Alibaba’s B2B Plan

By: Hanming Li

Alibaba, which is interested in developing its B2B business, has shown strong dominance in China’s B2C online shopping industry. Recently, the E-Commerce conglomerate in China has launched many creative implementations to help them explore the B2B market in other Asian countries, such as Thailand, Vietnam and Malaysia. Alibaba revealed an emailed statement which announced that they were planning to launch a new B2B initiative in which they would provide cheaper commodities from other countries to Chinese customers.

The Plan

Alibaba has a wholesale site, 1688.com, which gives more choices to customers and suppliers; it went global on May 18th, 2015. First, they are focusing on Spain, Portugal, Italy and South Korea and then they might go to North America. The plan is focused on turning 1688.com into the most important portal for Chinese customers and foreign suppliers, and the buyers and sellers can transact on the website directly.

After Alibaba implemented this plan, they had two different options, which include sourcing from overseas for domestic customers, and connecting domestic suppliers with oversea buyers.

The manager of 1688.com has said that the big difference from other import channels is they will lower the prices of imported goods, especially wine. By cutting out many steps from original import process, which requires general agents, customers will receive a lower price than before. Depending on the product, manager Fei said the price will be half lower than before.

The Impact

In my opinion, the reason why Alibaba is staying ahead of its competitors in China is because they are easing friction in cross-border commerce; they are taking advantage of the opportunity that China’s middle class’s demand for luxury foreign brands has increased dramatically. Furthermore, the Chinese government is planning to open more free trade zones to help citizens get import goods more easily. On the other hand, Alibaba plans to use the B2B model and broader financial services to make their suppliers and buyers feel more comfortable with the transactions. The tool that they introduced to the global market is Yu’E Bao, which is an E-payment platform. This platform was introduced to the Chinese customers many years ago and it is showing great performance. I think this platform will be needed for E-Commerce businesses, and suppliers can use this platform to handle foreign exchange transactions.

Alibaba’s new cross-border commerce play takes a first step towards addressing a new international market, and also provides opportunities to other industries to export products to China. On the opposite side, “tinkers, builders, entrepreneurs, and small businesses can order custom motors and parts from Chinese factories without having to travel there.” The companies, which are located in other countries, will use this platform to investigate the Chinese market and make connections with Chinese companies. For many years, Chinese citizens who have wanted to buy foreign products needed to find different ways to reduce the cost, but now they have a solution to avoid the extra fees that they needed to pay previously. For example, French red wine, which would have previously cost¥1,000 or more, will now be 40% cheaper with Alibaba.

Their B2B model will become more well-known over the next 20 years because customers have put more focus on global business, and at the same time, they want easier and more convenient solutions.

References

http://www.pymnts.com/in-depth/2015/alibabas-b2b-plan-could-change-the-world-of-cross-border-commerce/

http://fortune.com/2014/09/08/alibaba-amazon-b2b-ecommerce/

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6 thoughts on “Alibaba’s B2B Plan

  1. zhengyang zhu November 30, 2015 / 9:06 pm

    Alibaba is China’s — and by some measures, the world’s — biggest online commerce company. Alibaba handles more business than any other e-commerce company. Alibaba always make a good investment in some industry. Thus its global business grow very fast. 1688.com will be a good connect for both Chinese and American customers. They can get cheaper products than before.I believe that 1688.com will be a revolution in online sale industry.

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  2. Tara Stuhr November 30, 2015 / 10:17 pm

    Alibaba has been known to be a great investment for future international commerce dealings. However, I don’t see their business model being accepted by many countries. For example, America thrives on small business opportunities and likes to circulate money to many outsourcing companies. Therefore, I don’t think that the United States would participate greatly in free trade zones. We have particular alliances with certain countries that we have a generally accepted business consent, but for other countries that aren’t fond of the U.S. or that the U.S. isn’t fond of ourselves it would be hard to establish free trade zones. However, with this being said, I think that having these zones for developing economic countries, such as China, is a great way to grow their practices. I think that using this business model for growing countries might help their commerce and international trading tremendously.

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  3. Chris Coveney December 3, 2015 / 8:35 pm

    Alibaba has been known for quite sometime that a solid investment for the future of international commerce dealings. The united states is a place that small business thrive and is something that this place thrives itself on. Being able to come up with a good idea on your own and excelling is somethingthat is extreamly hard to do.

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  4. Giulia Palombo December 8, 2015 / 8:24 pm

    I agree with the reason why ‘Alibaba is staying ahead of its competitors in China is because they are easing friction in cross-border commerce; they are taking advantage of the opportunity that China’s middle class’s demand for luxury foreign brands has increased dramatically.’ I think this company is doing a great job in capitalizing business strategies that focus on ethical and political conflicts to increase sales presence and expand to international companies, as well as capitalizing on middle class needs for luxury goods. It is interesting to note companies who are able to successfully take advantage of cultural stressors to improve company and brand success.

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  5. VISHNU VARDHAN KARUKONDA December 9, 2015 / 8:07 am

    Alibaba making sales by introducing new strategy, recently Alibaba passed 9 billion sales in 24 hours holding highest sales in online. In the coming future revenue for the online shopping will increase as the customers are focusing on price of the products and quality. I think B2B makes Alibaba more success when compared to other strategy because it creates customers loyalty as well as satisfaction on purchasing a product in online.

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  6. Brad Daly December 10, 2015 / 1:11 am

    With a massive capability and massive amount of users, Alibaba can certainly capitalize in this space. There is a significant market for luxury goods, and they are certainly desirable items to the middle class person. If they can continue to make this a reality, Alibaba can expand its customer base and the countries it serves in order to gain more profits and increase market share in addition to creating more customer loyalty and repeat customers.

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