From Etsy to Amazon and beyond, there are more e-commerce channels than ever before, and each represents an opportunity to make your brand visible while generating sales. In addition to American names, there is a whole world of international e-commerce.
And in this space is a company king – Alibaba.1
What is Alibaba? It is the world’s fastest growing e-commerce platform, but it is also a tech company, a hub for manufacturers and a forum for C2C sales.
In this brief guide, we will cover Alibaba’s vast network of goods and services and the ways in which US companies can benefit.
Alibaba’s many revenue streams
US media often refer to Alibaba as the “biggest company you’ve ever heard of.”
Alibaba was founded in 1999 by Jack Ma and has seen a meteoric rise from its roots in Hangzhou, China to its place in history as the largest US IPO. In 2014, Alibaba’s entry on the New York Stock Exchange raised $ 25 billion for the company
What does Alibaba do? It may be easier to list what it does not. Alibaba’s strength lies in the diversity of its offerings.
The company wears many hats, including:
Technical company – Alibaba provides cloud computing and operating systems to companies in China and around the world. Alibaba DAMO Academy (Academy for Discovery, Adventure, Momentum and Outlook) is a forum for new research in computing, robotics and other related areas and thus promises more innovations in the coming years. Export and Import Platform – Chinese exporters looking to place raw materials and manufactured goods on international marketplaces can connect with potential B2B customers on Alibaba. Similarly, startups around the world use Alibaba to find manufacturers for their products. e-commerce giant – Alibaba is the parent company of several different e-commerce sites. Together, they exceeded the last $ 248 billion last year – that’s more than Amazon and eBay combined. Alibaba’s sites make up 80% of e-commerce in China. Payment platform – Alibabay’s AliPay payment tool is similar to PayPal, enabling easy peer-to-peer payment and acts as a checkout option on e-commerce channels.
Next, we look at the most interesting aspect for American companies seeking to establish a strong international presence – Alibaba’s various sales arms.
Alibaba’s e-commerce channels
China boasts the world’s largest e-commerce market – and it’s only growing.
U.S. retailers interested in entering global markets are often curious about Alibaba’s e-commerce sites.
If you’ve heard of Alibaba, it may be that the site is full of fake goods, amounting to more than 10 million misleading lists a day.3 This issue makes some US consumers skeptical about the overall quality and truth of goods on the market. .
But Alibaba is still an exciting potential channel.
One third of buyers on Alibaba are actually based in the USA4 95% of sellers are based in China. Alibaba is actively seeking to attract US companies to remain competitive with Amazon.
So if you choose to sell on Alibaba, what are your options?
Tmall is China’s largest B2C market, full-stop. With over 500 million buyers, there is a large network of potential consumers. The launch of Tmall Global enables international brands to access these senders.
Companies can pay to create their own online storefront on Tmall. Chinese consumers tend to discover brands through established shopping channels rather than by visiting their websites, so a Tmall presence is the key to discoverability. Tmall’s comprehensive data analysis is available to help US brands understand Chinese consumer behavior and create effective marketing plans. Brands do not have to establish a Chinese business presence and can continue to use their domestic bank accounts.
While you can easily navigate the global Tmall website in English, you need to provide product descriptions in Chinese as well as implement Chinese-language customer support.
For these reasons, you may also want to consider using a Chinese agent to sell during a brand that already has an established store presence on Tmall.
AliExpress is fast becoming Alibaba’s leading global online marketplace. With a website available in sixteen different languages, there is a streamlined process to enter international markets.
As on Tmall, you register as a seller and open your own store facade. AliExpress University is a free guide to running a successful online store. Website logistics solutions make it fast and easy to ship internationally.
This is perhaps the more straightforward option for U.S. brands seeking to enter the global marketplace without finding out about logistics information or navigating the challenges of multilingual marketing.
Like eBay, Taobao is China’s largest consumer-to-consumer marketplace.
However, small businesses can also create accounts and sell goods.
Taobao has an average of 300 million daily active users compared to eBay’s 182 million.5 There is no English language version of Taobao, so you will need a Chinese speaker for staff to set up your sales.
Since the focus of this site is largely on small businesses, this effort may not be worth it unless you are absolutely sure that your product will appeal to the Taobao user base.
Selling on Alibaba’s e-commerce sites
Is it worth selling on one of Alibaba’s sites?
To make your decision, it is important to understand Alibaba’s requirements and fee structure.
Requirements for sale
To prevent counterfeiting and secure high quality products, Alibaba’s websites generally require the following information:
Business Information – Provide your location, contact information, website, and other information that can confirm that you are a legitimate business. Operating License – Although you may not need a specific license to operate in the United States, it can also provide credibility to provide proof of legality in the form of your EIN. Product Certifications – Although not required, certifications can allow you to sell in Alibaba markets with more stringent requirements (for example, the EU).
The verification process usually takes two days. Once approved, enter:
Fast international topic Refunds for returned items Customer support
As with US-based sales platforms, non-compliance with the Terms of Service may result in termination of your account.
Start-up costs and referral fees
US brands accustomed to selling on Amazon can easily test the platform at no start-up cost (apart from learning to navigate its unique structure and requirements).
Amazon charges a flat fee of 0.99 ¢ plus a referral fee of 8-15% for businesses selling less than 40 items per day. Month. If you sell more, business plans cost $ 39.99 per share. Month
In contrast, you almost always pay an initial transaction fee when selling in an Alibaba subsidiary.
AliExpress – It costs $ 1,500 annually to sell on AliExpress. In addition to the annual fee, you pay a commission of 5-8% on most sales.7 Tmall Global – Sales on Tmall Global come with a steeper starting fee of $ 5,000 – $ 10,000 (depending on the type of product you sell). Taobao – If you’re ready to tackle this Chinese-language site, be prepared to pay $ 2,000 to set up your merchant account.
In addition to the cost of start-up fees, consider other hidden costs, including:
International shipping Multilingual staff support (if needed) Marketing costs
Pros and cons of Alibaba
While there is certainly a price for sales and marketing on Alibaba’s channels, you need to weigh your investment against the pros and cons.
Benefits of Alibaba
A successful strategy on AliExpress or Tmall can help you increase your global presence.
You get benefits like the following:
Access to Global Markets – As Alibaba is the largest e-commerce store internationally, creating a virtual storefront can connect you to consumers from around the world. Lower referral fees – While the initial fees for setting up your storefront are steeper than in the US, the amount you pay Alibaba per. Sales, relatively low. In addition, some fees may be waived or reduced as you increase your sales volume. Some built-in support – There is always a learning curve when adapting to a new e-commerce platform. Alibaba offers free learning tools and can even pair you with an office representative to help you establish a plan for success.
Once you have paid your store fee, you are not necessarily guaranteed a sale.
Alibaba is a crowded marketplace filled with cheap goods from China and around the world. You need to sell at competitive prices and offer free shipping to compete. Likewise, the platform requires you to provide thorough customer service across differences in time zone or language.
If the resources you need to sell on Alibaba are eating into your profit margins, consider whether you want to see more success by investing in your domestic and international marketing.
If you are determined to expand your digital footprint with Alibaba, you can always hire extra support to make sure you start with the right foot.
Marketing-Ideas Marketing’s strategies for global growth
As a business owner, you probably sell more than one place.
In addition to your own online store, options like Instagram Shopping, Amazon and Alibaba provide unique opportunities to connect with customers. Unfortunately, each one requires its own marketing.
The team at Marketing-Ideas specializes in 360-degree strategies that create a unified fire voice across multiple sales channels. Whether your goal is to increase your social media conversions or catapult to the top of Amazon product rankings, we are here to help you achieve growth.
Contact today to learn more.
Wall Street Journal. Alibaba. https://graphics.wsj.com/alibaba/ New York Stock Exchange. Alibaba lists on the NYSE. https://www.nyse.com/network/article/Alibaba-Lists-on-the-NYSE Jinh Daily. Alibaba’s fight against counterfeiting: Where are we now? https://jingdaily.com/alibaba-fight-against-counterfeits-where-are-we-now/ Reuters. Alibaba welcomes US companies. https://www.reuters.com/article/us-tech-alibaba-usa/alibaba-welcome-us-small-businesses-to-sell-globally-on-its-platform-idUSKCN1UI1DO Oberlo. Top eBay Stats. https://www.oberlo.com/blog/ebay-statistics Amazon. Selling plans. https://sell.amazon.com/pricing.html#selling-plans CED Commerce. Your ultimate guide to selling on AliExpress. https://cedcommerce.com/blog/how-to-open-aliexpress-seller-account-to-sell-on-aliexpress/