Alibaba: The House That Jack Ma Built pdfdrive com

Competitors in the Wings
Nevertheless Alibaba is facing rising competition in a number of categories like
clothing,
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cosmetics,
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books,
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and food.
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To buttress its position in
electronics and electrical appliances, Alibaba has even started to make
investments in traditional retailers as part of the new trend, mentioned earlier,
called “omni-channel” or “online to offline,” abbreviated as “O2O.” In August
2015, Alibaba shelled out more than $4.5 billion to buy a stake
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in Suning, an
electronics and white goods retailer. But some analysts questioned the logic of
buying into a company with more than 1,600 stores across the country that, like
Best Buy in the United States, were at risk of becoming merely expensive
showrooms used by customers to try out products that they would later buy
online. Alibaba made the investment in Suning in part to counter its biggest
competitor in e-commerce, a well-funded company called JD.com,
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 which went
public in the United States four months before Alibaba. JD is a threat to Alibaba
in part because it represents a competition of ideas. Unlike Alibaba, JD is more
closely modeled on Amazon, purchasing and selling its own inventory. In
addition, while Alibaba has kept one step removed, JD owns and operates its
own logistics network. While Alibaba argues that JD will never rival it in scale
due to the costs of owning inventory and shifting physical goods, JD counters
that its model ensures a higher quality of product and speed of delivery to its
customers.
JD clearly riles Jack. In early 2015 he turned his guns on the founder of JD,
Richard Liu. Although he spoke the words to a friend in what he thought was
confidence, Jack’s criticism of the company was posted on social media:
“JD.com will eventually be a tragedy and this is a tragedy I have warned
everyone about from day one. . . . So I’ve told everyone in the company, don’t
go near JD.com.” Soon after the incident, Jack apologized, joking, “The next
time I have a conversation, it’ll be in a public bath.”

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