E-Commerce Case Study

Introduction and Key Facts

Karz is a small-and-medium-sized enterprise (SME) operating under Taobao Mall (Tmall) which is a business-to-consumer (B2C) online retail market operated by China’s largest e-commerce company, Alibaba Group Holding Limited. Within this case, it has been made evident that there exists a main problem, but first one should understand the causes which led to such issues. The main cause which led to the problem is the fact that Alibaba Group unexpectedly announced its new policies that included significant increases in the annual service fee and cash deposit for stores on Tmall. With these changes, the cash deposit required for each store with a TM trademark would increase from the original RMB 10,00 to RMB 100,000 or RMB 150,000 per year. Furthermore, all store owners had to pay in full by the end of 2011.

In order to fully comprehend the extent of Karz’s business and their operations, we can use the SWOT analysis. Furthermore, the SWOT analysis will help determine the most effective solution the company can utilize to maximize their profits when considering the challenges the company can face in relation to their long terms goals and ambitions.

SWOT Analysis

Strengths

Some potential strengths Karz has in regards to operating under Taobao Mall is that Tmall enjoys an overwhelming traffic flow of 110.46 million (monthly reached visitors), which is substantially larger than that of any other B2C platform. This is an advantage for Karz to operate under because of the higher traffic flow in which they consistently experience thus increasing their likelihood of sales by the amount of people who visit their website on a daily basis.

Weaknesses

Karz and its workers have a lack of understanding towards the clothing industry. In fact, Chen stated in the case that sometimes they would order large quantities of clothing in which they thought they could sell quickly, but the outcome in reality would be that they would struggle by only...