With growth slowing in China, the internet behemoth unleashes AliExpress for global e-commerce dominance, applying lessons from Tmall
For Carine Danblier, 51, a Belgian housewife based in Brussels, shopping on Chinese online marketplace AliExpress has proved to be nothing short of a treasure hunt.
Every week, she snaps up cooking accessories, shoes and electronic gadgets directly from China via AliExpress, a subsidiary of Alibaba Group Holding. A few taps on her device keypad, followed by a few days in wait — that’s all it takes for the tamper-proof parcels to materialize at her doorstep.
So impressed was Danblier with AliExpress that she created a Facebook page just to share images of the goodies as well as information on online deals. Two years on, the page has 100,000 followers.
Alibaba has also become famous in Europe for its Singles Day shopping extravaganza on Nov 11, which created a buzz on online social media. The shopping fest has made Alibaba the world’s top e-commerce marketplace by transaction value. It reported a gross merchandise volume of $485 billion in fiscal year 2016. This is higher than $482 billion in revenues netted by Walmart Inc in the same period.
Alibaba is expanding overseas aggressively using AliExpress, in the process taking on global rivals such as Amazon and eBay.
Founded in 2010, AliExpress is the equivalent of Alibaba’s business-to-customer site Tmall, but targets only overseas customers. It has attracted more than 100 million international buyers as of April, said Dai Shan, president of Alibaba’s business-to-business unit.
Following a decade of explosive growth, China’s online retail market is expected to slow down to a 15 percent compounded annual growth rate, consultancy Mintel has projected. This means internet behemoths like Alibaba need to foray abroad for new sources of income.
AliExpress is gaining traction among users such as Danblier by reshaping their shopping behavior and building a personal rapport, said
AliExpress is planning to tie up with more local vendors, ship from local warehouses ... ” Sheng Difan, general manager of AliExpress in Russia
million
international buyers that AliExpress has attracted as of April this year
Zuniga Perez Pell, an employee at AliExpress’ Spanish operations.
“Wedding is perhaps the most important occasion for women. In the past, Spanish women never bought wedding dresses online. But now, taking a look at AliExpress before buying is becoming a ritual,” he said.
Agreed John Arregui, a regular Spanish shopper on AliExpress. His personal favorite is footwear. “I really like the clear assortment of all types of shoes, and I’d say China-made footwear is of superb quality.”
Alfonso Noriega Gomez, economic and commercial counselor of the Consulate General of Spain in Shanghai, believes e-commerce is an essential engine to promote trade and economic relations and a major conduit for products made around the world.
“Through Tmall and Tmall Global, Chinese consumers are able to enjoy products from Spain. We hope AliExpress can bring alive the virtual Silk Road by connecting Chinese merchandise with countries including Spain,” he said at an AliExpress conference in Hangzhou earlier this month.
Customers from more than 220 countries and regions have placed orders via the platform, according to the company. The top three countries ranked by total spending are Russia, the United States and Spain.
Apart from Spain, AliExpress also found early success in Russia, by offering Chinese products including clothing and car parts at a lower price. It also advertised its services and teamed up with local payment providers. The platform has been Russia’s biggest shopping site since 2014, according to researcher TNS.
A wide array of goods, partnerships with several key Russian payment providers, and a strong social media presence have helped make AliExpress the top player, said Shen Difan, general manager in Russia.
“AliExpress is planning to tie up with more local vendors, ship from local warehouses, and provide local after-sales service, including a no-excuse return policy in 72 hours,” Shen said.
Relatively super-quick delivery has become the real gamechanger. In Russia, parcels normally take weeks, or even up to two months, to reach buyers. Backed by big data technology, AliExpress has managed to shorten the delivery period to just four days.
This is part of an even bigger goal of global delivery within 72 hours in three to five years, using algorithm-based realtime analysis by Cainiao Network Technology Co Ltd, Alibaba’s smart logistics network.
Alibaba will be wading into a number of markets where no single player has yet to dominate. Challenges abound.
Many developing nations still lack the infrastructure crucial to widespread adop- tion of e-commerce.
According to Wan Lin, Cainiao’s president, the logistics network has teamed up with various postal services to ensure faster customs clearance, including a partnership with US Postal Service, Brazilian Post and Australian Post. It has picked up a stake in Singapore Post.
It will manage logistics globally and provide users with global traceability of their parcel shipment movement.
AliExpress aims to build a “cyber Silk Road” and serve up to 1 billion people from overseas, Shen said. “The Belt and Road Initiative, which aims to strengthen infrastructure, economic and trade ties in the Eurasian and Africa region, will lend AliExpress new momentum to grow its customer base tenfold in less than seven years.”
That creates a win-win scenario for both global shoppers and export-driven Chinese manufacturers, who are transitioning from being original equipment manufacturers to providers of higher-end branded products.
Napearl, a Chinese curtain maker, is riding the consumption boom overseas. Via AliExpress, the company receives regular orders from US customers for tailor-made curtains used in villas. Its monthly revenue could top $500,000, said Wang Yuting, its operations director.
Also reaping the gains is earphone maker Bluedio. According to Li Jiacheng, its marketing head, sales on Singles Day last year surged 120 percent compared to the previous fest.
“We’ve devoted a 30-people taskforce to research and development of critical technologies, and are on course to bagging a handful of patents. We’re building our own brand, and AliExpress is a good starting point,” Li said.
To date, AliExpress has groomed and fostered over 1,000 smaller merchants whose monthly sales in crossborder deals have surpassed $500,000 each.
“While globalization offers many benefits to multinational corporations, the Belt and Road Initiative aims to unlock the potential of SMEs (small and medium enterprises) by enhancing connectivity, and e-commerce is a critical channel to reach that goal,” said Zhao Lei, a professor at the Institute for International Strategic Studies, which is part of the Central Party School of the Communist Party of China.