Is it time to sell products on Alibaba? I think it is.
Just this week, the Chinese ecommerce giant and Amazon-rival announced that it will be opening up its platform and providing tools specifically for U.S. small merchants. The potential is enormous. Alibaba has customers worldwide and according to Reuters, U.S. merchants will be able to sell to Alibaba's customers in India, Brazil and Canada, as well as other U.S. businesses.
"You get to compete and act like a multinational company in a way you've never had the tools or technology to be able to do so," John Caplan, head of North America B2B at Alibaba Group, told Reuters.
It's quite possible that selling your products on Alibaba could turn into a big deal for you. So is it not your responsibility to consider this potential? Of course it is, and for a few good reasons.
For starters, it's a new, and potentially enormous channel to develop - and you need to expand your channels if you want to grow. The smartest business owners I encounter are all about diversifying and reaching new markets. My best clients, whether or not they're a brick and mortar store, are developing other channels for their products - both on and offline. For those into ecommerce, many are realizing that Amazon isn't the only game in town. They can sell on eBay or Etsy or use applications like Shopify, BigCommerce or Magento to sell from their own websites. Now, there's Alibaba and its millions of potential customers. My recommendation - assuming you have the resources to manage it - is to exploit as many as these channels as possible.
Alibaba taps you into an enormous market. As great as Amazon and eBay are, Alibaba has 150 million users across the company's 189 other markets outside of China. It's an enormous number of potential buyers for your products. There's no word from them yet, but I would hope in future Alibaba will also be giving U.S. businesses more access to their Chinese market as well as tools and services to help its American sellers over the next few years for facilitating shipment, customs and other bureaucratic challenges.
It's not just about consumers, either. There are both B2B and B2C opportunities. Alibaba is hoping to not only help American companies sell to consumers but to also build a market place where those same companies are selling to foreign companies as well. "Alibaba.com was well known as more of a gateway to China's well-established supply chain for global buyers," Daiwa analyst John Choi said in the Reuters report. "Now they are opening this up to U.S. small businesses so they could sell their products." The global B2B e-commerce market is $23.9 trillion, more than six times the global B2C market.
Of course, succeeding on Alibaba is going to take resources. The company provides services in English but let's face it: they're relatively new to the game when it comes to working with American companies and there are sure to be cultural hurdles. But if there's one thing any business owner like myself can tell you is that nothing is easy - and the entrepreneurs who get there first will certainly have a leg up on those that delayed.
One final thing to note is cost. Alibaba's Caplan believes that small business owners looking to sell to Alibaba's overseas customers will be enticed by Alibaba's fee structure and business model. He says that the company charges a membership fee of around "a few thousand dollars" as opposed to taking a cut of each sale and also offers advertising options for its merchants. Whether this turns out into real savings remains to be seen. But at the very least, the costs to do business there should be somewhat similar to Amazon.
"Getting new customers is hard, and when you have an online store, you don't automatically have customers," Caplan told Business Insider. "There has been, up until now, no global platform you can join where you could actually get customers all over the planet, and we're trying to combine the best of those two capabilities for US small businesses."