Communication in E – Commerce: Guest Blog by Erna Li

Introduction by Iris Wenting Xue：

This is my first in a series of guest blogs featuring my recently-graduated capstone (thesis) advisees in New York University’s Master’s in Public Relations and Corporate Communication.

I myself was a guest-blogger when I graduated two years ago from the program. (See A 10-C Model for Apologies here.) And it is my great honor to become a Capstone advisor and contribute to the program.

In her capstone, Erna Li conducted analysis on the China-born e-commerce company Alibaba and compared it to American e-commerce company Amazon in terms of social media and business model aspects to learn best practices. She focused on the challenge of building messages that resonate as the companies expand from just domestic online shopping platforms to global online retailers.

Communication in E – Commerce: Guest Blog by Erna Li

Online shopping in a cash-based country could be a dream to a teenager. I still remember the excitement of winning the first bid for a backpack on eBay at my senior high school in China. After shopping online for over ten years and learning public relations/communication for six years, I realized how important it will be if e-commerce companies could strategically convey messages to their target audiences. They need to send out the right messages at the right time via an appropriate channel.

We assumed that communication would be easy for of e-commerce companies compared to other industries, because  e-commerce is online, global, and almost everywhere.  However, successful e-commerce companies face unexpected challenges when they try to expand to other territories.  They need strategic communication to overcome challenges that occur in international environments.

Alibaba Case Study: Born in China, Created for the World 

Alibaba is an enormous China-founded e-commerce company. This company powers 80% of online commerce in China. From flight ticket reservation to fresh fruit delivery, consumers are able to find most kinds of services they need. At the end of December 2014, Alibaba had almost 334 million active buyers on its website. Such success would not have been possible without a social media and public relations campaign.

Alibaba Corporate Communication Strategy: Domestic Shopping Day to Global Shipping Festival

Each November 11th since 2009, Alibaba has launched a domestic online shopping celebration campaign. The date is well known in China as Single’s Day  — the date’s number eleven represents people who are single. Initially, the idea was for singles to celebrate their freedom and independence. Now, it is also an excuse to shop. People are more than welcomed to shop online whether or not they are single.

The above image is a screenshot of the Alibaba website. It says that all merchandise is available for at least a 50% discount on November 11th. Every year the discount theme is similar. Before 2014, Alibaba’s corporate message was about the discount and coupons. After Alibaba went through 2014 IPO, Alibaba changed its message and emphasized its global shipping services. The target audience is mostly the Chinese who live overseas. That is to say, Alibaba upgraded its shipping from purely domestic to global.  However, Alibaba’s website is not available in English, which could limit participation of the international buyers in the Global Shipping Festival.

Best Practice

(http://fortune.com/2015/11/11/alibaba-singlesday-record-2015/)

With their successful public relations and social media campaign, Singles Day in 2015 reached e-commerce sales to $9.8 billion. The chart above shows how Single Day’s revenue in China was more than all sales volume during the U.S. shopping holidays in 2014.

Challenge: Stock Decline

(http://www.barrons.com/articles/alibaba-why-it-could-fall-50-further-1442036618)

Barron’s, an American weekly stock market-focused newspaper, posted an analysis “A Hot Stock Turns Cold.” As the first chart shows, Alibaba’s stock has kept dropping since December 2015. The price reached its peak in November, which also suggests that Global Shipping Day campaign remains an important date for the company.

Situation analysis – Map impact and likelihood

I have learned the following chart from the crisis management perspective during the crisis communication course in 2015. Since then I tried to apply it in other business communication settings.

The above chart says that the most likely/ already happened is the stock price decline. The major impact of dropping stock is investment lost and negative influence on financial performance. The possible critical impact is that Alibaba might lose some investors. The major possible impact is that Alibaba’s credibility is criticized and questioned. Wall Street Journal, BBC, Fortune, Reuters and other media outlets might state the controversy from different angles. The critical remote impact on Alibaba is that the declining stock could cause public concerns and shareholders’ disappointment.

In Alibaba’s case, there are two main reasons behind the scene that led to the stock slide.

1. Alibaba has strong domestic and overseas competitors. JD.com is a Chinese e-commerce company based in Beijing. It is one of the largest B2C online retailers. Another strong oversea competitor is Amazon. As Amazon has been in the e-commerce industry for decades, it has stable customer resources and deep understanding of the market. Even some of the Alibaba’s business models are learned from Amazon.

2. A controversy regarding potentially counterfeit products sold through Alibaba has led to negative visibility and stock market declines.