Alibaba’s B2B Plan Could Change the World of Cross-Border Commerce

Monday, May 11, 2015

Alibaba is a huge fan of the B2B business model. The eCommerce conglomerate, which has overhauled China’s B2C online shopping industry, has launched several initiatives within the B2B market, including partnerships in other Asian economies to launch wholesale eCommerce services in Thailand, Vietnam and Malaysia. The company has also fostered B2B eCommerce startups through its competition recently held in Hong Kong to promote innovation and progress in the industry.

When Alibaba founder Jack Ma spoke with Indian Prime Minister Narendra Modi during a visit to the country earlier this year, the firm reportedly discussed the strength of the B2B online commerce business model and the potential for various markets, including India and China. Not only does B2B align with government regulations, but it also supports SMEs more than the traditional B2C model, Ma
reportedly said.

But the Chinese company’s latest venture could be its loudest endorsement of B2B business to date. Reports said that Alibaba revealed via an emailed statement Wednesday (May 6) that it is launching a new operation that uses the B2B business model to offer cheaper imports into China. The impact, experts say, could have widespread implications for cross-border commerce around the globe.

The Plan

Alibaba’s wholesale site 1688.com, founded to facilitate domestic trade, is going global. The company said it plans to launch a new service on May 18 that sees 1688.com inking deals with foreign suppliers – first focusing on Spain, later expanding deals with Portugal, Italy and South Korea, Alibaba said – in a plan that aims to turn 1688.com into the world’s largest import sourcing portal. Buyers and sellers will be able to directly transact on the website.

In a sense, 1688.com will be the inverse of Alibaba.com, sourcing from oversees for domestic commerce, as opposed to connecting domestic suppliers with overseas buyers.

Separate reports said that 1688.com department manager Liu Fei revealed that the new initiative will lower prices of imported goods from Spain, especially wine, by cutting out several steps of the traditional import process that usually requires product handling from general agents, regional agents, wholesalers and exporters, with the cost of the product going up each step of the way. According to Fei, a bottle of wine imported from Spain will cost half as much as it usually does when imported through Alibaba’s mechanism.

Source: PYMNTS (link opens in a new window)

Tags
government, regulations