STEP 2

PROBLEMS OR CHALLENGES THAT JACK MA FACED

For Jack Ma-- the Alibaba founder and executive chairman, the only sign of failure is giving up. Even though, people might assume his life is successful and lucky to be one of the richest people in the world, not only in China. But who knows behind that title, he had been through many things to become what he is today. Hence, these are the discussion on what, why, when, who and how the problem and challenges that Ma faced and handle the situation.

What challenges that Jack Ma confront:

When Alibaba started out, one of the major problems Jack Ma faced was how to manage e-commerce payments. It presents a big challenge for Alibaba's business to grow due to the difficulty to complete payment transactions on the platform between buyers and sellers.

For example, there were some cases of products not being delivered even though the product have been paid for by the buyer and cases of fraud against the seller by making a fake transaction. This was hampering e-commerce sales as it made the process of buying and selling online unpredictable. Without a reliable and secure payment system, buyers and sellers were hesitant to use the platform.

Due to this problem, Alibaba is having difficulty gaining consumers' trust in online purchases. Users are worried about being fraudulent and scammed when using unsecured platforms for making transactions.

Why the problem distracted him:

Lack of infrastructure: At the time, online payments in China were still in their infancy, and there was a lack of infrastructure and technology in place to support electronic transactions. This made it difficult for businesses and consumers to make online payments and also for e-commerce companies to establish a reliable and secure payment system.

Skepticism from Banks: Banks needed to familiarize themselves with the e-commerce industry and the risks involved in working with e-commerce companies like Alibaba. They were hesitant to work with these new and untested companies, making it difficult for Alibaba to establish a payment system that banks could support.

Lack of trust and credibility: Many consumers were skeptical about making online purchases, and were worried about fraud and scams. Without a reliable and secure payment system in place, it was difficult for Alibaba to establish trust and credibility with its users, which made it hard for the platform to grow its business.

Regulatory challenges: At the time, Chinese government regulations were not well-established for e-commerce, and there were no guidelines for online payments, making it difficult for Alibaba to get approval from the government to operate.

Limited competition: At the time Alibaba was starting, there were not many e-commerce platforms, which made it hard for Jack Ma to find inspiration or guidance from other companies.

When he experienced the problem:

As soon as he started opening Alibaba in 1999, many people keep giving him criticism. At that time, there was no reliable payment system to help Chinese consumers buy products online. In addition, people said that the creation of the Alipay was a crazy idea that he even made since the knowledge of e-commerce payment technology was not still spreading in China community.

Who is the person involved in this issue:

First of all, our scholar of leadership, Jack Ma-- who is the founder of Alibaba. Jack Ma was the main person responsible for creating and managing the e-commerce platform. He faced the challenges of establishing a payment system and getting banks to work with the company.

Next, Alibaba's management team, known as Jack Ma's management team, which included other key leaders of the company, was also involved in the process of establishing a payment system and getting banks to work with Alibaba. They helped to develop and implement strategies to overcome the challenges faced by the company.

Other than that, banks in China were also involved in this event, as they were hesitant to work with e-commerce companies like Alibaba, due to their lack of understanding and unfamiliarity with the industry and the risks involved. Jack Ma had to work with these banks to establish a payment system that could be supported by them.

Last but not least, the consumers and sellers. The consumers and sellers using the platform were also involved in this event, as they were the ones who would be affected by the lack of a reliable and secure payment system. Jack Ma and his team had to find a solution that would be beneficial for both the buyers and sellers.

How the problem solved by the scholar:

In order to overcome these challenges, Jack Ma and his team decided to create their own payment solution which is Alipay. Alipay is an escrow service, which means that when a buyer makes a purchase on Alibaba, their money is held by Alipay until the buyer confirms that they have received the goods and are satisfied with them. As Alibaba grew, more consumers and merchants began using Alipay, which provided the company a natural opportunity for expansion into adjacent services like peer-to-peer payments and e-commerce via merchants’ websites. By capturing one segment of the market early, it was able to build customer loyalty while continuously offering those customers new products.

The implementation of Alipay might be hard to do and build at first, but Jack Ma keep trying to get all of the customers' trust. He created Alipay, which provides a level of security and trust for both buyers and sellers on the platform, and helped to boost Alibaba's e-commerce business. However, creating and running a payment platform is expensive, and Alipay did not generate any revenue in the first three years after launch. Nevertheless, he keep trying to make Alipay one of the famous e-commerce payment platform as now, Alipay has been reaching over 1.3 million users and 80 million merchants.

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