This article was previously published on Retail TouchPoints.
While Alibaba followed the now well-established playbook for these events — new product releases, heartwarming entrepreneur stories and lots of team spirit — the company’s event stands out from the pack because it’s not actually for sellers, but rather buyers. In fact, many of the more than 2,000 people who attended the second annual CoCreate event take the products they buy on Alibaba and sell them on platforms like Amazon and Walmart Marketplace.
A Different Angle on a Familiar Story
Alibaba represents the other half of the marketplace machine, the place where entrepreneurs find a way to bring to life the products they’ve dreamt up. And yet, it’s interesting to note how much Alibaba’s pitch to its buyers mirrors Amazon’s and Walmart’s own pitch to their sellers, one that boils down to, “Our company is empowering small businesses.”
Same goes for the services Alibaba is building to stay competitive: financing solutions, fulfillment services, AI tools to make the process of using the platform easier, localized warehousing to speed up delivery. Sounds familiar, right? That’s because Amazon, and now Walmart, have all done the same. Somehow, the supply side of the online entrepreneurship machine is looking more and more like the selling side.
That’s a good thing, according to Alibaba: “Global sourcing is complex and we want to help small- and medium-enterprises (SMEs) navigate it better,” said Kuo Zhang, President of Alibaba.com at CoCreate. “We want to make global sourcing as simple as shopping online.”
Building the ‘Next Generation of Digital Sourcing’
One thing missing from CoCreate was the usual subtle, but still clear, digs at the competition. That’s because when it comes to online marketplaces (in the U.S. at least), Alibaba isn’t competing with the other big names, it’s feeding them.
“Having a business is very expensive, and Alibaba has made us profitable,” shared Jennifer Kennedy, Founder of gifting brand HoneyBug at CoCreate. “Packaging is a huge part of our business, and at the beginning we were losing a lot of money on it, so we started the process of optimizing our packaging with suppliers [on Alibaba]. It has been night and day, from a unit economic perspective, but also a quality perspective.”
That’s not to say that Alibaba doesn’t have competition in the U.S., but there’s nothing yet that comes close to touching its scale. In operation since 1999, Alibaba.com currently serves approximately 8 million SMEs in the U.S alone, according to Zhang.
Newer wholesale marketplaces like Faire and Bulletin are gaining traction, but they’re not yet a threat to the sourcing side of Alibaba.com’s business, and Alibaba has the market cornered when it comes to manufacturing resources. That’s a lead the company aims to hang onto.
“Since 1999 Alibaba.com has been democratizing global trade,” said Rah Mahtani, Alibaba.com’s Head of Marketing for North America at CoCreate. “We know that it’s really hard for small and medium businesses to compete on a global scale. That’s why we build tools on our platform to help level the playing field. We’re talking about simplified sourcing, decreasing the barriers to entry and the power to co-create your dreams into reality. And we are evolving the platform. In fact, we’re taking a huge leap into the next generation of digital sourcing.”
Among the new ways Alibaba is working to do that are:
- The launch of a conversational AI assistant to guide buyers through the sourcing process from end to end;
- The debut of new financing options to give SMEs better cash flow, including a co-branded Alibaba.com credit card and buy now, pay later options; and
- Ongoing initiatives to bring in suppliers from global markets outside of Asia, while at the same time building up a network of localized warehouses to cut down on delivery time and costs.
‘Redefining the Process of Sourcing’ with Conversational AI
At CoCreate, Alibaba formally launched its new AI-powered conversational sourcing engine (first announced in August during the Olympics), which the company believes will “revolutionize the global sourcing process for SMEs.”
Leveraging the latest advancements in AI technology, the tool synthesizes vast quantities of information from Alibaba, can interpret a buyer’s sourcing needs using natural language processing, will match buyers with products and suppliers and provides advanced tools to support sourcing decision-making.
“AI offers a completely new way to search,” explained Zhang at CoCreate. “With AI you can now describe your needs in plain language, whether it’s a detailed product description, a visual reference or even a sourcing list. And it’s like ongoing conversation — the AI agent can understand your needs and help you narrow down your search. Moreover, AI can automatically help you with communication and summarizing feedback from merchants, making the whole process much easier and faster. We have a lot of experience in the sourcing industry, so we can help you ask the right questions to find precisely what you need.”
New Financing Solutions to Help SMEs Manage Cash Flow
Alibaba also announced the debut of its first-ever co-branded U.S. credit card, in partnership with Mastercard, designed specifically for sourcing customers, as well as the addition of buy now, pay later options from Afterpay, PayPal and Klarna.
The Alibaba.com Business Edge Mastercard, which is powered by Cardless, offers consumers either 3% cash back or 60-day interest free payment terms on up to $40,000 in Alibaba.com purchases per year. After that, cardholders will continue to earn 1% cashback on purchases made on the platform. For purchases made off the platform, cardholders will earn 2% cashback on other business expenses, such as advertising and dining, and 1% on everything else. All purchases made with the card on Alibaba.com also are eligible for extended 90-day order protection through Alibaba.com’s Trade Assurance service.
“Access to capital is the number one stumbling block [for SMEs] globally — it’s essential for businesses to be able to grow, but it can be incredibly difficult to get,” said Jane Prokop, EVP for SMEs at Mastercard during CoCreate. “Business owners need support managing payments, forecasting and budgeting, controlling their spend, and they also need time management solutions to improve efficiency. But we know that no single player can solve all these challenges alone; innovation does not happen in isolation. Our collaboration with Alibaba.com is a perfect example of how partnerships can create value for the entire small business community.”
A More Diverse, Yet Localized Supply Chain
Alibaba is primarily known for its Asian suppliers. However, last year, the Alibaba International Digital Commerce Group (the umbrella division that Alibaba.com falls under) invested in European company Visable, which owns two of the biggest B2B marketplaces in Europe: Europages, with 3 million European suppliers, and the German-language WLW, with more than 600,000 suppliers from Germany, Austria and Switzerland.
In describing the company to attendees at CoCreate, CEO Peter Schmid called it a “re-startup,” because Visable actually got its start 92 years ago as a catalog at the Leipzig trade show. Now, of course, it’s been digitized; in fact, the company’s two websites first went live back in 1995, three years before Google. With Alibaba now a partial owner of the company, Schmid said it is already making significant technology upgrades to its offering.
For Alibaba’s part, the move represents a concerted effort to expand its supplier base outside of Asia. Andrew Zheng, VP at Alibaba.com also shared at CoCreate that “Mexico is set to play an important role on Alibaba.com” with more Mexican suppliers joining, although no additional details were shared on that particular regional expansion. Additionally, Alibaba.com has updated its search tab to allow buyers to search for products from specific regions.
“We want to give global SMEs more choices and help them diversify and simplify their supply chain,” said Zhang. “At the same time, we want to foster a strong and thriving local SME ecosystem. Our goal is ambitious — we aim to have over 100,000 global suppliers on Alibaba.com to diversify your supply chain within the next three years.”
At the same time, customers’ expectations for shipping times have never been higher, and being able to deliver on those expectations starts at the source. To speed up its ability to get products to buyers quickly (so they can, in turn, get them to their customers), Alibaba.com is planning to roll out a new Local Warehouses service. Alibaba.com will partner with local warehouses around the world to allow suppliers to store and even make products in different regions in order to reduce delivery time and cost. The first part of the project will kick off on the east and west coasts of the U.S. next quarter.
