Alibaba Group Holding Limited, (BABA) through its subsidiaries, operates as an online and mobile commerce company in the People’s Republic of China and internationally. It operates Taobao Marketplace, an online shopping destination; Tmall, a third-party platform for brands and retailers; Juhuasuan, a group buying marketplace; Alibaba.com, an online business-to-business marketplace that focuses on global trade among businesses; 1688.com, an online wholesale marketplace; and AliExpress, a consumer marketplace.
Alibaba, which raised a record-setting $25 billion from its New York IPO has become a rapidly growing beast in the online marketplace and have hit the $200 billion dollar mark in revenue. Yes, both Wal-Mart and Amazon are shaking in their boots as Alibaba shows no signs of a plateau in the future. I wanted to get some real life experience with the monster so I chose to start sourcing product (mostly clothes) on AliExpress.com. Some experts predict world dominance by 2024, but I see it as being a little sooner than that.
Now, I realize that there are those who would simply choose to not buy direct from China for various personal reasons, but even in my numerous attempts to buy American, I have found that I have in fact bought from China. So, turning my attention to www.aliexpress.com for a shopping “experience” isn’t really a case of my throwing my hands up in the air and saying “well, if you can’t beat them, join them”, but instead, I wanted to delve into direct trade with various companies based in China who were selling everything Amazon was, and then some. (Over 300,000 plus products @ 50% off). I needed to see what one facet of the “umbrella corporation” looked like from the inside.
If you take a look at www.aliexpress.com, you will find a website that is very similar to www.amazon.com in design and user interface. My curiosity led me to sourcing from several different companies on the site from apparel to electronics. I must say, I have been impressed with the control that Alibaba places on the orders from processing to final delivery, as no seller is paid (funds released) until the item shows up on your door step, and you click on “confirm order received” in your account settings under “orders.” Yes, on certain occasions you get what you pay for in the form of $34 faux leather boots with wafer thin soles, and a $13 shirt made of origami like paper material. Overall though, I have been impressed with the quality of the products I have received. (Especially the ear buds for $9 that rival my $80 Sennheisers in quality of sound.)
What about the orders getting through Customs in a timely manner? From the time of the transaction to “free” delivery to my doorstep, in most cases, is an average of about three weeks, although I have had a couple orders take about two months. This being the exception rather than the rule, and remember, the seller doesn’t get the funds released to them until you confirm that you have received the merchandise, and 99% of sellers will extend the buyer protection plan if it is requested. The protection plan is roughly 60 days, allowing you a full refund if the product doesn’t reach you in that time. I have discovered that no less than a 5-star rating in a review is met with absolute distain, and most companies will bend over backwards to make things “right.”
There is a great deal at stake for the sellers on AliExpress as they ferociously compete for every order. Obviously, there are several stores (just like on Amazon) that offer the same, or very similar items, so many claim that they will beat any price, just provide them with the competitor’s link. I have also found that if I leave an item in my cart long enough without paying, the price is usually lowered to entice me to buy. (You buy now!!!!) You can communicate with any seller via email directly at any time, but I have discovered that the communication with customer service is quite a challenge with the language barrier, as the same facts as to why a particular order didn’t get fulfilled correctly needs to be repeated, over and over again.
In the bigger picture, Alibaba really needs to educate their sellers and start filling in the gaps where most are collectively losing a good percentage of market share in the U.S. by simply not adapting to the buyer’s needs. In a smaller picture, I can site one specific example: I found a company on AliExpress called “Jeansian” who manufactures the absolute coolest looking shirts for men that you won’t find in America, but their largest size is an XXL on the Asian size chart, which is the equivalent to a shirt size in the U.S. that would fit a very thin 10-year-old boy. Disappointed in the prospect of never being able to wear any of these really cool shirts, I asked the manufacturer if they would extend the sizes to at least a 5XL, and they said “no.” No!!!!!!?????? What???? To me, that is a case of simply ignoring a huge market share in the U.S. It upset me enough to send out a message to VF Corporation in Greensboro, North Carolina who manufactures the Rock & Republic clothing line for Kohls. If you take a look at “Jeansian” designs, and Rock & Republic, you will discover what I did, which is, Rock & Republic really needs to expand their designs to include “Jeansian.” Rock & Republic used to be owned and operated by Victoria Beckham, and they sold $100 pairs of jeans until filing for bankruptcy, but I will digress no further on the smaller picture. Besides, Jeansian is now selling their shirts on Amazon.com in the U.S. with an office/warehouse in San Francisco. (with U.S. sizes) Imagine that?
This is just one example I have found of many where the Chinese companies were missing the mark in the U.S., and some (most) simply do not feel they need to, (or don’t know how) to become more aggressive. Maybe they don’t need to be based on the sheer volume that they are doing not only in China, but around the world. I recently watched a video about “Alibaba” by Jim Tompkins of Tompkins International, on the Supply Chain Television Channel via CSCMP (Council of Supply Chain Management Professionals), and found it to be very informative. Here is the link to Jim’s video on Alibaba: http://www.scdigest.com/newsviews/15-01-26-1.php. It will give you a good overall view of just where Alibaba is heading in the future, and again, it’s nothing short of world domination.
Also, you may wish to subscribe to CSCMP’s membership as they cover international trade from A-Z: http://www.cscmp.org/. Braumiller Law Group has partnered with CSCMP in 2015 to provide training in a variety of areas in international trade: https://www.braumillerlaw.com/events/customized-training/. Nothing short of world domination.
A special note: A China regulator has accused Alibaba Group Holding Ltd of failing to clean up what it called illegal business deals on the e-commerce titan’s platforms, in an unusually strong government criticism of one of the country’s biggest private companies. (Very rarely done in China) The State Administration for Industry and Commerce (SAIC), in a report published on its website on Wednesday, said many products sold on Alibaba’s e-commerce websites and services infringed upon trademarks, were substandard or fake, were banned or endangered public security. Alibaba declined to comment on the report. (Stay tuned)
By: Bob Brewer, VP Business Development Braumiller Consulting