Alibaba IPO and The Marketplace Era

September 23, 2014 | Admin

Last updated on June 14th, 2016

Alibaba-IPOAlibaba [BABA] just made history, claiming the title for the largest Global IPO – ever. Hitting $25 billion, Alibaba is now possibly the leading public marketplace in the world.

In spite of their booming open, the leaders of Alibaba have their sights set on something even larger. They want to become the world’s largest retailer. Alibaba founder, Jack Ma, recently stated “We want to be bigger than Walmart [by 2016]”. They expect to have $490 billion in transactions by that year which would more than qualify Alibaba as the worlds largest retailer. In fact, this marketplace giant has already grossed more merchandise value than Amazon and eBay combined.

Yet Alibaba’s growth is not alone. Amazon, eBay, Tencent, Etsy, Google Shopping and hundreds more have transformed the retail space and ushered in a new powerful shopping era – the Marketplace Era.

The power of the online marketplace lies in it’s ability to capture attention of all demographics in one, single channel. Single-seller online webstores do well, but are limited in reach to only those interested in their unique products or services.  In stark contrast, marketplaces thrive because they offer increased value, better selections, greater convenience and undeniable confidence – all in one, single place.

The Marketplace Era is one of powerful consequence to the world’s economy. It is estimated that B2C ecommerce sales will reach a global $1.471 trillion in 2014 alone, nearly 20% more than 2013.

marketplace growth

Online Marketplaces erase international borders and bring commerce directly into the living rooms of millions of homes across the globe. Suddenly a mom-and-pop shop in central Kentucky can reach markets in China, Brazil or France. A small business in Europe can expand faster through selling it’s products to markets outside of their brick-and-mortar reach.

Benefits of Marketplaces:

  • Competition
  • Value
  • Convenience
  • Trust
  • Variety
  • Security

Prices become more competitive, value must be proven and variety seems endless. And all of this with the added bonus of convenience for the millions of shoppers too busy to stop by 13 different stores to get their favorite products. Through one outlet, one shopping cart – buyers can purchase nearly everything on their list and input their credit card information just once.

Marketplaces also provide buyers with the added benefits of security. Buyers feel confident in the quality of their purchases because they are hosted on a larger marketplace they already trust. Reviews and ratings give buyers transparency that few single-seller webstores can offer.

Whether or not Alibaba will become the worlds largest retailer is still to be determined but it is clear that the Marketplace era has, and will continue to transform online retail.

What role do you think marketplaces will have on long-term commerce?

Photo credit: Rueters