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On Monday, options trading for Chinese ecommerce giant Alibaba debuted on the New York Stock Exchange. In September, the company raised a record-breaking $25 Billion with their initial public offering, making it the biggest haul in history. While that is an impressive feat, the bigger news is how Alibaba’s funding opens up huge opportunities for online store owners and small businesses, not just in China, but everywhere.
What is Alibaba?
While new to many Americans, Alibaba was founded in 1999. The company, founded by Jack Ma, was started to help small businesses use the Internet to grow and compete on an international level–and it’s succeeding. In the last fifteen years, the company has grown into a complete ecommerce ecosystem that includes everything from selling and sourcing to logistics, loans and payment processing.
It’s this incredible growth that has Wall Street all abuzz. Not only is the market far from saturated in China, but the US market seems primed for Alibaba’s main property, Alibaba.com. The site offers direct-from-manufacturer goods in bulk, solving one of the hardest problems for small businesses: how to source products.
Sourcing for the masses
No matter what size store you have, one of the biggest obstacles to overcome is finding a supplier to source and ship your merchandise. Big players like Amazon, Walmart, and Target either have connections directly with the manufacturers, or they have a team of folks constantly looking to find the highest quality and lowest cost source. Small and medium-sized businesses, often running on tight budgets with limited resources, have to navigate the supply chain maze themselves or have an expensive agent guide them. Now, thanks to Alibaba, merchants of all sizes can easily buy and source directly from suppliers.
As you can imagine, this is extremely exciting news for store owners. While there are other sites to help with sourcing, like Worldwide Brands, SaleHoo, Wholesale Central, and doba, Alibaba has the largest number of suppliers. In just a matter of clicks, you can pretty much find anything from electronics and apparel to jewelry and food–just like you were shopping for it on Amazon. And if you can’t find it, you can place an ad or buyer’s request looking for suppliers. Also, everything is at wholesale prices. Now everyone can get a little bit closer to competing against the big guys.
Admittedly, for me, there’s a little bit of anxiety about ordering a big batch of bulk items off the Internet. If I’m investing that much money, I want to know that I can trust the supplier. Bigger companies can afford to send employees or agents to inspect the manufacturer. Small merchants, on the other hand, just don’t have that luxury. Alibaba solves this problem by verifying 3rd-party manufacturer inspections, allowing you to organize an inspection, and keeping payments in escrow until you get your merchandise.
News reporters and analysts are busy looking to see what Alibaba’s massive IPO means to ecommerce. In China, alone, “analysts predict that China’s e-commerce market will be bigger than the existing markets in America, Britain, Japan, Germany and France combined by 2020.” And while it may seem a little crazy, some analysts think that after the eBay/PayPal split, Alibaba could swallow the online auction site whole and buy it out. That’s one way to spend the $15 billion in cash and short-term investments. It would also help ensure Alibaba’s penetration into the US market.
For ecommerce store owners, Alibaba makes it easier to find more unique products that fill the demands of consumers. While this will help the little guys take on the large catalogs and low prices of the big boys, it could lead to increased competition in the niche markets. To stand out in the long run, ecommerce entrepreneurs will need to focus on building their brand so they can own their niche.
Have you sourced from Alibaba? How was your experience?
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