Last week Alibaba hosted their first conference outside of China – Gateway 17 in Detroit. China Skinny was there.
Jack Ma has long had a personal dream of cracking the US and with plenty of cash in the coffers, Alibaba was out to dazzle the audience. Jack Ma was joined by Martha Stewart, Lisa Ling, Charlie Rose and robots, backed up with an arsenal of big statistics and some sage advice to entice more American businesses to export to China.
Whilst there are great success stories on Tmall and Tmall Global, the platforms aren’t right for every brand. It is not cheap to set up and operate, and new stores are competing with over 10 million other vendors who are often well established. Smaller brands may also have difficulty being accepted by Alibaba.
Alibaba has a finely tuned sales machine attracting foreign brands to its platforms. It has set up offices across North America, Europe and Australasia, has shiny campus tours for visiting delegations and now hosts overseas events to woo Western brands to its cross border channels. Yet with all the good news stories, there are some cautionary factors. For example, Tmall Global’s sales drive saw the number of brands selling on the platform grow 169% last year, with sales growing just 30% – a similar rate to ecommerce overall. In short, there are many more foreign brands competing for a smaller piece of pie.
Cross border commerce is also much more fragmented than Mainland based commerce. Alibaba commands around 80% of overall ecommerce sales in China and 57% of B2C commerce. Whereas Tmall Global accounts for just 18.9% of the cross border market and Taobao Global 15.4%.
There are a host of smaller cross border platforms that are often more targeted to specific segments such as food, wine, cosmetics, mum & baby, health and fashion. They may only have 10 or 20 million shoppers, but they are generally qualified for your segment, often more affluent, and the competition is less fierce.