> Posted by Jeffrey Riecke, Senior Communications Associate, CFI
In most countries, you don’t hear much buzz about business-to-business (B2B) eCommerce. In the United States, for example, our eCommerce goliaths of the moment are Amazon and eBay, which focus on the business-to-consumer (B2C) segment. But this isn’t the case in China, where the B2B eCommerce industry is ballooning and drawing the rest of the world in. It grew by 32 percent to US$ 3.76 billion in revenue in 2014, and in the coming years the revenue growth rate is expected to stay over 20 percent. China’s B2B break-out market leader is Alibaba, which brought in about US$1 billion in B2B eCommerce revenue in 2014, comprising roughly 34 percent of the country market. Alibaba has been busy with B2B this spring, partnering with alternative lending startups in the United Kingdom to facilitate B2B trade between the two countries, hosting a B2B eCommerce competition in Hong Kong to support Chinese SMEs, and, as of this coming Monday, launching a new cross-border service on its 1668.com platform to facilitate foreign imports for Chinese SMEs.
By now, whether from their record-breaking IPO last fall, record-breaking Singles’ Day online sales, or their success in payments, mobile money, financing, and other online marketplace activities, you’ve likely heard of Alibaba. The company does the majority of its business in its consumer-facing sites, which include AliExpress, Tmall, Juhusu, and Taobao. The Taoboa marketplace, for example, is the biggest customer-to-customer marketplace in China, hosting (as of late last year) 8 million vendors, most of which are small and micro-sized entrepreneurs. Though Alibaba’s retail space netted US$ 8 billion in 2014 to its wholesale’s US$ 1 billion, the company’s B2B stature is anything but marginal. All told, Alibaba has a higher trade volume than Amazon and eBay combined.
Alibaba primarily works in the B2B space through Alibaba.com and 1688.com. Alibaba.com, the world’s biggest B2B eCommerce platform for small businesses, handles sales between domestic suppliers in China and wholesale buyers in over 240 countries. (Alibaba.com is similarly available for domestic suppliers in India and Pakistan, too.) The site also encompasses AliExpress, which enables smaller buyers to source smaller amounts of goods at wholesale prices. 1688.com supports domestic trade and business, facilitating merchants purchasing goods from one another within China. Taken together, the two platforms open up the world’s potential buyers to Chinese businesses of all shapes, sizes, and locations. The platforms make it easier and cheaper for businesses to get connected, verify one another, access credit, complete transactions, manage logistics, and analyze data.
This past March, in an effort to expand options for SMEs using Alibaba.com in the U.K., Alibaba formed partnerships with iwoca and ezbob, two alternative credit scoring startups that harness data from sources like online shopping behavior.
Last month, Alibaba’s first-ever Outstanding B2B eCommerce Business Competition in Hong Kong came to a close. The four-month competition aimed to support innovative Hong Kong SMEs working with eCommerce to disrupt the global B2B supply chain. The winner of the competition, United Art Metals Factory, will have access to resources from Alibaba, such as training and exchange activities. A series of similar competitions are forthcoming.
On Monday, Alibaba is introducing a new service on the 1688.com platform that effectively is the inverse of Alibaba.com. Instead of Chinese SMEs selling goods abroad, they’ll be wholesale buying from abroad. Reports indicate that the first country participating will be Spain, followed by Portugal, Italy, and South Korea. Alibaba seeks to build the service into the largest sourcing platform for imports. Later this year, the service will likely offer customs clearance, logistics support, and product inspection services. The initiative comes at a time when China is easing policies to make it easier and faster to import goods. 1688.com department manager Liu Fei said that the new platform will dramatically reduce import prices, by cutting down on product handling via agents, wholesalers, and exporters. Fei also reported Alibaba’s plans to launch a broader range of cross-border financial services, however, details are still forthcoming.
Just as the digitization of finances opens the door to greater financial access, so too does the growth of robust online marketplaces for small business activity. We’ll look forward to the new 1688.com platform’s launch on Monday, and seeing how Alibaba utilizes its stable of financial services options to facilitate this business ecosystem.
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