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Alibaba already had its sights set on global expansion, but the coronavirus outbreak has given China’s largest e-commerce company the opportunity to accelerate that vision.
In recent weeks, the Hangzhou-based tech giant has become a crucial intermediary between Chinese factories and the global demand for equipment needed to fight the pandemic, from face masks to hand sanitizers and fans.
In part, this is due to donation efforts by founder Jack Ma and Alibaba’s charitable arm, which has shipped more than 40 million items of personal protective equipment to 150 countries, and pledged to deliver 101 million masks to the World Health Organization.
But Alibaba’s newly discovered PPE dominance has also opened it up to a huge new potential market as global consumers turn to the Chinese e-commerce giant for the first time and discover what else it has to offer them.
In Europe and the USA USA In particular, the company’s platforms have benefited from a sharp increase in demand that has made it difficult to find protective gear locally and on overloaded e-commerce platforms like Amazon and eBay.
In Spain and Italy, traffic to the company’s AliExpress platform, which connects Chinese merchants with buyers from around the world, increased by 20% and 14% respectively during the first quarter compared to the previous year, according to SimilarWeb data.
Alibaba’s English subsite for coronavirus protection equipment
“We are very much in need,” said Emanuele, 20, of northern Italy, who placed his first orders from Alibaba this month after failing to find masks elsewhere. “The state only gave us a disposable mask, but we are six adults and two children,” he said.
In recent months, Alibaba has especially targeted southern Europe, where online shopping is less established than in countries like the US. The US, the UK and Germany, so their competitors are not as entrenched.
The company has poured advertising resources into these regions in an effort to win new customers. According to Sensor Tower, Alibaba was among the most-displayed shopping app ads in France, Spain, and Italy in February and March on Facebook’s ad network.
Meanwhile, the company is also gaining new clients in other parts of Asia.
“Where I live, there is an absolute shortage of PPE,” said Sajjad Ahmed, 31, from Pakistan, who last month placed his first order for 50 masks on AliExpress. “The masks here are sold as hot cakes right now. Local sellers are doubling prices to customers after getting them from AliExpress. “
PPE supplier to the world
Alibaba’s emergence as a PPE supplier comes amid a global expansion plan that was already underway. Last year AliExpress opened up to local sellers in Spain and Italy, among other countries, undermining some rival platforms by charging lower commissions.
According to David Dai of Bernstein Research, the company is seeking international growth on two fronts: directly through AliExpress in mature and competitive markets, and through locally managed e-commerce platforms in emerging markets.
“Alibaba certainly has an ambition to expand abroad and become a global e-commerce giant,” he said.
In recent years, the company has cultivated a substantial global footprint, with a mosaic of local e-commerce sites, including Lazada from Singapore, in which it has invested $ 4 billion, and Trendyol from Turkey and Daraz from Pakistan, which it acquired in 2018. Elsewhere it has invested $ 945m in the Tokopedia of Indonesia, acquired a stake in Snapdeal in India, and formed a joint venture, AliExpress Russia, which has come to dominate online sales in the country.
Before the outbreak broke out, Alibaba’s international e-commerce companies contributed around 6 percent of their sales in the fourth quarter of 2019, having grown 23 percent from the previous year. Its Cainiao logistics arm reported 67 percent growth, in part as a result of transporting more packages abroad to its 120 million annual overseas buyers.
AliExpress, which launched in 2010, is at the center of its international efforts, though so far it has offered global customers a somewhat mixed bag: lower prices in exchange for long waits, as most packages originate in China. As a result, AliExpress, which offers everything from vacuum cleaners to wigs, has been more successful in countries where Amazon penetration is low and fast delivery is hard to come by.
“When Amazon is weak or missing, AliExpress is stronger,” said Ralph Huebner, a partner at Ecom Consulting GmbH.
The coronavirus pandemic is introducing new clients to the platform. In the first three months of the year, AliExpress was among the most downloaded shopping applications in countries such as Spain, France and Poland, according to Sensor Tower data.
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Meanwhile, the company has seen an increase in air shipments, mostly containing face masks and other medical equipment, to its European center in Liege, Belgium, where Cainiao is building a € 75 million ($ 82 million) logistics center. ) on more than 30 soccer fields. Earth. The center connects to a new line of freight trains from China and is central to Alibaba’s plan to confront Amazon in Europe.
“From Hangzhou to Liege we used to do three flights a week. It is now four o’clock. We will add another in the next two weeks, ”said James Zhao, general manager of Cainiao Global Supply Chain.
Cainiao plans to build a similar logistics center in Africa, Zhao said, noting that preparations were still in the early stages. The e-commerce company hopes that the continent’s 1.2 billion people can help it meet its goal of reaching 2 billion customers by 2036.
Beyond the mask business
After the current crisis, the challenge for Alibaba will be to tap into its recent gains and convince the world to turn to it for more than just PPE.
“The mask business provides a reason for customers to try AliExpress. When people realize that it is easy to buy masks on AliExpress, they will use it to buy other things in the future, “said Chris Bu, manager of 4PX backed by Alibaba, a logistics partner for Cainiao.
The Jack Ma Foundation delivers EPP to Juba in South Sudan as part of a charitable effort to supply African countries © AFP via Getty Images
In Europe, the company faces a battle similar to the one it overcame in its local market, where five years ago it was known for slow and unreliable shipping compared to rival JD.com, which pioneered next-day delivery. Alibaba finally prevailed by investing heavily in its logistics infrastructure and taking stakes in partner courier companies, and is now following a similar strategy in Europe.
4PX had warehouses in seven European countries and was working with AliExpress to develop local fulfillment options, Bu said.
“China’s e-commerce took off after the Sars outbreak. I think this time we will see a similar trend in Europe,” said Mr. Bu.
Still, the company’s free markets pose challenges in attracting occasional buyers outside of Amazon.
Last week, Alibaba took steps to prevent the sale of low-quality, counterfeit masks, an issue that has tarnished China’s reputation as a supplier. Factories selling bulk masks on Alibaba.com now need to undergo additional verification, and most AliExpress shipments to the US USA They have been reduced as vendors are reviewed.
Meanwhile, Ahmed in Pakistan said he was diligently reading the reviews before ordering from a seller, who never shipped his first batch of masks, though AliExpress did eventually provide a refund.
“With KN95 masks or N95 masks, [they] give you 100,000 results. . . It’s a difficult site to navigate, “said Yury Tsukerman, who created an intermediate website called Areweoutofmasksyet.com to help people buy EPP through AliExpress.” It’s not like going to Amazon. “
