Alibaba: a $7bn company tears up its entire business model within a year of going public

Interesting story on Alibaba’s reinvention from a low volume, high margin player into a high volume, low(er) margin player:

Its strategy, as spelled out in the prospectus, was to charge high annual membership fees from a select group of global importers and Chinese exporters. But as subscribers lapsed and sign-ups started to falter last year, it turned that on its head, seeking high volumes of customers paying less than 40 per cent of that annual fee. To protect gross margins, Alibaba would focus on “value-added services” – the more buyers and sellers were milling around, the more it could charge for keyword searches to match them up.

via FT.com / Lex / Technology, media & telecoms – Alibaba.com.

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