• Five Forces Analysis
• :Barriers to Entry
• High returns will draw firms. This results in many new entrants, which will effectively decrease profitability. With the development of B2B market and long time high profit ofAlibaba.com. There are more and more new websites try to copy the business mode ofAlibaba.com. The most common way to entry B2B e-market is try to position its targetmarket to a single industry. For example, in the recently 2 years, finechemical.com for thechemical products and Textilehome.com for the textiles and so on. Although these firmsdon‘t have the broad market as Alibaba.com, in another word, they share the special marketof Alibaba.com because they are more professional and targeted.
• Buyer Bargaining Power
• The buyer bargaining power is the ability of customers to put the firm under pressure and italso affects the customers sensitivity to price changes. For Alibaba.com, the customers aregenerally the medium and small-size firms which don‘t have the ability or don‘t need to buildup their own websites. To negotiate with the biggest B2B e-platform, these firms don‘t havetoo many advantages to fight for lower cost and nearly all the standards are decided by theAlibaba.com. But with the development of B2B websites, the customers may have theopportunity to choose the other platform and that will also be the opportunity to negotiatewith Alibaba.com for more rights.
• Supplier Bargaining Power
• Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g.charge excessively high prices for unique resources. But for Alibaba.com, there are seldom suppliers of raw materials, components and labor because it is not a manufacture firm but ane-service one. The largest cost for this firm is cost for selling, so the most important suppliersare the firms supply the advertise for Alibaba.com, such as the famous magazines,newspapers and websites. 13
Availability of SubstitutesThe
existence of close substitute products increases the propensity of customers to switch toalternatives in response to price increases. The most important substitute service is the self-websites of large companies. For the customers which prefer to make business with largecompanies, they will not turn to Alibaba.com but directly contact with the companiesthemselves.
Competition
For most industries, this is the major determinant of the competitiveness of theindustry.Sometimes rivals compete aggressively and sometimes rivals compete in non-pricedimensions such as innovation, marketing, etc. The most competitive firms of Alibaba.comare the search-websites such as Baidu.com and Google.com. The potential customers maysearch the results just through these free and simpler websites but not through the B2B e-platform, which will lead Alibaba.com to lose lots of profit.