Caixin
Jul 24, 2019 01:58 PM
BUSINESS & TECH

Alibaba Open to U.S. Merchants for First Time Amid Trade War

The Chinese internet powerhouse is opening up Alibaba.com just as a decelerating home economy depresses the top line. Photo: Bloomberg
The Chinese internet powerhouse is opening up Alibaba.com just as a decelerating home economy depresses the top line. Photo: Bloomberg

(Bloomberg) — Alibaba Group Holding Ltd. is opening its oldest online platform to U.S. merchants, promising to help American businesses at a time when U.S.-Chinese tensions are darkening the outlook for global trade.

The Chinese e-commerce giant on Tuesday opened up Alibaba.com to U.S. sellers for the first time, allowing them to peddle to buyers around the world who seek merchandise to stock shelves or materials to make products. Alibaba says it now wants American producers to hawk their wares as well, eventually helping them tap a vast Chinese market. Fruit and vegetable wholesaler Robinson Fresh and Office Depot Inc. will be among the first U.S. names to join Alibaba.com.

Two years after billionaire founder Jack Ma promised Donald Trump he would help create a million American jobs, Alibaba is opening up its wholesale platform to U.S. sellers who want to tap a multi-trillion dollar global procurement market. The initiative could generate new income and also goodwill for Alibaba in the U.S., particularly as Washington and Beijing spar over trade. The threat of rising tariffs is now encouraging businesses to source their merchandise and components locally, said John Caplan, president of Alibaba’s North American business-to-business effort.

Rollout plan

U.S. business owners “increasingly want to find domestic producers because of trade concerns and this platform will allow them to do that,” he told Bloomberg News. He anticipates strong demand for American agricultural produce and consumer products. “Anything you put on or in your body.”

Alibaba will send staff to promote the service to businesses and local chambers of commerce, and plans a September promotional event to drum up awareness, Caplan added.

“The success of this program will depend on whether Alibaba can recruit a strong number of successful sellers,” said Jillian Ryan, principal analyst at researcher eMarketer. “It will ultimately determine whether Alibaba will be able go toe-to-toe with Amazon in the B2B commodity market.”

The Chinese internet powerhouse is opening up Alibaba.com just as a decelerating home economy depresses the top line. The online retailer is expected to soon post its slowest quarterly revenue growth in three years.

Oldest unit

Unlike its better-known consumer bazaars Taobao and Tmall, Alibaba.com was originally envisioned as a way to match foreign firms with Chinese wholesalers of everything from watches and shoes to raw textiles. Operating under the motto “global trade starts here,” Alibaba.com now connects about 150,000 mostly Chinese sellers. It had some 650,000 registered U.S.-based companies as of 2017. Those American businesses previously could only buy, not sell, via Alibaba.com.

It’s the Chinese giant’s oldest business, but now accounts for just a sliver of revenue, mostly through membership fees, marketing and shipping assistance.

Alibaba still gets the vast majority of its revenue at home, but has taken steps to court international markets in recent years. It acquired Lazada to spearhead a foray into Southeast Asia. It’s also tweaking its main businesses: in June, it set up an English-language portal on Tmall for the first time to entice more merchants from around the world to sell to Chinese consumers.

But like rival JD.com Inc., Alibaba is trying to grab a bigger slice of so-called cross-border e-commerce, particularly as affluent consumers in the world’s No. 2 economy buy more goods from abroad. That market is expected to reach 3.6 trillion yuan ($523 billion) by 2020, according to AliResearch, a unit of Alibaba.

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