David Lloyd is General Manager at Alibaba Group, UK, Netherlands & Nordics. In this Alibaba 101 guest post today, David looks at why now is the time for UK SMEs to make the most of the global export opportunity:
International trade can be an important step in a business’s journey to long-term growth. This is true for most companies around the world and is no exception for SMEs – who remain a critical and fast-growing part of the UK’s post-pandemic economy.
Yet, international trade and developing the infrastructure to support this can seem like a daunting prospect – and a step that is often seen as a giant leap in the next stage of an SME’s growth. According to our survey of 1,000 SME leaders across the UK, conducted in October 2020, more than a quarter believed they were ‘too small to export’, while a fifth thought that there was ‘no demand for their products outside Europe’.
Accelerated by Covid-19, we live in a world now where technology is the axis on which so many businesses spin. The retail sector is just one business arena that has seen huge transformation thanks to tech – from a historic reliance on bricks-and-mortar stores to the emerging world of ‘New Retail’, where physical and digital stores work together to give consumers more choice and freedom than ever before.
Household name brands have always been able to sell their products around the world, but now tech-enabled export models make it just as easy for small and sometimes unknown businesses to access new customers and compete on the global stage.
Alibaba was founded on this principle back in 1999, and we remain committed to enabling the world’s small businesses to do business anywhere. Alibaba’s global platform helps buyers and sellers around the world to stay connected with one another, with Alibaba.com providing UK businesses with access to over 200 markets worldwide.
The gateway to China – and half the world’s ecommerce market
Alibaba is often referred to as the gateway to China – its Tmall Global platform, for example, is China’s largest cross-border platform, with more than 29,000 brands from 84 countries selling to almost 900 million consumers.
China is clearly an important and high-potential market: as one of the world’s largest and fastest-growing consumer markets, it contributes around half of all the e-commerce activity across the globe, which is predicted to reach $1.3 trillion just this year. Its economy is bouncing back in the aftermath of the pandemic faster than all of the world’s other major countries, and is forecast to lead the way in 2022 as well. And there remain hundreds of millions of people yet to come online for the first time.
As an undoubtedly fast-moving and complex market, it can seem daunting to those who want to export and capitalise on the opportunities at hand. Alibaba has been at the forefront of China’s monumental consumer growth over the past two decades, making us well placed to share our understanding of exactly how China’s retail market works.
Alibaba is the key for UK SMEs to trade on a global scale
There is a large consumer audience that British-based SMEs can access by tapping into the Alibaba ecosystem. Alibaba’s global annual active consumers across its ecosystem reached 1.18 billion in its June quarter, an increase of 45 million from the March quarter, and makes up 912 million consumers in China. And in June 2021 alone, Alibaba’s China retail marketplaces had 939 million mobile monthly active users, representing a quarterly net increase of 14 million.
The brands that have the most success in China are the ones that can quickly react to consumer demand, create innovative products or experiences and adapt their offerings to reflect emerging trends. They tend to be flexible and responsive, acknowledging quickly that what works well for them in the UK may not necessarily be a top seller in China. Alibaba’s teams in the UK and China can help British SMEs to understand these trends, and to adapt to China’s unique and fast-paced online market.
Alibaba’s annual 11.11 Global Shopping Festival has been just one way in which UK brands, both new and established, are able to export into the China market. In November 2020, the festival saw UK SMEs sell $494m worth of goods during the eleven-day event.
It’s all digital
Chinese consumers, perhaps more than those in any other market, want a seamless interaction between on and offline shopping experiences. For brands wanting to tap into those consumers, it is important to think about the entire digitisation of retail. Livestreaming, for instance, is currently the go-to option for consumers when seeking out new products and deciding on what to buy, replacing traditional methods of online shopping.
Not only that, the livestream shopping market in China is expected to reach RMB2 trillion, or more than US$300 billion this year. It is a platform that product followers can use to engage with a brand, whether it’s to ask questions about the products or to receive updates on new and upcoming launches. Welsh beauty tech brand SmoothSkin is a great example of this – the brand conducted a livestream at last year’s 11.11 Global Shopping Festival with over 103 million views, which hugely contributed to helping the company rank as one of the top ten UK brands at the 2020 event.
In today’s retail climate – which has seen considerable shifts over the past 18 months thanks to the pandemic – a defined e-commerce strategy is essential to the longevity and success of a brand. And that strategy, increasingly, should be global. British SMEs should take note, and think about the global export opportunities at play as they develop a growth strategy that will boost the bottom line, reach new markets, and help them to stay on the front foot in an ever-changing landscape.