What is the main pricing method used by Alibaba.com? [e-marketing]

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The main pricing method used by China's Alibaba.com is called "penetrative pricing" and reflects Alibaba Group Holding Limited's business strategy of penetrating a succession of new markets. Alibaba.com is the first of a series of websites owned by Alibaba Group and has a specialized penetrative pricing policy designed to optimize...

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The main pricing method used by China's Alibaba.com is called "penetrative pricing" and reflects Alibaba Group Holding Limited's business strategy of penetrating a succession of new markets. Alibaba.com is the first of a series of websites owned by Alibaba Group and has a specialized penetrative pricing policy designed to optimize revenue from its target market.

Alibaba.com is a business-to-business (B2B) providing small businesses with low-overhead access to global buying and selling and fast shipping of small-lot orders of materials and supplies. The pricing plan for this B2B marketplace is built upon transaction commissions and upon advertisement purchases by sellers to boost their products' exposure. Penetrative pricing generates revenue for Alibaba.com and allows business owners easy access to a global .com marketplace.

There are more than a dozen websites owned by Alibaba Group, including ones similar in purpose to PayPal and YouTube (Alipay and Youku Tudou, respectively), and each illustrates Alibaba's penetrative pricing method through a specialized pricing plan.

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Alibaba.com's main pricing method works through three different domains, each handled by a different website. Pricing models are:

1) Free product listing and revenue through advertisements

2) Online platform for exporters/importers and revenue through trade commissions

3) Annual subscription fee, commission on each transaction and a deposit

This three-part price model is targeted at different audiences.

Alibaba.com itself operates on pricing method number one and connects the exporters and importers to operate somewhat like eBay.

Its subsidiary, Taobao, the largest e-commerce website of Alibaba, has millions of sellers selling products through free listings. The free-posting platform has attracted vast quantities of small sellers and they pay for advertisements to make their products stand out.

Tmall is the brand-based portal of Alibaba and charges major brands for listing, earning commission on each trade and providing a niche market for niche products.

Thus by tapping the different buyer/seller markets, Alibaba has emerged as a remarkably popular e-commerce firm.

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