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Jack Ma: The C2B business model is an “undeniable trend”

Jack Ma gives a keynote speech at Softbank World 2014

Jack Ma gives a keynote speech at Softbank World 2014

Masayoshi Son’s SoftBank empire has been getting a lot attention in recent months, with a US$20 million splash of venture funding for the Phillipines, the debut of Pepper, the family friendly robot, and, the impending financial windfall from Alibaba’s IPO. Today, at the SoftBank World 2014 event, Alibaba’s founder and executive chairman, Jack Ma, talked about Alibaba’s business philosophy and the coming shift of Customer to Business (C2B) corporate strategies. Traditionally, business models are created with the assumption that a business will sell to other businesses (B2B) or simply to customers (B2C). According to Ma, customers will soon completely dictate to businesses what their needs are.

Ma’s business acumen is widely revered now that Alibaba is hurtling towards a US IPO that could top US$15 billion. However, a major theme in his talk was that he had been dismissed as a fool by many individuals and companies over his business career. The felicity of his current success is not lost on Ma either. “People ask me how I did it. I still say I don’t know,” he told the crowd. However, his humility is tempered by a fiery belief in Alibaba’s business philosophy. The company has a laser-sharp focus on personal entrepreneurship and customer satisfaction.

According to Ma, Alibaba puts its priorities in the following order – customers first, employees second, and shareholders third. If an employee is trying to make his or her boss happy, the company will not succeed. Employees must act to make customers happy. Accordingly, problems with the service or tough competition from rival firms are not to be lamented over. Such problems are opportunities, plain and simple. The key is being able to act quickly to take advantage of those opportunities. “Just having good ideas in your head doesn’t matter. You have to put them into action, take initiative, be autonomous,” Ma exhorted.

Technology driven by big data – what Ma referred to as data technology (DT) – will make it easier for companies to take care of their customers. “We will see a shift to C2B, in other words, it’s all about customisation […] it is not about cost competition any longer, we have to compete against value,” he explained. Customer needs are more articulated than ever before. For Ma, shipping a container of clothing with 10,000 of the same shirt is not as good as shipping 10,000 shirts of multiple, customer-selected styles. There is no marketing plan, there is only satisfying individual needs through data and logistical prowess.

See: Alibaba’s new IPO filing shows $272 billionw as spent on Taobao and Tmall in 2013

Although Ma was clear that his speech was not intended as any sort of sales pitch or forecast for Alibaba, he did express confidence that the Alibaba way of putting customers first, and using technology to solve their problems, would allow the company to grow revenue larger than giants like Wal-Mart (NYSE:WMT). Wal-mart, with US$476 billion in revenue for 2013, currently dwarfs Alibaba, which made US$7.6 billion in the same period. Nevertheless, Ma remains convinced that Alibaba could become the first company to hit US$1 trillion in yearly revenue gross merchandise value (GMV). (Correction: Alibaba has notified us that the translation provided for Ma’s Mandarin-language speech misidentified GMV as revenue.). “Wal-mart needs to hire millions of people. […] We don’t need to hire a ton of people. We just need the right technology,” he said.

Ma shared with the audience his plan to have Alibaba survive for at least 102 years. Founded in 1999, that would allow the company to straddle three centuries. To prosper for the remaining 87 years will require the company to take a very long term view and not be distracted by temporary ups and downs in the economy. Part of his plan for reaching his goal? “I’m not listening to investors, I’m watching customers,” Ma said.

Editing by Paul Bischoff

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