Amazon | SWOT analysis of Flipkart

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OLX is a leading online platform to buy, sell, and exchange various products like electronics, apparel, household goods, cars, bikes, etc. During the year 2014, the OLX platform has about 11 billion-page views; it sees about 200 million active users per month, 8.5 million transactions per month, and 25 million listings. OLX is a platform where the buyer and seller of an exchange item come on a common platform to buy and sell. For this, each of them should be a registered user of this platform. Once they are registered on this platform, the seller can place their products with its features. Once the seller posts their products, people who are registered on this platform can view the details shared by the buyer. This platform has a unique feature wherein the search is tuned as per the location. Buyers and sellers in the nearby area can see each other on the platform and communicate using messaging services. The SWOT analysis of OLX differentiates all the main strengths, weaknesses, opportunities, and threats that give guidance to the company to scale up more. Readout this article, to get an understanding of where OLX stands. The SWOT analysis of OLX indicates the strengths of the brand in which the brand is good and what differentiates it from its competitors, its weakness that stops the brand from performing well and should focus on to improve. It lists its opportunities that the brand can use to increase its market share and brand value. It also throws light on the threat that has the potential to harm the brand. To make sure that OLX meets the long-term competitive advantage, it must address the various concerns highlighted in the SWOT analysis of OLX. Let us discuss on the SWOT analysis of OLX. Strengths in the SWOT Analysis of OLX 1) Large Presence – OLX has its presence in more than 100 countries. This is an excellent strength for the brand. Having a significant presence in many countries would see many users created on the platform. When there are more users on the platform, it means that people make use of this platform to buy and sell. 2) Brand Image – OLX has a strong brand image and has about 11 billion page views. Also, it sees about 200 million active users per month, 8.5 million transactions per month, and 25 million listings. This shows that the brand is visible across the country, and it is known to many people. Having a strong brand image is the main strength of the brand. 3) Strong Backup – OLX sees a strong back up by Naspers. It has a lot of experience in working with various eCommerce giants. Because of this, there can be a lot of input from the backup. This is the main strength of the brand. 4) Strong Advertising Campaign – Yet another strength of the brand is its strong marketing efforts. It has an excellent marketing strategy, and its advertisements are popular on television, radios, many online channels, etc. Due to its marketing efforts, its brand value has increased. Many people are aware of this online platform and use it. Its advertisement is quite popular in online media. 5) Strong Vehicle Category – OLX has a strong place in the vehicle category. It sees many sellers placing ads to sell their vehicle, and there are many buyers to purchase as well. The vehicle category alone sees around 850 million page views per month. This is indeed a vast data and the main strength to highlight the brand. 6) C2C Market Leader – OLX seems to be India’s market leader in the C2C business. This is also the main strength of the brand. It has fewer competitors and one reason to have many users on its platform. 7) No Specific Product – OLX has no limitations with regards to products. It has a massive portfolio of products where users can place their advertisements. 8) Business Model – OLX is one of the biggest free online classified platforms. Its business model is unique and presents it finely. It has an online platform where people buy or sell products. It is spread across many cities in India. 9) Many Functions – On the OLX platform, a user can easily design many rich advertisements with beautiful images. A user can also control the buying and selling activities in the OLX platform. It also has a feature where a user can display their ads on any social networking platforms. Users can access the OLX website from anywhere, and it also has an app to support. 10) Easy Availability of Products – This platform gives easy access to customers to get any products at less cost. Customers can access their beautiful websites with rich and featured listing. 11) Huge Market Share – OLX has managed to get about 60% of the online classified market share. This is a significant strength to the brand, and its traffic has also grown to 55 times over the past few months. Even, the OLX app has exceeded 3.2 million downloads in India. Weaknesses in the SWOT Analysis of OLX 1) Technology-oriented – OLX is heavily dependent on technology, and it lacks features to convert non-internet users as potential customers. This is a great weakness for the brand because the number of users would reduce. 2) Competition – There are many competitors from the offline mode as well. Many people try to sell their products using many other ways like WhatsApp, word of mouth, etc. This is also a weakness for the brand because the users would reduce. 3) No Quality Assurance – As many buyers and sellers meet online, and various discussions take place online, there are chances that the quality would go off. Till the buyer sees the product and understands its features and use it, there is no guarantee on the product. This is also a weakness for the brand. 4) Online Fraud – As OLX is entirely an online platform where many people meet online and discuss their sale and purchase, there is a chance that it can enter fraudulent activity as well. 5) Fake Ads - As OLX is entirely an online platform where many sellers post many ads, there are chances that people post fake ads as well. 6) Delay in Response – As OLX is entirely an online platform, it is dependent on people to log in to check for an update on their products. There would be a delay in response and for the product to be sold. Opportunities in the SWOT Analysis of OLX 1) Increasing Products – OLX sees more opportunity if they diversify on its products listing. It could have many subcategories of products, and this would bring more opportunity for sellers and buyers to glance through their requirements. 2) Increase in Offline Channel to Advertise – OLX can increase on its advertising channel by setting up an offline channel so that it could bring more brand awareness about its platform. This would also get more customers to get into their platform. The brand can brief the audience about its features and ways to use it. 3) People Choice – This platform is ideal for users who can wish to purchase their products as per their wish at less cost. So, there is a lot of opportunity for this platform. 4) Many Sellers – This platform brings a lot of opportunity for the sellers as they can sell their products and benefit out of it. With this, the online platform also sees more users using it, ultimately leading to huge traffic. 5) OLX Jobs – This online platform can increase its offering by listing job opportunities as well. This would see more chances of its business and improve the user count as well. 6) Real Estate Property – OLX has also entered listing of real estate and sees many opportunities to expand. Threats in the SWOT Analysis of OLX 1) Competitors – OLX sees many competitors at a similar domain, and this is a big threat for the brand. Investors have funded its competitor Quickr. So, OLX is at threat. 2) Offline Stores – Many offline stores sell second-hand products at a discounted price. This is also a threat to the brand. People would prefer to visit the offline store so that they could see and feel the product before purchase. Conclusion The SWOT analysis of OLX mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, having a significant presence in the country, having a strong backup, excellent marketing efforts, a strong presence in the vehicle category, being a market leader in C2C, availability of many products, having a unique business model, easy accessibility, and a considerable market share. The weakness of the brand is its technology-oriented platform where it is tough to get many non-internet users to the platform, having many competitions from the online and offline mode, no quality assurance, online fraudulent, fake ads, and delay in response. Its opportunities are seen on increasing its product listing, entering the offline mode to raise its brand awareness, having many sellers, allowing people to select their products, OLX jobs, and entering real estate business. It sees a threat from its many competitors like quickr, eBay, and many more, and many of the offline stores that sell second-hand products.SWOT Analysis of OLX
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About Hitesh Bhasin

I love writing about the latest in marketing & advertising. I am a serial entrepreneur & I created Marketing91 because i wanted my readers to stay ahead in this hectic business world. You can follow me on Facebook. Let's stay in touch :)

Comments

  1. Leandro says

    I like your analysis on Alibaba. It is possible that in a few years, Alibaba would be another Amazon. Do you believe that by December of this year the stock can be at $200.?

    Reply

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