The business environment is constantly changing, and so are the associated elements. One of the elements of business that has seen a greater transformation in the recent past is marketing. As a result of the incessantly evolving customer needs and globalization, businesses have had to introduce innovative concepts into their marketing techniques to cope up with the ultimate competition. Among the products of such innovations was the business-to-business transaction, which adds to the generic business-to-customer mode of business. The concept of business-to-business denotes a mode of transaction in which one business involves directly with another business instead of customers. Business-to-business is typical of situations where, for instance, one business is outsourcing raw materials to be used in their production process, a particular business is in need of services of another business for purposes of operations, and a business enters into an agreement with the other to re-sell its products (Nanji 2016). In the B2B model of business, both the parties have relative powers of negotiation and involve their necessary staff and legal counsel in the agreement, which is converse to the B2C model, which is largely shaped by the information asymmetry economic implications. It is noteworthy that the entire B2B’s volume of business transactions is usually higher than that of the B2C, which is seen as the major advantage of this business model over the B2C model. Even with such merits, the business-to-business framework has had to grapple with challenges- some inherent, some typical- that have limited the use and effectiveness of this model. As one of the top B2B marketplaces across the globe, no business offers a better tale of these challenges than the Alibaba Group. Whereas Alibaba’s growth has been significantly slowed by these challenges, its means of overcoming the challenges has been its greatest strength. Arguably, the challenges facing the B2B model can be minimized or completely overcome. Some of the top challenges facing B2B businesses such as Alibaba include building the market share, innovating products and services, acquiring and retaining the customers, ameliorating the customer awareness of the brand, keeping up with the stiff competition, and technological issues. The following discussion will delve deep into some of these challenges with reference to the Alibaba group and postulate on how to overcome the challenges.
Overview of the Alibaba B2B Model
A comprehensive understanding of the challenges facing the B2B businesses is best gained through obtaining a prior understanding of the model as used by the biggest business-to-business marketplace in the world- Alibaba. Alibaba Group Holding Limited is an e-commerce company domiciled in China that uses the web portals to carry out business-to-business, consumer-to-consumer, and business-to-consumer sales. The company was founded as a business-to-business portal with the aim of linking the manufacturers in China with buyers from overseas. That is one reason why this discussion will use, and only focus on the company’s B2B model. Bourenane (2014) that Alibaba, which is currently the biggest B2B e-commerce market in the world, has always acted as an intermediary serving to facilitate the transactions between the buyers and sellers through by linking the buyers and the sellers. The sellers and buyers are companies and businesses that have entered into an agreement with Alibaba. Alibaba forwards its operations through three major sites. Taobao, its largest and most busy website comprises more than 760 million listings of services and products from about 7 million sellers at one particular time (Zhe 2012). The merchants sell their products for free on Taobao making it particularly attractive for businesses as it reduces their marketing costs. Even so, they pay Alibaba for extra services such as advertising to ensure they are conspicuous from the long list of products on the site (Boudelaa 2010). Taobao mostly deals with small merchants with the bigger businesses using Tmall. The latter has relatively fewer clients, about 70,000, who pay Alibaba a deposit and a specific annual amount. Well aware of the challenge of imposters and cons, Alibaba runs a distinct rating system that shows the number of successful transactions of each seller to enhance credibility with the shoppers. Besides, the model provides a platform, the instant messenger software, where merchants and buyers can directly interact and answer some of the pressing questions from either side. It is a prerogative of the individual businesses to buy advertising from Alibaba to improve their sales. Alibaba primarily makes money through the advertisements in addition to other fees and commissions. Over the years, the challenges that the company has faced has made it implement some of the most radical measures to enhance their performance and support their growth. For instance, it came up with the Alipay system, an online third party payment framework that provides both payments and escrow services for financial transactions on all the platforms run by the Alibaba Group (Zhe 2012). The system protects both the buyers and the sellers from falling victims to cons who pose as either buyers or sellers on the site. It enhances the security of the transactions and assures both the merchants and buyers of safer transactions. Alibaba’s B2B model is the embodiment of the challenges that face such models of business and how to overcome them.
The Marketing Challenges