Alibaba B2B Strategy: What Wholesalers Need to Know
Post Link: The Alibaba B2B Strategy: What Wholesalers & Distributors Need to Know
The Alibaba B2B Strategy: What Wholesalers & Distributors
Need to Know
We live in the era of eCommerce. It’s an exciting, albeit competitive, time for business. Of
course, the growth of eCommerce around the world isn’t complete without mentioning Alibaba,
China’s eCommerce giant.
Once upon a time, circa 1999, a little eCommerce company began in a cement-floored
apartment in Hangzhou––a city Southwest of Shanghai––at a time when only a few million
people where online in China.
Led by Jack Ma, they started Alibaba.com, a global wholesale marketplace connecting buyers
and sellers. In what was to become a spectacular play, Alibaba.com grew big enough for the
whole world to notice, along with its C2C eCommerce site Taobao, as well as B2C retail site
Alibaba.com handles billions of dollars a year in transactions, increasingly acting as a bridge
between mainland China, North America, Europe, and the rest of the world. Alibaba follows the
supplier aggregator model (much like many B2B marketplaces of the 90s) working to ease the
pain of global sourcing.
While Alibaba may be a B2B behemoth, it wasn’t an easy road to growth. As told to Rebecca
Fannin of Inc.com, Jack Ma started his entrepreneurial journey very young. At 12, he showed
foreign tourists around Hangzhou’s West Lake District, making him more outward thinking and
entrepreneurial than most.
After finding himself without a job (including a rejection from a KFC restaurant) by 1992, he
borrowed $2000 to start a company that directly competed with China Telecom. Then, he
ushered in a group of friends and convinced them to part with a collective $60,000 to start the
B2B ecommerce site that was to become Alibaba as we know it today. Despite the obstacles,
as Charlie Rose of Bloomberg helpfully points out, Alibaba is set to change the face of B2B
commerce as we know it.
Just how exactly will the Alibaba B2B juggernaut affect business around the world? What do
wholesalers, distributors, and manufacturers around the world need to know?
Alibaba is big, but it’s getting bigger.
According to David Moth of Econsultancy, Alibaba has 231 million active buyers, and over 11.3
billion orders flowed through the company’s eCommerce platforms in 2013. An average buyer
makes about 49 purchases a year, and the total gross merchandise volume of Alibaba’s three
main consumer retail marketplaces is roughly $248 billion. Alibaba has B2B and B2C has
suppliers in more than 20 countries.
The scene continues to play out in US markets as well. Alibaba’s global IPO was the world’s
largest ever at $25 billion. The United States has more than 7 billion B2B customers on Alibaba,
and about 1.5 million in the U.K.
Ben Popper of The Verge writes that in 2013, Alibaba recorded $240 billion in sales––more
than Amazon and eBay combined.
Focus Is the Core of the Alibaba B2B Strategy
Alibaba’s meteoric rise can be attributed to its focus on growing its enormous supplier base,
which targets Chinese and other Asian sellers that Amazon and other marketplaces don’t.
In other words, Alibaba’s B2B marketplace has acted like a gateway to China and the growing
economy’s enormous capacity to produce goods that the world wants.
To cater to this global demand, Alibaba does everything it can to build more trust, opening the
gates wider to the world. This is evidenced in initiatives like business verification, factory
inspections, and stringent demands on quality of products.
Alibaba & The Future of B2B eCommerce
Alibaba is only the beginning of the future of B2B eCommerce. There’s still lot of opportunity for
eCommerce stores, wholesalers, distributors, and retailers to build on inefficient supply chains,
paper-centric processes, and error-prone workflows.
Broadly, there’s opportunity for: