The Evolutionary Process of Alibaba International and its Presented Problems

The following source table shows the evolutionary process of Alibaba International in building its global electronic marketplace platform, and shows how it tried its efforts to meet customer requirements within the particular China’s foreign trade environment.

The outcome of these efforts is that Alibaba has secured a large customer base such that to February 2006, it has daily trade lead more than 82,000 and with customers more than 2 millions in more than 240 countries.

However, technically speaking, in spite of the great success in terms of its customer-oriented strategy that met the business requirements of China’s small and medium sized enterprises, Alibaba international is encountering the following challenging problems:

• Non-interoperability of product representation between different Alibaba sites. For example (note: the following searches are performed on March 23, 2006), if we search in www.alibaba.com with term “refrigerator”, we will get a long list of products containing keyword “refrigerator” but some of them actually are not refrigerators. If we search “refrigerator” in www. china.alibaba.com, we can only get 1 result of “供应高级合成冷冻机油REFRIGERATOR(图)”. Obviously, it is not refrigerator. If we again search with “电冰箱”, we then obtained a long list but totally different from the search results (by referring to the actual products and manufacturers) from www.alibaba.com using the keyword “refrigerator”. The problem here is that Alibaba even cannot provide integrated services to its own customers for cross-border product and customer search, let alone to interoperating with other electronic catalog systems if its customers also use other internationally popular systems. The key to the problem is Alibaba’s ad hoc proprietary design of electronic catalogs.

• Lack of standardized document processing mechanism. Like the adhocracy of product search, Alibaba’s business document processing is also ad hoc. For example, the output of Inquiry Basket cannot be effectively connected to any product offering systems and have to be processed manually. The problem here is that the documents generated by Alibaba (e.g. Inquiry Basket or Trade Manager) can only be processed manually by the recipients. They are not appropriate for further machine-processing. By comparison, TradeCard can automatically process not only the inquiry but also other advanced business processes such as order and payment information.

• Credibility check cannot be validated through TrustPass. The problem is on what TrustPass is based. Through the analysis, TrustPass is based on the customer’s self-presentment of identity certificate for www.china.alibaba.com. Such certificate can be deemed non-authentic and thus void. Related to this issue is the inability of Alibaba to provide an anti-fraudulence mechanism and a trade dispute arbitration mechanism.

• Lack of international trade payment mechanism. Currently, Alibaba can only recommend its users to select an appropriate payment method based on the trust relationship between buyers and sellers, e.g. letter of credit through traditional banks or escrow services from a third-party e-payment service provider.

It is conceivable that if Alibaba wants to continue its success, the above technical problems have to be resolved.