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Jan 11

Why Alibaba’s A100 Showcases It Is A Platform Company

Hangzhou, China – March 25, 2018: The main building in the headquarter of Alibaba group in Hangzhou.  photo credit: GettyGetty

Since the middle of 2018, the Chinese economy and its slowdown have been documented and unfairly blamed as reasons for the drop in share price by global businesses such as Apple and the public Chinese internet companies such as Tencent and Alibaba. The Chinese economy which has grown at an amazing speed currently has signs that it has contracted as Chinese customers are spending less but this does not change the fact that China remains a large and important market for local and international brands.  I have written previously that international brands can access China through Alibaba but today Alibaba has announced at its inaugural “Alibaba ONE Business Conference” in Hangzhou, a new initiative called A100 which symbolizes Alibaba’s goal of providing digitized solutions to a large number of companies.

A platform that has powered Alibaba that can power brands

With over 600 million monthly active users and nearly 30 business units specializing in enterprise services including tech-driven retail, mobile payment, digital marketing, media entertainment, IT infrastructure and more, Alibaba is the leading partner for businesses within China and around the world to capitalize on the growing consumption by China’s middle class. The A100 initiative, powered by the Alibaba Operating System, will be a one-stop shop for businesses to access a comprehensive range of enterprise services in the digital era,” said Daniel Zhang, CEO of Alibaba Group.

Alibaba has created software and services that powered its own business that is both highly scalable (it services arguably the largest customer set globally, over 600m active users) and also increasingly personalized through the use of artificial intelligence. Alibaba’s business with the exception of its Alibaba B2B marketplace has predominantly been focused on consumer-facing products but the A100 initiative highlights that Alibaba is increasingly also thinking about is offering for businesses.

The shift from being only focused on e-commerce to becoming a technology company

The creation of the Alibaba Operating System is a part of the company’s progression from an e-commerce provider to a global technology company. As Alibaba has expanded its business from pure e-commerce into digital entertainment (Youku( and local services (Ele.me), the power of its infrastructure has grown to cover sales (Taobao and TMall), logistics (Cainiao network), supply chain optimization (New retail), payments (Alipay), marketing (AliMama) and a wide range of supporting services all powered by cloud-based technologies (AliCloud).

A graphic representation of the Alibaba Operating System.Marketing Interactive

The Alibaba Operating System is truly unique in the sense that it is the first time that a marketplace operator (Alibaba) offers third-party a one-stop solution to a large ecosystem of technologies that they can leverage instead of being able to access a single service as seen on Amazon or JD.com. To be clear, the Alibaba Operating System is not a traditional operating system as seen with Microsoft Windows and Apple’s OS X but rather the opportunity for brands and business to utilize Alibaba’s ecosystem to gain access to the Chinese market.

By offering third-parties A100, Alibaba ensures that efficiency and return on investment is possible to occur faster for partners as the technologies offered already been proven to leverage synergies between various parts of the Alibaba ecosystem. It also provides partners with the opportunity to maximize investment made into China in a less risky manner.  “It’s going to become significantly more challenging to do well in China because the market is tightening up,” said David Roth, chief executive of WPP Plc’s ‘The Store’ global retail practice. Alibaba offering A100 to brands ensure that brands can leverage Alibaba’s expertise and synergies between its various business units at a time in which the Chinese opportunity is seen to be a bit riskier due to slower consumption and a tightening of the Chinese economy.

Alibaba will offer the Alibaba Operating System to companies of all sizes through the A100 program, which lets them choose from an exhaustive menu of services to enhance their business operations. Alibaba will establish a cross-platform integrated account-serving team to supervise the implementation of A100 and will start with partners already in the company’s ecosystem. The program will gradually expand to other brands looking to optimize their digital operations.

Efficiency

This announcement by Daniel Zhang, CEO of Alibaba Group highlights a trend I have seen over the last 12 months. Zhang has leveraged efficiencies whether through a restructuring of business units or the announcement of an initiative such as A100 – it is clear that Daniel Zhang wants to ensure that Alibaba operates in an efficient manner, leverages synergies between their various businesses and then offer this technology to brands or businesses. By offering business partners the Alibaba Operating System, it builds deeper relationships between Alibaba and it’s brand/business partners which lead to more trust, communication and mutual business success.

Alibaba has always been a technology company that utilized e-commerce to generate revenue and profits with the A100 initiative it offers brands and businesses with the opportunity to utilize proven technology to accelerate their digital transformation.

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