Alibaba welcomes small units to sell globally on its platform

NEW YORK: Chinese e-commerce giant Alibaba Group Holdings will allow small US businesses to sell on Alibaba.com, the company said, as it seeks to tap into the business-to-business e-commerce market and fend off rivals like Amazon.com.

The move will open up markets to US merchants in countries served by Alibaba, including India, Brazil and Canada. US merchants, previously able to only buy on Alibaba.com, can now also sell to other US-based businesses on the marketplace.

Roughly one-third of buyers on Alibaba.com are US-based. More than 95% of sellers come from China.

Small business owners from across New York attended Alibaba’s inaugural Build Up event on Tuesday, in Brooklyn, US.

Alibaba’s pitch to US small businesses comes as the company faces lean e-commerce revenue growth, which has been further threatened by the US-China trade spat and a growing number of rivals such as recently listed Pinduoduo.

Alibaba, which does not sell inventory of its own, hopes to attract local US businesses as their marketplace platform of choice by offering small- and medium-sized businesses global selling power. Alibaba highlighted its interest in winning over manufacturers, wholesalers and distributors.

Last month, the company launched an English-language website for its Tmall Global marketplace aimed at merchants, in an attempt to double the number of international brands on the platform to 40,000 in the next three years.

Amazon, in addition to selling its own inventory, allows third-party vendors to list products for sale on its website. Those vendors may store their products in Amazon’s warehouses or ship directly to customers.

The business-to-business e-commerce market (B2B) is valued at $23.9 trillion, according to the U.S. International Trade Commission. The business-to-consumer e-commerce market is valued at $3.8 trillion.

“I don’t think they (Alibaba) are trying to benefit financially in the near term, but this does open up a complete new market for their B2B business,” said Daiwa analyst John Choi.

“Alibaba.com was well known as more of a gateway to China’s well-established supply chain for global buyers. Now they are opening this up to U.S. small businesses so they could sell their products,” Choi added.

U.S. sellers have to pay a membership fee of roughly $2,000 to get their online stores on Alibaba.com, plus any marketing and advertising costs, the company said. Amazon charges third-party sellers by the month or per item.

“You get to compete and act like a multinational company in a way you’ve never had the tools or technology to be able to do so,” John Caplan, head of North America B2B at Alibaba Group, told Reuters.

The United States is the first market where the company is focusing on globalizing supply, Caplan said, but Alibaba has a “very clear approach to other markets.”

Shares of Alibaba were trading up about 1% at $175.71. As of Monday’s close, the shares had risen roughly 30% this year.

Alibaba recently launched an English-language website for its Tmall Global marketplace aimed at merchants, in an attempt to double the number of international brands on the platform to 40,000 in the next three years.

The company said in a statement it wants to make Tmall Global, which currently hosts 20,000 international brands across 77 countries and regions, more appealing and accessible to niche, small- and medium-sized brands from other countries.

The new portal comes as Alibaba is facing lean e-commerce revenue growth, which has been further threatened by the ongoing US-China trade spat, and increased competition from rivals such as recently listed Pinduoduo.

Launched in 2014, Tmall Global is an extension of Alibaba’s Tmall marketplace and hosts overseas brands looking to sell to Chinese consumers.

“We believe the launch of this English-language website will expedite the process for brands and merchants to introduce their products to Chinese consumers,” said Yi Qian, deputy general manager, Tmall Global.

Initially, interested brands were able to get in touch with Alibaba mainly through trade shows, personal introductions, or its Chinese-language website, the company said.

The new English-language portal, which will assist merchants with tasks such as opening shops on Tmall Global, will eventually be available in other languages such as Spanish and Japanese, the e-commerce giant added.

Meanwhile, Amazon.com’s Prime Day is now a major marketing opportunity and shopping event in the annual calendar for other US retail companies, rivaling the Thanksgiving holiday’s Black Friday as a driver of sales. Alibaba Group reported sales of $30.8 billion during its 24-hour online retail frenzy Singles’ Day in 2018.

Reuters