Alibaba Business History - Business Chronicler

In June 2022, Forbes reported that eCommerce giant Alibaba had reached $1.3 billion yearly active consumers. Yes, this figure fell short of what business analysts expected. But I don’t think everyone should ignore this company’s significant achievements.

For instance, Alibaba had the sixth-highest brand valuation worldwide in 2020 and is still among today’s eCommerce companies generating billions in profits annually. Besides, Datamation, a leading resource for B2B data consumers, put it on its list of the best artificial intelligence brands in 2022.

Additionally, Alibaba has been around for over two decades. While numerous retail companies have filed for bankruptcy and eventually collapsed, it has survived a global recession, the heartbreaking economic effects of the Covid-19 pandemic, and several controversies.

As a passionate entrepreneur, these are some of the accomplishments that pushed me to research everything about Alibaba’s business history.

Alibaba’s Background

When I think of online shopping, Alibaba is among the first names that come to mind. If you ask me, this company’s story began in 1995 in Seattle when Chinese business tycoon Jack Ma, its founder, discovered the internet after a friend told him about it.

Out of curiosity, they visited Yahoo and searched “beer,” He was perplexed that there was no information about China. Driven to change that, he created a company and registered it as China Pages.

Shortly after, he borrowed $2,000 from his family and close friends to run his first business, a part of China Telecom.

Regrettably, Jack Ma knew little about emails and computers at the time. China and other parts of the world were recovering from the devastating ramifications of the early 1990s recession. And even worse, all the potential investors he approached didn’t want to sink their money into his enterprise.

When Jack Ma realized his business was doomed to fail, he shut it down in 1998. But like JP Morgan, he didn’t give up, and this failure paved the way for the birth of another organization; Alibaba.

In June 1999, this multi-billionaire invited 18 friends to his apartment in Hangzhou. He spent two hours enlightening them about his vision of building a successful online eCommerce ecosystem. Drawn in and convinced that his goal was attainable, they raised $60,000, which Jack Ma used to establish Alibaba.

Alibaba Growth Story

Alibaba Group started attracting investors only a few months after its launch. In October 1999, SoftBank, Fidelity Investments, and Goldman Sachs put $25 million into it. These companies’ primary objective was to help grow the brand and allow it to transform the eCommerce market for Chinese businesses.

Alibaba’s investors also hoped it would be handy in exporting Chinese products to various parts of the world. At the same time, the company could help solve some of the country’s issues in its attempt to make the most out of the World Trade Organization (WTO).

This time, Jack Ma was dead set on winning and making all the right moves so that his second company wouldn’t go down the drain like the first one. Fortunately, his hard work and ambition paid off, and in 2002, Alibaba made a profit for the first time.

Here’s a more detailed timeline of the company’s development from there, including how it acquired and launched its subsidiaries.

Taobao

In 2002, the SARS outbreak hit China, wreaking havoc on the country. Impressively, Alibaba still launched the Taobao marketplace in May the following year while many of its employees were in quarantine.

The goal behind the establishment of Taobao was to aid consumer-to-consumer (C2C) retail, enabling solopreneurs and small businesses to start online stores serving Chinese-speaking areas and abroad.

So, sellers would sell their products through establishing auctions or setting fixed prices. While most chose the latter, a small portion went for the former, and they’d create several ‘acceptable’ transactions, each with a certain amount.

Taobao and eBay: I must say that eBay played a crucial role in Taobao’s successful launch. Then, it was looking to expand into China and was under the leadership of Meg Whitman, one of the most influential women in the tech world today.

At first, eBay offered to buy out Taobao, but Jack Ma couldn’t hear of it. Instead, the visionary became even more motivated to thrive. He set out to push out the foreign competitor by taking advantage of the available technologies to gain and serve Chinese consumers as best as possible.

Luckily, he attained this goal several years later and was even able to expand his brand, thanks to Taobao’s success.

Alipay

Jack Ma and his team launched Alipay in 2004 as the preferred payment system for parties leveraging Taobao. Basically, it’s an escrow-based platform to ensure buyers receive their orders in good condition so that they can release payments to the sellers.

Alipay was based in Hangzhou, China, at the time of its launch. However, as of this writing, its headquarters are in Pudong, Shanghai.

I must mention that even though Alipay was launched to facilitate transactions on the Taobao marketplace, you don’t have to limit yourself to using it alone. Ideally, you’re free to utilize other systems, such as PayPal, which Elon Musk co-launched, Visa, Mastercard, Boost, and Merchantrade Money.

Additionally, Taobao buyers can also make payments via the Lazada wallet, which the Alibaba Group owns following its acquisition in 2016.

Alimama

Here’s another subsidiary of Alibaba Group. Alimama has been around since 2007 and is a well-known online marketing technological website. With it, sellers on Alibaba’s marketplaces, such as Taobao, and Alibaba.com, can market their products to maximize sales.

Alimama has gained a reputation for its efficiency. In my opinion, this is because it depends on Big Data to optimize solutions for users while guaranteeing accurate results.

TMall

TMall, initially known as Taobao Mall, started its operations in 2008, thanks to Jack Ma and his company, Alibaba. Its primary objective was to enable buyers in Greater China to purchase goods from local businesses in China and other parts of the world.

Most people couldn’t tell the difference between Taobao and Tmall, though the former came with a consumer-to-consumer business model, and the latter had a business-to-consumer strategy.

Rebranding: To eliminate consumers’ confusion, Tmall launched its independent site in November 2010, investing a whopping $30 million in its marketing campaign.

Then, in June 2011, Jack Ma announced that Tmall had become an independent brand under the Alibaba Group so people would stop perceiving it as a part of Taobao. The company’s founder added that making that decision was critical as it helped deal with competitive threats, which the latter had experienced.

At the beginning of 2012, TMall changed its name to Tiān Māo (天猫), which translates into “sky cat” Nevertheless, most international consumers from non-Chinese speaking regions still refer to it as “TMall,” which I presume is because they find it easier to pronounce and remember.

Alibaba Cloud

As far as I’m concerned, Alibaba Cloud remains one of the Alibaba Group’s most important launches as it made way for the brand to achieve most of its current feats.

Founded in September 2009 and based in Singapore, this company avails cloud services to Alibaba’s e-commerce system and other online businesses. Its offerings include content delivery networks (CDN), relational databases, data storage, anti-DDoS protection, and big-data processing.

In 2017, Alibaba Cloud revealed that it has partnered with the Singapore University of Social Sciences (SUSS) to offer an accreted entrepreneurial course for students in the tertiary educational facility.

AliExpress

Alibaba launched AliExpress in 2010. It was established to allow small businesses in China and other Asian countries to avail their diverse products to the international market. In 2016, this platform became available in multiple languages, such as Spanish, French, Turkish, Russian, Indonesian, and German, to attain this goal.

Notably, AliExpress has often been compared to eBay, where Marc Andreessen once served as a member of the board of directors. Both allow buyers to buy from independent sellers, own a considerable market share, and have established reliable buyer protection measures.

Cainiao

With multiple marketplaces and millions of customers worldwide, the Alibaba Group needed reliable delivery services. Therefore, in 2013, it collaborated with eight other organizations, including SF Express, to establish Cainiao, a logistics firm that delivers goods to various parts of China within 24 hours.

By 2018, Cainiao had achieved massive success, and its value was estimated to be 100 billion yuan.

Even so, it has encountered various issues while trying to meet its customers’ diverse needs. For instance, a Cainiao-leased Tupolev Tu-204 accidentally caught fire in January 2022 in the middle of pushback from a flight. Eight passengers were on board, but luckily, none were injured.

The airliner involved was written off, which I’m sure gave the company’s officials some peace of mind.

11 Main

In June 2014, Alibaba wanted to explore the US market, so it launched 11 Main, a shopping website to serve consumers in the nation.

It attracted merchants quickly, most selling items such as clothes, accessories, jewelry, and arts and crafts.

However, a year later, the Alibaba Group sold 11 Main to the New York-based eCommerce operator OpenSky.

Additional Ventures

I feel the need to mention that Alibaba Group has launched more subsidiaries and invested in 160+ companies since its inception.

Therefore, the company also offers internet, communication, entertainment, and health services, sometimes in partnership with other organizations.

All these investments enabled it to accrue its net worth of $237.35 billion as of August 2022.

Alibaba Videos

Alibaba History: 20 Years in 3 Minutes

Supposing you want to learn Alibaba’s history but don’t have a lot of free time on your hands, check out this brief 3-minute video. I believe it’ll come in handy because it covers the brand’s history from the beginning (in Jack Ma’s apartment as he shares his vision with his pals) to when it turned 20 in 2019.

Alibaba Group’s Company Story 2021

Here’s a more detailed video explaining how Alibaba became the massive success it is today. It touches on the launch of Alibaba.com and Taobao, which was meant to be the ‘Chinese eBay,’ though it eventually outperformed its competitor.

It also explains some of the factors that accelerated Alibaba’s growth, including the increased demand for consumer goods in China and the country’s internet censorship that made no room for foreign eCommerce marketplaces to thrive. Then, Alibaba’s main competitor was Tencent, also based in the region.

More critical info in this video includes its subsidiaries, acquisitions, and significant achievements until 2021.

Alibaba Name Origin

I have always wondered why Jack Ma’s company is called “Alibaba.” As it turns out, this name was inspired by the character “Ali Baba” from the popular folk tale collection One Thousand andOne Nights.

In the book, the name “Ali Baba” is often linked to the phrase “Open, Sesame,” which the character uses to access hidden treasures.

Besides, it’s easy to spell, and people worldwide deem it alluring.

Jack Ma even tested it before he settled for it. When TalkAsia’s Lorraine Hahn interviewed him a while back, he said that he went to a coffee shop in San Francisco and asked the waitress if she’s heard of “Ali Baba,” and she nodded “yes.”

He also found thirty strangers on the streets to inquire if they were familiar with the name, and they associated it with kindness and brilliance.

Alibaba Controversies

Being such a big name in the tech world, I’m rarely shocked when I hear that Alibaba has aroused public interest. As I see it, the company is bound to bump heads with individuals and other corporations as it tries to meet its financial goals while availing its services to its tremendous customer base.

The following are some of Alibaba’s most popular controversies.

Alibaba Sells Counterfeit Goods

In 2016, American trade officials said they had added Alibaba’s subsidiary, Taobao, to their list of top marketplaces selling fake and pirated products. This was after they received numerous complaints from brand owners about the presence of counterfeit products on the burgeoning shopping bazaar’s site.

In response, Alibaba said it was doing its best to identify and remove the knock-off items on the platform. But of course, those who’d fallen victim to the fraudsters were still angry and turned to social media to air their concerns, which I understand.

Addressing the issue, Jack Ma commented that the company wasn’t the “villain,” and they were aware they lost five customers for every fake item sold via their site.

Unfortunately, in 2018, the U.S. Trade Representative backlisted TaoBao again, alleging that it was still peddling counterfeits. This was a massive blow to Alibaba’s efforts to implement its anti-fraud policies effectively.

#MeToo Scandal

The #MeToo social movement gained a lot of popularity in 2021 as countless individuals came forward with their experiences of sexual harassment.

In August last year, one of Alibaba’s female employees disclosed that her boss had sexually assaulted her the previous month following a “drunken night” while on a work trip. She posted on the company’s internal site that though she had reported the case to her managers, no action had been taken against her alleged abuser.

This caused an uproar as the public and the company’s other employees demanded answers. Later, the male manager was fired as the Chinese police launched a criminal investigation to get to the bottom of the issue.

In December 2021, Alibaba got tongues wagging after terminating the female employee who’d accused her manager of sexual abuse. The company’s action triggered many responses, with most people questioning its decision.

Nevertheless, Alibaba mentioned establishing ‘better’ protection measures to avoid cases of sexual harassment within its workspace in the future.

Russian Invasion of Ukraine

In 2022, many businesses, such as Steve Jobs’ Apple, and Jeff Bezos’ Amazon, cut ties with Russia after it invaded Ukraine. The war triggered adverse repercussions, including a dramatic rise in the cost of fuel, food shortages, refugee crisis, and massive uncertainty.

To everyone’s surprise, Alibaba and many other Chinese companies remained silent. And the eCommerce giant continued to transact with Russia.

Like myself, many weren’t surprised that Alibaba sat on the fence, as taking sides would mean losing business ties the brand had spent years building.

However, I think making a stand regarding the Russia-Ukraine war could have been the best move for Alibaba. As a leader in the global business industry, this tech company should already have mastered the art of dealing with such volatile situations.

Frequently Asked Questions – Alibaba Business History

Question: Is it Safe to Purchase Goods from Alibaba?

Answer: Yes, I can confirm that it’s 100% safe to purchase products from Alibaba as I have done so in the past and received my orders on time. The company has taken various measures to protect you, such as offering a verification program. Also, most of the merchants on this eCommerce platform are legit, and you can trust them.

Question: Does Alibaba Serve the United States?

Answer: Yes. Alibaba ships to the US.

Question: Is AliExpress the Same as Alibaba?

Answer: Though Alibaba Group owns these two platforms, they vary because they are designed for different target audiences. While Alibaba caters to the needs of individual customers, AliExpress is created to serve B2B transactors.

Question: Who’s the CEO of Alibaba?

Answer: As of this writing, Daniel Zhang serves as the CEO and executive chairman of Alibaba Group. He took over as the organization’s chairperson after the company’s founder, Jack Ma, stepped down in September 2019.

Question: Can Anyone Buy One item from Alibaba?

Answer: Yes. Alibaba allows you to order a single product. If you don’t plan to buy wholesale, talk to your supplier so that you can agree on the charges.

Question: How Long will Alibaba Take to Deliver My Products?

Answer: It depends on how you want the company to ship your order. If you prefer air, expect your goods in 3-10 business days. Products shipped via sea could take 1-3 months.

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Jodie Chiffey

As a fellow business owner and business strategist, Jodie shares valuable insight into the strategies and tactics business owners can use to increase their growth.