The e-commerce giant develops a formula for calculating the cost of living online
Alibaba dominates more than 80% of all e-commerce trade in China and had combined sales greater than eBay and Amazon combined in 2013. Now, the online giant has managed to track price data from over 100,000 products to build a price index for online shopping.
The Alibaba Shopping Price Indices (aSPI) uses a number of methods based on cost of living theory to inform its findings. Through Taobao, an online shopping platform similar to eBay, Alibaba uses a chain-weighted index that calculates and adjusts the price of different categories over the previous months.
It also uses another program called aSPI-core, which is based on fixed basket theory that is similar to the methodology used by most countries in determining the Consumer Price Index.
Both indices monitor products across ten seperate categories, comprised of: food; tobacco and alcohol; clothing; household equipment and maintenance services; healthcare and personal products; transport and communications; entertainment, education, culture goods and services; lifestyle; office supplies and services; and hobbies, collection and investment.