China’s Alibaba: Should Amazon, eBay and Overstock Worry?

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 I’ve long been fascinated by what’s happening in the world of international commerce. My intrigue has grown considerably over the past week after a lunch with two new friends from China. Over dumplings, a spicy chicken dish and cabbage, we explored a cornucopia of topics from the future of Big Data to the emergence of the messaging platform WeChat. But the biggest discussion topic was the explosive success of a global e-commerce enterprise in China that few westerners have even heard of……

Alibaba.

Founded in 1999 during a time when less than 1% of China’s population was online, Alibaba has minted itself as the world’s largest e-commerce company with a customer base that exceeds that of Amazon. Back in 2014, the company made history by raising $25 billion – reputedly the largest IPO ever – exceeding that of Google, Facebook and Twitter combined!

Now comes word out of China that Alibaba endeavors to significantly expand its footprint worldwide after a stunning set of accomplishments in their home country. According to the book ‘Alibaba’s World: How A Remarkable Chinese Company Is Changing The Face Of Global Business’, the company currently has approximately 300 million customers, while facilitating over 80% of China’s e-commerce transactions. And this is in a country where per-capita income averages $6,800 per year, and only a quarter of their population has ever ventured into the world of online shopping.

A One-Day Shopping Explosion

In an interesting twist six years ago, Alibaba turned November 11 into China’s equivalent of the U.S. Cyber Monday . Known as Singles Day in China, it is reputed to be the world’s largest 24-hour shopping event, trumping the combined force of Cyber Monday and Black Friday. This year, the shopping event generated an astounding $14.3 billion in gross merchandise volume; a figure which signals the growing influence of the company as well as its enormous impact on the Chinese economy.

Perhaps most impressive about Alibaba’s online presence is its diversity of revenue streams across multiple product lines and offerings. Sales transactions and payments are generated through a stealth digital money wallet called AliPay that connects the dots between the company’s massive array of domestic and international platforms.

 Alibaba’s Next Big Leap

Possessing a dominant presence in the online economy, the company is strategically positioned to capitalize on the projected half-billion people who will join China’s middle-class over the next 15 years. The impact of this demographic surge will be a massive demand for high-quality products and services among its populace.

Dovetailing off of the company’s domestic success, Alibaba founder and CEO Jack Ma is now focussed on building Alibaba’s presence outside of China. To this goal, he is pursuing a massive set  of investments and partnerships to fuel his expansion plans. Included here is a new relationship with the coffee giant Starbucks, which recently announced that it will be employing Alibaba’s stealth e-commerce site tMall as a part of its international expansion efforts.

However, there are a couple of significant barriers that could hinder expansion plans. For starters, Alibaba’s site is reportedly rife with fake, knock-off and illegitimate goods that may ultimately threaten the integrity of the company’s reputation. To this point, Ma recently hired former Apple leader Matthew Bassiur to lead the effort in addressing counterfeit items that find their way onto the website. Bassiur previously worked in a similar role at Apple, assisting the tech company in tracking down fake iPhones and the theft of intellectual property.

Ma has publically said that 2016 could be a challenging year for China and Alibaba amid the country’s economic adjustments and government spending crackdowns. Nevertheless, Alibaba’s slow and steady climb to global domination should cause Amazon, eBay, Overstock and the like a good measure of concern.  

Michael Scott is a Denver-based journalist whose primary work focuses on disruptive trends in the new digital economy. More on Michael can be found at BitDisrupt

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