Here’s How Alibaba Can Benefit From Its Partnership With The International Olympic Committee

Recently Alibaba‘s (NYSE:BABA) Group and the International Olympic Committee (IOC) announced a partnership through which Alibaba will become the official “Cloud Services” and “E-Commerce Platform Services” partner of the IOC through 2028. Through this sponsorship, whose estimated value is $800 million, Alibaba will provide cloud computing infrastructure to the Olympic Games and create a global e-commerce platform for Olympic stakeholders to engage and connect with fans seeking official Olympic licensed products. This partnership will increase Alibaba’s global visibility and bring it closer to its goal of serving 2 billion customers worldwide in the next twenty years. The long term nature of this partnership will ensure that Alibaba is able to bring its brand to various countries where the games will be held in the next ten years supporting its globalization goal. It also put Alibaba in the league of other global sponsors of the Olympics such as Coca Cola and McDonalds.

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Moving Forward In Its Global Ambitions

The Olympics are the biggest global sporting event and for the Rio Olympics held in 2016, 10,500 athletes participated with television programming content spanning over 6,000 hours.  The viewership of these Olympics was estimated to be 3.6 billion. Given the huge popularity of this sporting event and its global appeal, a partnership with the IOC gives Alibaba a huge platform to connect with global audiences. Currently Alibaba is the biggest e-commerce company in China, but its presence in other countries of the world is limited. The company is making inroads in India and South East Asian countries, but has not been able to make any significant progress in Europe and America. However, global expansion is a clear goal of Alibaba and it expects to serve 2 billion customers around the world in the next twenty years. With issues of counterfeit goods plaguing the company, it is working towards its security standards to establish a good reputation to be “accepted” by global consumers.

Alibaba’s Olympic deal is estimated to be worth $800 million and potentially the single biggest partnership IOC has done till date. Through this deal Alibaba joins the club of companies such as Coca Cola, Visa and McDonald’s who have been sponsoring the Olympics in the past. This symbolically puts Alibaba on the global map making it a recognized international player.

We believe that, as Alibaba looks to go global and finds growth opportunities outside China, the Olympic sponsorship can lead to two direct benefits. a) It gives global visibility to the company given the popularity of the games. b) It can potentially improve Alibaba’s reputation and put in the league of global companies which have been historically sponsoring the games. Strategically this appears to be the right move for the company to meet its global aspirations.

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