Alibaba Business Model: How Does Alibaba Make Money?

Before we start with how Alibaba, a China-based B2B marketplace giant makes money, let’s take a glimpse of the eCommerce industry and the potential of the online B2B market. 

As you know, the eCommerce industry is experiencing significant growth. Especially, the way customers have accepted and loved online shopping, the upcoming era is going to be the “Era of eCommerce”. Not only the B2C (Business-to-Customer) but also the B2B (Business-to-Business) industry is also sharing the domain by shifting offline to online. 

According to reports, a substantial increase can be seen in B2B market size and business growth in the upcoming years. In numbers, the research and analysis report of Precedence Research says that the B2B market size will grow at a CAGR of 18.04% to reach a market size of $60.62 Trillion in 2034.

The B2B marketplace giants including Amazon Business, eWorldTrade and Alibaba have fueled the growth. Particularly, their technological advancements and diverse offerings have played a crucial role. B2B online marketplaces have demonstrated that businesses can easily reach and trade with global customers online. Unlike traditional B2B markets, there is no such boundary and barrier that can break off. 

Now, let’s back to Alibaba’s diversified revenue streams and explore how the platform revolutionized the eCommerce landscape to become one of the largest marketplaces in the world.  

What is Alibaba? 

Founded in 1999 by Jack Ma, a former English teacher and 17 other co-founders, Alibaba is one of the largest online B2B marketplaces that connects international businesses on the platform.  The company is headquartered in Hangzhou, Zhejiang, China and George Town, Cayman Islands.  

This multinational conglomerate, Alibaba Group Holding Limited is a technology-driven eCommerce platform that has revolutionized online trade with a mission to business anywhere with ease. Apart from B2B trade, Alibaba’s diverse offerings include digital payments, cloud computing, digital entertainment, logistics and more. 

How Does Alibaba Work: Alibaba Business Model

Leading as one of the largest eCommerce and technology conglomerates in the world, Alibaba has a diversified business model that generates revenue from multiple streams. Unlike eBay and Amazon where usual transactions are initiated between businesses and customers, Alibaba’s business model is primarily focused on selling products in bulk. The platform and even its major B2B subsidiaries offer a wide range of products and services. These platforms let businesses of all sizes including small, medium and enterprise level order products in bulk at the best possible pricing. It allows businesses to accumulate good margins and make wholesome profits by selling products in their targeted markets.

Talking about Alibaba as a B2B marketplace, the platform works as an intermediary between buyers and suppliers. It directly connects buyers with manufacturers, wholesalers, suppliers and distributors. This is how Alibaba helps buyers to get products at affordable prices. 

To offer a satisfying B2B trade experience, Alibaba allows buyers to negotiate pricing using its B2B marketplace feature Request for Quote (RFQ) like offline business dealing. In addition, the platform also lets businesses get customization opportunities according to their specific product and business requirements. 

How to Place an Order on Alibaba eCommerce Platform in Bulk?

In case you are not familiar with international trade or new to eCommerce. You might face a little challenge in finding reliable suppliers, navigating quality products, negotiating prices, understanding international shipment and many more. However, ordering products on Alibaba is very simple. You can register as a buyer and order products in bulk in a few steps. Let’s go through the below steps to place the order in bulk on Alibaba: 

• Create an Account: To create an account and register as a buyer to access the marketplace you need to register on the Alibaba website by verifying your account details and other essential documents. 

• Search for Products: You can find products that you want to order in bulk using the search bar. Simply enter the keywords into the search bar to view them. 

To get the preferred search results by considering factors like supplier’s location, product quality, price range and more, you can use filter options. 

• Contact Suppliers: By clicking on the search, you will view listings for the same products from multiple suppliers. Reach out to suppliers directly through the platform to discuss pricing, specifications, and delivery terms. 

However, once you are finalized with the supplier, in the next step you can ask for the sample to ensure quality before placing the order in large quantity. 

• Place an Order: In the next step, you can place the order using the buy now option or request a quote to finalize the best deal once you are done with the product details, quality and others. 

However, various business terms and conditions are there that are crucial to finalize before you place an order or initiate payment such as payment terms, delivery timeline, quality control measures and more. 

Alibaba Group: Some Well-known Subsidiaries of Alibaba

Apart from the flagship platform, Alibaba Group has a number of subsidiaries dominating various sectors and has helped the group broaden its footprint. Let’s explore some of the most popular subsidiaries of Alibaba Group:

1. 1688.com

1688.com is a Chinese wholesale platform owned by Alibaba Group. This platform. It connects Chinese suppliers and small manufacturers with domestic buyers. With a base of over 41 million active buyers, the platform has a range of over 50 million products available at lower prices from diverse categories.  

2. Taobao.Com

Taobao is another eCommerce platform owned by Alibaba Group, typically considered a C2C (consumer-to-consumer) marketplace. The platform allows individual sellers to open online stores to sell products directly to customers. The majority of Taobao customers are based in China, making it a popular platform in China. However, the platform is also popular in Taiwan, Malaysia, Singapore and more. 

3. Tmall.com

Tmall is another leading B2B marketplace owned by Alibaba that offers opportunities to its users to buy luxury products on the platforms. This online marketplace strictly verifies products to ensure their authenticity and quality. Tmall is an ideal platform for shoppers looking to buy premium and luxury items. This trusted online marketplace only allows reputed brands to sell products on the platforms. 

4. AliExpress.com

Initially, AliExpress was launched as an eCommerce platform to trade between business entities. But today, the platform has expanded a lot and offers services as well. AliExpress connects Chinese manufacturers with international buyers. It offers a wide range of products, including clothing, electronics, home decor and accessories. AliExpress is a one-stop destination for businesses and individuals looking for a variety of products at affordable prices. 

5. Alimama.com

Alimama is a paid marketing solution that helps brands, merchants and retailers with brand exposure and sales generation. It uses intelligent algorithms to gather data in order to promote brands and their products across Alibaba’s various platforms such as Tmall, Taobao, AliExpress and others. Alimama allows advertisers to target their precise audience based on various factors such as demographics, purchase history, search, browsing behavior, interest and more. 

Alibaba’s Subsidiaries and Their Launch Year

Since the founding of Alibaba in 1999, the group expanded its businesses through its various subsidiaries in order to create a digital ecosystem. Through its strategic planning and launches, the group ensured that each subsidiary grows with its unique value proposition by complementing each other. Here are Alibaba’s subsidiaries with their launch year in the table below: 

Subsidiary Name	Launch Date
1688.com	April 1999
Taobao.com	May 2003
Alimama.com	Nov 2007
Tmall.com	April 2008
Aliyun.com (Alibaba Cloud)	Sept 2009
Juhuasuan.com	March 2010
AliExpress	April 2010
Cainiao Formerly China Smart Logistic Network	May 2013
Ant Financial Services Group (AliPay)	2004 and officially founded in October 2014
DingTalk	2014

How Does Alibaba Make Money (Revenue Model of Alibaba)

When it comes to making money using diverse revenue channels, Alibaba stands out as a unique player with a varied revenue model that extends far beyond just selling products in bulk on its eCommerce platform. This group has built an ecosystem of interconnected businesses that generate revenue through multiple channels. Let’s explore the monetization Strategies of this eCommerce giant:

1. Revenue from eCommerce Platforms (Retail and Wholesale)

Alibaba’s eCommerce platforms are the primary sources of its revenue generation. The core revenue sources include Taobao and Tmall. These domestic eCommerce platforms generated 41% of the company’s revenue in the fiscal year 2024 and the international sales accounted for about 9% of Alibaba’s total revenue. 

Alibaba’s eCommerce platforms generated revenue through multiple revenue models such as commission on sales, membership fees, commission on each transaction, value-added services and more. In addition, advertising is also one of the main revenue sources on eCommerce platforms. It helps the platform generate revenue through featured listings, sponsored Products and targeted marketing campaigns that allow businesses to increase their sales. 

2. Revenue from Alibaba Cloud Services (Aliyun) 

Cloud Computing Services have emerged as a significant revenue stream for the company. Alibaba Cloud provides cloud computing, storage, platform, AI solutions, software, and other services to businesses of all sizes. By leveraging advanced technological infrastructure, Alibaba has transformed cloud services into a lucrative business segment that complements its eCommerce operations.

The revenue model here is based on subscription services, pay-as-you-go computing resources and enterprise solutions. 

3. Revenue from Alibaba’s Digital Media and Entertainment 

Alibaba’s Digital Media and Entertainment is another considerable contributor to its revenue generation. This revenue channel helps Alibaba generate revenue through the streaming platform Youku similar to Netflix, music streaming service Xiami and Alibaba Pictures. To expand its global presence in the entertainment industry, the company is also investing in film production and distribution. According to Statista, Alibaba Digital Media and Entertainment Group has recorded revenue of 21.15 billion yuan in 2024, showing growth from 18.44 billion yuan in 2023. 

Alibaba Digital Media and Entertainment generate revenue from subscription fees for premium content, advertising revenue from free content, ticket sales and production fees for Alibaba Pictures. 

4. Revenue from Cainiao: A Cross-border eCommerce Logistic Services Provider

Cainiao Smart Logistics Network Limited, formerly known as China Smart Logistics Network and popularly known as Cainiao is a Chinese logistics company that is another important revenue channel of Alibaba Group. Being a global leader in eCommerce logistics, the company is the largest cross-border eCommerce services provider worldwide. According to Statista, Cainiao was listed as one of the five most valuable unicorns in China in 2023. Also generated approximately 99 billion yuan in the fiscal year 2024. 

Working on a mission to ease doing business anywhere, Cainiao is famous for ensuring delivery within 24 hours in any region of China and 72 hours worldwide. The company has established a smart logistic network through its innovative solutions and technological advancements. Cainiao works as a growth driver for Alibaba Group by supporting their expansion with the best logistic solutions.

Cainiao generates revenue primarily through providing cross-border eCommerce logistics services by charging fees for managing the movement of goods and ensuring a seamless delivery. In addition, the company also earns from warehousing, transportation, delivery services and partnering with various logistic services providers.  The growing demand for international shipping is Cainiao’s key revenue driver. 

5. Revenue from Alipay: Financial Services Provider

Alipay (Ant Financial Services Group) is a third-party online payment platform that allows users to make payments online and in person to the merchants that accept Alipay payments. It is one of the most popular and secure payment methods in China. There is also an international version of the app for people around the world to initiate global transactions.

However, the platform not only helps in making purchases, paying bills, and transferring money but also allows its users to invest, buy insurance and earn interest. In addition, Alipay also lets you store digital identification documents, order food, book tickets and more. 

Alipay generates revenue via transaction fees charged on processed payments, fees on financial products, interest from microloans, and more. 

Build a B2B eCommerce Platform Similar to Alibaba with Yo!Kart

Launching a marketplace like Alibaba can be very easy with Yo!Kart B2B. It is a readymade marketplace software that allows businesses to launch their B2B eCommerce platforms. Yo!Kart is suitable for businesses of all sizes, small to enterprise level. Especially for entrepreneurs and business owners who want to test their marketplace ideas with a small budget, Yo!Kart is the most preferred option. The platform provides opportunities to connect manufacturers, suppliers, distributors and buyers online on a single platform for B2B trade. 

In addition, the B2B-specific features and functionality of Yo!Kart B2B makes it more reliable for entrepreneurs and business owners. These B2B features include RFQ module, hide pricing, minimum order quantity, bulk order discount, direct buyer-seller communication and more. 

Advantages of Choosing Yo!Kart

• Yo!Kart is a white-label marketplace software.
• Available at a one-time payment with no recurring charges.
• Provides a lifetime license for lifetime product ownership.
• Yo!Kart is a fully customizable and scalable eCommerce platform.
• Offer source code ownership allowing you to get complete access to the platform. 
• Self-hosted marketplace software that allows you to host your platform on your preferred server. 
• Comes with 20+ pre-integrated payment gateways.
• Provides 1 year of free technical support and a dedicated manager. 
• Buyer mobile apps are available for Android and iOS.
• Multilingual and multi-currency support allows you to operate worldwide. 

B2B Marketplaces Launched with Yo!Kart

Yo!Kart has empowered 5000+ entrepreneurs and business owners worldwide by helping them launch their online eCommerce platforms. Here are a few B2B marketplaces launched with Yo!Kart: 

UNI Diamond: World’s first-ever B2B Diamond trading platform. Case Study

CX Marketplace: A Europe-based marketplace ecosystem for the Cannabis industry. Case Study

Bozinga: A wholesale marketplace with 520+ categories and subcategories operating in 190+ countries. Case Study

Green Sourcing Hub: A popular B2B eCommerce platform for sustainable products.

Rexporta: A Georgia-based marketplace that allows B2B trades for hardware parts.

Explore Yo!Kart’s Portfolio

Final Thought

Alibaba’s success story is an inspiration for entrepreneurs and business owners. Started as a B2B eCommerce platform, today the group has established an ecosystem in the digital and eCommerce landscape. Especially, its innovative business model and diversified revenue streams are keys to its success. 

In addition, technological advancements have also helped them lead the industry. Alibaba has positioned the group as a global leader in the eCommerce space by following the trends and adopting customer’s demands. Their strategic steps and partnership have enabled the path to expansion. 

What best you can learn from the group is how diversified revenue channels can help you lead the industry and grow your business. If you are also one of the entrepreneurs looking for diversified business models that can generate revenue from multiple channels, launch your eCommerce platform. Launching an eCommerce platform not only helps you generate revenue from multiple revenue streams but also gives you access to the global market.  

FAQs

Q 1. How is Alibaba’s business model different from Amazon’s?

Ans. Alibaba facilitates transactions between two business entities, not selling products to individual customers like Amazon does. While Amazon primarily focuses on B2C (Business-to-Consumer), Alibaba focuses on B2B (Business-to-Business. It connects manufacturers, wholesalers, distributors, suppliers and other businesses who are looking to order products in large quantities. Alibaba also works as an intermediary and does not hold inventory like Amazon. However, Amazon Business is quite similar to Alibaba in some aspects. 

Q 2. What is the current revenue of Alibaba

Ans. According to the latest report of Statista, Alibaba’s revenue for the fiscal year ending March 31, 2024, is about 941 billion yuan which is around $130.35 billion.

Q 3. What are the revenue streams through which Alibaba makes money?

Ans. Alibaba has a diversified revenue stream. However, the platform is popular among B2B marketplaces for connecting manufacturers, suppliers, wholesalers and other business entities to trade in bulk. Yet, the platform does not just generate revenue from its B2B marketplace but the group has several other revenue channels. 

Revenue Streams	Sources
Advertising and marketing services	Sellers pay for visibility
Cloud computing	Businesses pay for Alibaba Cloud services
Payment and financial services	Alipay earns from transactions and loans
Membership fees	Businesses pay for premium services
Logistics services	Cainiao generates revenue through shipping, warehousing and delivery services
Entertainment and Media	Streaming, movies and ads
AI and enterprise solution	Businesses pay for smart technologies for businesses

Q 4. When was Alibaba founded?

Alibaba was founded on the 4th of April 1999 by Jack Ma and his 17 friends and students in Hangzhou, China.

Q 5. How did Alibaba become successful?

Ans. There are several explanations that are attributed to Alibaba’s success. But in all of them, unique business models, innovative strategies, diverse revenue channels and technological advancements are the key contributors. In addition, visionary ideas and out-of-the-box offerings have also helped Alibaba keep growing and stay ahead of its competitors.

Q 6. Is Yo!Kart B2B a self-hosted marketplace solution?

Ans. Yes, Yo!Kart is a self-hosted eCommerce marketplace software that lets you host your platform on your preferred server. 

Q 7. Can I launch a fully operational B2B marketplace with Yo!Kart?

Ans. Of course! Yo!Kart comes with all the essential features and out-of-the-box functionalities required for a B2B marketplace. In addition, to meet your specific business requirements, Yo!Kart also offers customization services. 

However, with Yo!Kart you also get source code ownership that gives you the freedom to align the platform with your specific needs on your own.