Economics @alibaba

Economics of scope:

The cost savings associated with the offerings through sales of different products by a single stream through the same small channels.

Alibaba has two sales channels namely Taobao  and Tmall. The advantage of scope comes into picture as there are cost savings to them as they are bringing the common inputs but the diversification leads to the cost savings to the organisation.

By the same channel, they are supplying it with the two sources which in turn saves the cost.

Economies of scale:

There the cost savings because, it has the large platform for selling in bulk, there are certain advantages of economies, so that it can reduce the prices that it is offering.

As the research said that Taobao and Tmall topped by $163 million which is more than the amazon and ebay.

The largest the area of network the more valuable the product becomes to each other.

Respond to incentives:

With the economies of scale and scope, the company is able to offer certain incentives by saying that if there is a minimum order of purchase, then there will be a discount. As this trends as incentives which is making the people to buy the products.

Monopoly: 

In china, the monopoly competition of alibaba as it takes up 80% of the online shopping revenue of the country's total population in 2010.

Pricing model:

Alibaba's pricing model impiles to set a low price in order to increase sales and market share. They also bring into llay with the discount to increase more sales as well as to increase their relationship with their customers.