Twenty-year-old Chinese ecommerce giant The Alibaba Group is making moves to grow its US B2B business, allowing US-based small and medium-sized sellers to list goods on its B2B marketplace, Alibaba.com.
With this move, Alibaba is making several bets.
The first is to fill demand gaps. With more than 300 million product listings across more than 5,000 product categories, supply volume is not the issue. Upwards of 90% of those products come from Chinese factories that produce low-cost custom goods, according to John Caplan, head of North America B2B at Alibaba Group.
While this supplier pool offers buyers many bespoke manufacturing options, commodity items—commonly sold on competitor Amazon—aren’t as popular on the marketplace.
But Alibaba.com B2B buyers, mainly from developed markets like the US, Canada, Australia, India and Brazil, want more than the custom goods currently dominating supply on the marketplace. “There's demand in our system for products beyond specialized manufacturing that we haven't met in the US,” Caplan said.
This includes commodity items for bulk purchases from categories like food and beverage, agriculture, beauty, apparel, electronics, vehicles and accessories, office supplies and medical.
Entry into the commodity goods market has the potential to put Alibaba toe-to-toe with B2B marketplace competitor Amazon Business, which generated $10 billion in sales in 2018 across eight markets globally (the US, UK, Germany, France, Italy, Spain, Japan and India). While more than half of those sales were from third-party sellers on the marketplace, Amazon—which owns its inventory as a distributor—sold the other portion. (Editor's Note: Amazon did not immediately respond to requests for comment.)
Caplan maintains there are big differences between Alibaba.com and Amazon: Alibaba.com doesn’t take a commission on orders, but monetizes through ad revenues and an annual membership fee in the “thousands." Further, unlike Amazon, Alibaba doesn’t own inventory, so sellers are only in competition with each other, not with Alibaba.
Still, June 2018 research from B2BecNews found that while nearly eight in ten US B2B buyers used Amazon Business, only 36.5% shopped on Alibaba.com.