Alibaba wants to woo U.S. small businesses. It’s unclear how enthusiastic the small businesses are.
Earlier this week, the Chinese e-commerce giant announced that, for the first time, it will let US companies sell on its platform. It’s part of a strategy to compete with Amazon, tap into a new supplier resource as well as expand beyond its current Asia stronghold. Currently, 95% of Alibaba’s sellers are based in China; the company said one-third of the buyers are from the US.
This push is focused squarely on the B2B market. Until now, businesses turning to purchase wholesale online through Alibaba were only offered Asia-based sellers. Now, the company is pitching itself to small distributors in the hopes that they’ll build their own digital storefronts on the platform.
To kick off this launch, Alibaba is hosting a series of events throughout the US in collaboration with local chambers of commerce to meet with small business owners and pitch the new services. The first one was in Brooklyn’s Industry City. John Caplan, the company’s president of North America B2B, unveiled the new platform and sat alongside executives from Office Depot, Wellbots and other local New York businesses to discuss the overall B2B ecosystem. The Alibaba executive talked about the platform’s growing emphasis on the US market, and how he sees his North America team of 42 — and the other entrepreneurs in attendance — as building a robust “ecosystem of relationships.”
The elephant in the room was, of course, Amazon. Data from Avionos says that 33% of B2B buyers now begin purchasing goods either through Amazon Business or Google; conversely, 32% start by going directly to a wholesaler’s website. In fact, according to a June 2018 survey by eMarketer, 78.4% of B2B buyers chose Amazon Business to research and buy products online. One attendee who runs a local bakery described to the panel the difficulties her business faced thanks to increased expectations made by the US e-commerce giant — namely, free shipping.
Another entrepreneur in attendance, who works for a hair product company attempting to expand sales to North America, said he came to the event to get a sense for what the hubbub was about. His company uses many online channels to sell — Amazon, Shopify — and has had difficulty getting widespread distribution in the United States, given how fragmented the industry is for brick and mortar stores. He wasn’t necessarily enthusiastic about Alibaba solving his North America scale problems, but added that any competition to the ever-growing Amazon behemoth “is good.”
This is just the latest step the Chinese company has made to make itself more well-known in other geographies. For example, it recently inked a deal with Walgreens to use its payment platform in US stores, as well as have Walgreens products featured on Alibaba’s Tmall marketplace. The e-commerce company has also been working with Office Depot specifically to help get this small business e-commerce initiative off the ground.
To gain any traction against big players like Amazon, Alibaba will have to continue accruing partnerships with US players, which will likely further help it look attractive to more businesses. Until then, businesses may use it as a hedge to diversify revenue, but Alibaba’s not the next Amazon killer just yet.