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Understanding Alibaba’s Business Model (BABA)



Chinese e-commerce giant Alibaba (BABA) boasts a wide variety of eye-popping statistics. The company accounts for a reported 58% of all online retail sales in China. As of 2018, the company has 576 million active users, larger than the entire population of the United States. Alibaba recorded $25.4 billion worth of orders on November 11, 2017, the Chinese equivalent of Black Friday called “Singles Day” or “11.11.” This year’s Singles Day falls on Sunday, November 11, 2018, and Alibaba is expected to sell $35 billion or more in goods, despite a slowing Chinese economy and the country’s ongoing trade war with the United States.


While many people understand that Alibaba is an online retailer similar to Amazon (AMZN) or eBay (EBAY), the company’s business model is surprisingly different from the leading e-commerce businesses in the United States. Whereas Amazon is housed under one roof, Alibaba is divided into three core businesses: Alibaba, Taobao, and Tmall. All three of these e-commerce websites serve to connect various types of buyers and sellers, allowing Alibaba to act as a middleman in China’s emerging e-commerce industry.



Alibaba




Taobao






Tmall




11 Main



Software vs. Warehouses



Alibaba’s Relationship With Baidu




Alibaba Group’s Ecosystem


Alipay



Alimama



China Smart Logistics 



Aliyun



Investments in Other Businesses




The Bottom Line




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