How Alibaba can double its sales

While I will not get into the financial details of Alibaba's public offering, these are some highlights:

• The stock was competitively priced, at a reasonable P/E ratio, and the fundamentals are strong. This allowed investors to earn more than 30 per cent on the IPO day.
   
• Alibaba's market value, on Day 1, was around $242 billion. Well over its goal to be valued at $160 billion. This is hard currency which can be used, in the form of cash inflow and/or stocks, to acquire new businesses

Of course, this is setting high expectations from investors and the general public. The Chinese market has its own specific features, in terms of local presence, delivery methods, payment platforms (Alipay anyone?), etc. Thanks to tracking technology and big-data capabilities, Alibaba can monitor the profitability of its marketing efforts in its core market, China.

Outside China, Alibaba wants to start partnerships, instead of trying to push its model on local markets. That is an effective and efficient way to grow sales, at the same time investments need to be strategic, lean and properly priced. If Alibaba pays for partnerships at the inflated stock price value those target companies will have (when there are rumours that Alibaba wants to buy them), then it will take years to create any real value from such strategic investments. The future value that Alibaba may get from these acquisitions will already be embedded in the stock price, as a hefty premium.

This is even truer for Europe, where the market segmentation among various countries is so high that operating margins will be affected. But Alibaba does want, and need, to grow on a global scale. So, how can Alibaba double sales in two years or a little longer?

Alibaba is already running an affiliate programme for AliExpress, its B2C portal. There are opportunities in B2B affiliate marketing as well, for Alibaba flagship site, and, of course, there are B2B and B2C opportunities to grow AliPay through affiliate marketing. This does not keep in consideration all the additional channels which will be created through acquisitions and investments.

By creating an in-house, international affiliate programme paired with a presence on affiliate networks with a strong local presence, Alibaba can keep growing with a focus on ROI. The number of products, and ancillary services, that affiliates would be able to promote through such affiliate programme is massive. Instead of starting dozens of independent programmes, each affiliate would have a dedicated affiliate manager on the in-house affiliate programme (covering all products, services and markets).

The author is Frank Ravanelli, affiliate marketing and ecommerce expert. Re-printed with permission. Link: https://www.linkedin.com/pulse/article/ 20141001043539-137337963-how-alibaba-can-double-sales-and-so-can-you?trk=prof-post