The first business to meet with Donald Trump when became President of the United States was Alibaba. Alibaba’s Executive Chairman Jack Ma pledged to help create one million jobs in the US in five years by helping small businesses sell products to China and other markets in Asia. and President Trump responded saying “Jack and I are going to do great things for small business”.
Alibaba’s Western Challenge
Alibaba are in an interesting place, they’re massive in China and South East Asia, and yet still somewhat regarded in the West as a dodgy place to do business due to China’s past reputation. Alibaba have done loads to assuage these fears with their trust programs and even taking counterfeiters to court but they are still, perhaps unfairly, regarded with suspicion.
We saw Rakuten, another Eastern company attempt to spread to the West and that to be frank was a bit of a disaster with the closure of their UK, Spanish and Austrian marketplaces. Could Alibaba do better?
Alibaba’s two pronged approach to conquering the West
It would appear that Alibaba have a different approach to the West than their competitors. Rather than a head long attack of the consumer market, which at least in the UK is already a duopoly between eBay and Amazon, Alibaba have concentrated on business to business sales in the West and are acting as a gateway for Western merchants to sell to the East.
Business to Business
It’s a lot easier to convince a business that you’re a safe place to trade compared to consumers. For starters the orders will be bigger and secondly it cuts out the expense and difficulties of fulfilling individual end user orders. Best of all it costs a lot less to attract business customers than to build blanket widespread consumer awareness of a brand and convince individuals that you’re a safe trading platform. Many businesses already be sourcing from China or know competitors who do, plus they are more sanguine and will simply look at the economics and if they add up they’ll trade.
Trading from West to East
The real opportunity for Western merchants is the potential lucrative Chinese and Asian markets. However, not only are the costs of entering the Chinese market relatively high, but Chinese consumers buy in very different ways to Europeans or Americans. Social media, video and mobile Internet is developing at breakneck speed (many Chinese routinely carry at least two personal mobile phones!) Chinese consumers are highly engaged across multiple platforms and as a retailer you need to engage with them on their own territory.
Hear from Alibaba at IRX
If you’re attending Internet Retailing Expo on the 5th-6th April this year, there will be a dedicated Marketplace Theatre and David Lloyd, Business Development Director from Alibaba will be talk on “Marketplaces as a Gateway to the East” and answer the question “What do you need to know about how to profitably engage with and penetrate China to win success?”.
