This case explores how Alibaba Group has nurtured the creation of a business ecosystem to underpin the success of its Taobao Marketplace and Tmall.com e‐commerce businesses that have come to dominate on‐line shopping in China. The actions Alibaba took to catalyse and shape the development of its business ecosystem and to encourage investment and innovation by partners to make the ecosystem more successful are highlighted. These included making space for partners by abandoning important early profit streams and focusing Alibaba's role in enabling the ecosystem rather than acting as an intermediary, promoting efficient interfaces between partners, breaking down barriers to joining the Taobao and Tmall.com ecosystems to encourage recruitment participants and rapid growth. It shows how, by focusing on improving the ecosystem's scale, vitality and speed of innovation, Alibaba successfully creates the potential for new profit streams both for itself and its partners. The key question at the end of the case is how the ecosystem has to be developed further in view of the maturing of the Chinese consumer market.
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