Chances are, you've only recently heard of Alibaba. It's the first name in e-commerce in China, with sales worth more than those of Amazon and eBay combined. It reportedly controls nearly 80% of China's vast, rapidly growing internet shopping market, and its Alipay payments unit completed more mobile payment transactions in 2013 than PayPal and Square Inc. put together.
But Alibaba was a relative unknown until news broke in March of a planned IPO. And now, as people are quickly learning, Alibaba is no longer just a Chinese company. Its business-to-business (B2B) service links small enterprises around the world with manufacturers in China, and its business- to-consumer (B2C) operation gives them a shop window in the world's most populous market. The company employs 24,000 people and has more than 36m registered users.
James Hardy, Alibaba.com's head of Europe, is bringing the principles of Chinese e-commerce to Europe. Alibaba.com is the B2B arm of the parent company that aims to become the go-to English-language platform for cross-border trade, and to help small businesses, worldwide, to expand to overseas markets. The platform serves millions of buyers and suppliers - from more than 240 countries and regions - and people trade everything from fashion and high technology to industrial chemicals, kidney beans, and trampolines. But, in Europe, this internet giant has a low profile.
"It's a significant challenge," Hardy says. "In China, Alibaba is the dominant player, and brand awareness is 100%. Brand sentiment is pretty much 100% as well, whereas - within the European market - we're a challenger brand. Your very first challenge is to generate brand awareness. Without that, you're always going to have a problem trying to persuade somebody to become a member, or to use your services."
Start small
British business Blends for Friends, based in Kent, is the kind of venture that Alibaba.com is hoping to attract in Europe. It takes tea grown in China, blends and packages it in the UK, and sells it back to upmarket Chinese consumers through Alibaba's B2C service, Tmall. Tmall is a one-stop shopping platform with around 70,000 'stores', of which 20,000 or so are non-Chinese.
Some, such as Blends for Friends, are small operations that use the platform to avoid the headaches and expense of setting up physical shops and warehouses far from home. Big, global brands - such as Clarks, Lacoste, Mothercare, Clarins, Marks & Spencer, Accessorize, Gap and Nike - use Tmall too, lured by the sheer scale, and increasing wealth and sophistication, of the Chinese consumer market.
At the end of 2013, the value of online retail sales in China surpassed those of the US for the first time. By 2015 or 2016, Chinese e-commerce is expected to be worth more than that of the US and the European Union combined. In Europe and the US, consumers frequently shop at stores' individual online outlets, and only 25% of sales are through an e-commerce platform. In China, however, 90% of e-commerce is through shopping platforms, usually Alibaba.
Now, with a New York public listing in the works, it's clear to see how far the company has come since it was launched, 15 years ago, by former English teacher Jack Ma in a flat in Hangzhou, south of Shanghai. Its expansion, Hardy says, has been primarily driven by data and quick-fire online research.
"What always drives the strategy is the underlying mission, which was identified very, very early by Jack Ma," he says. "Right from the start, it was to make it easy to do business anywhere. The focus over the years has been on SMEs because it's fairly easy for big companies to do business anywhere. The challenge is for small and medium-size companies."