How Alibaba’s success is shaping a new generation of B2B ecommerce for SMEs

Posted by Uncategorised • July 6th, 2015

Think large-scale, global ecommerce and the two big names that spring to mind are probably Amazon and eBay. But both these corporations are eclipsed by Chinese giant, Alibaba, whose 2014 sales were estimated at USD 420 billion – over five times that of closest competitor, Amazon. Established in 1999, most of Alibaba’s revenue comes from its B2C ecommerce sites, but in 2014 a staggering USD 1 billion was generated from the company’s B2B business, an online platform connecting buyers all over the world with suppliers in China.

After posting a record-breaking initial public offering of around USD 25 billion last year, Alibaba’s success in the B2B arena through sites and has been driven by its unique access to the Chinese supply chain and a focus on providing an easy-access global sourcing solution for small and medium size businesses. With over 10 million SMEs now using Alibaba’s B2B marketplace, there’s even a dedicated part of the main site, AliExpress, designed for smaller businesses to source smaller amounts of goods at wholesale prices.

While most large organisations use automated procurement processes, many smaller businesses still have manual systems, faxing and filing paper purchase orders and quotes. Alibaba was quick to recognise the huge opportunity to streamline the procurement process for these companies, while providing access to a new world of low-cost international suppliers. They’ve made it easier and more cost efficient for SMEs everywhere to become global traders.

Innovation remains an important factor in Alibaba’s continuing success, with the business recently embarking on a number of initiatives to expand its global reach and influence, including the launch of new cross-border service on the platform enabling Chinese SMEs to access foreign imports, and partnering with UK lending providers in order build stronger B2B trading relations between the two countries.

With major B2C ecommerce marketplace providers like Amazon and eBay slow to respond to the opportunities offered by B2B, especially in the SME sector, the seemingly unstoppable progress of Alibaba is now inspiring a new generation of high-performing start-ups, including Joor, Lockboard and Tradeshift. These businesses provide SMEs with buyer-driven workflow solutions for specific product groups, simplifying procurement processes, reducing the cost of transactions and making and supply chains more efficient.

Alibaba continues to create the path for a growing number of emerging B2B ecommerce marketplaces and SMEs increasingly have the opportunity to benefit from streamlining their paper-based, error-prone supply chain management. As Forbes says in a recent report: “The technology has improved, buyer expectations have increased, and automation is becoming increasingly powerful. The days of faxing procurement forms may not disappear entirely over the next five years, but the coming generation will wonder how we ever got by.”
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