the company has reshaped the retail landscape in China, turning an
obscure tradition known as “Singles’ Day” (November 11, or “11/11”)
into the world’s largest shopping day. The company did $17.4 billion in
GMV on Singles’ Day alone in 2016, of which 82 percent originated
from mobile.^5
Alibaba has succeeded because it hit most of the markers we’ve
outlined. It began in a vast market—China—filled with millions of
small manufacturers desperate to reach the outside world. It went
global almost immediately, reaching almost every country on the
planet. It is a master of big data/AI—one of its services. And the
market has given it a stratospheric valuation, so it has investment
capital to burn. Alibaba has grown so fast, that it essentially has no
competition in its corner of the world—as with Amazon, it’s easier just
to work with Alibaba than to fight it. Many Western brands in China
have shuttered their direct-to-consumer sites (unthinkable in the
United States and Europe) to focus on their presence on Alibaba and
sister property Tmall.
Investors have taken note. In 2014, the company offered what
remains the largest IPO in U.S. history, raising $25 billion on a
valuation of $200 billion.^6 The stock has underperformed the market
since then; however, as I write this in early 2017, BABA has declined
15 percent in value from its offering while Amazon has increased more
than 100 percent over the same period.^7
For all its vast scale, Alibaba faces significant challenges if it
wishes to emerge as a global digital-age player in the same class as the
Four Horsemen. By definition, it has to expand in a more substantial
way beyond its home market—and most important, it has to establish
a material commercial presence in the United States, where it operates
almost exclusively as an investor. The Chinese market—which seems
to grow more volatile by the year—remains as much as 80 percent of
Alibaba’s business.^8
As such, Alibaba carries a lot of water on its path to global
domination. First, there is no historical precedent for a consumer
brand emerging from China. The world is used to global brands from
the United States and Europe, and more recently from Japan and
South Korea, but not from China. Chinese firms face associations
(legitimate or not) of labor exploitation, counterfeit goods, patent