Alibaba takes on Amazon with ecommerce overhaul

13/05/2019

Alibaba takes on Amazon with ecommerce overhaul

Chinese online retail giant Alibaba is revamping ts business model to compete with Amazon on a global scale.

The ecommerce group will make changes to AliExpress, a website that sells goods from Chinese retailers to 150 countries, allowing retailers from other markets to sell goods through the platform.

For the first time AliExpress has opened its platform to vendors overseas, allowing small and medium-sized businesses in Russia, Turkey, Italy and Spain to register and sell their products to other countries in the AliExpress network.

It plans to roll out the service — which it calls “local to global” — in more countries after building up experience in the initial four.

Alibaba said a “good foundation” of businesses from the four countries have already registered to sell through AliExpress.

President of Alibaba’s wholesale marketplace division Trudy Dai told the Financial Times: “From the very first day that Alibaba was founded we had a global dream.
“This year is the first year for our ‘local to global’ strategy.”

Alibaba’s global plans will be spearheaded by AliExpress, which registered a 94% spike in sales in its 2018 financial year. The ecommerce giant is also focusing on growing Lazada, its website that sells in Southeast Asia.

Haitong director Billy Leung said Alibaba’s global growth plan was aimed at offsetting “declining growth in China itself”.

Leung said: “They are at the point when they need a lot of growth to come from AliExpress and Lazada and other international businesses.”

Closing the delivery gap

Elliott Jacobs, Director at LiveArea, said: “Alibaba have titanic task toppling Amazon internationally. They have the financial clout to be a threat but will need to completely overhaul their customer experience and exponentially increase investment to make the strategy a success. Take the simple T-shirt – today, AliExpress offers delivery in 30-50 days, compared to same day delivery from Amazon. Closing this gap will take time, and means Amazon are unlikely to feel the heat in the near future.

“Above all else, Alibaba must focus on their customer promise, customer awareness and supply chain. Amazon were burnt in China and were forced to withdraw - Alibaba need to head that lesson and understand the new market before looking to conquer it.

“While Alibaba have the potential to steal market share, in reality ecommerce penetration rates in many regions – Southern and Eastern Europe, for instance - are so low that there is ample space for them to boost their footprints simultaneously. For the time being, the international opportunities are so great that the 10-ton gorillas can happily co-exist.

“Internationalisation is the great commerce opportunity of our time – brands need to develop a global strategy to maximise profits before companies, like Amazon and Alibaba, snap up too much of the market for it to be clawed back.”

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