Product-sourcing site Alibaba.com, which connects buyers with foreign manufacturers and suppliers, has already had an impact on our industry. Part of the Taobao/Alipay family of e-commerce sites which are said to control as much as 80 percent of the Chinese e-commerce market, the site is poised to make even further inroads into the promotional industry. After delivering the keynote speech at PPAI’s North American Leadership Conference, Annie Xu, general manager for Alibaba.com U.S., spoke with Promo Marketing about the company’s future, as well the evolving roles e-commerce and the global marketplace have in the promotional product industry.
Promo Marketing: Can you tell us about your current role in the company and how it’s changed over time?
Annie Xu: I have been with the company for a little over 11 years. I started in the product management field, and it evolved to handle marketing and business development. Now I lead a team of 20 in the marketing/business development user-experience/product development in the customer service field. Our team in America focuses on branding and marketing to our targeted buyer audience in America. So we conduct trade shows, we do online events to get the word out about Alibaba marketplace and educate people on how to leverage Alibaba.com to build or grow their businesses.
PM: Can you tell me a little bit about Alibaba.com, in terms of its overall business model, core strategies, etc.?
AX: Alibaba.com is a B2B online marketplace connecting business buyers and sellers all over the world. When it was first started in 1999, up until a couple of years ago, it was primarily an information exchange platform. Meaning people would go on the site, find each other and communicate and complete a transaction offline. So our users are mainly importers, wholesalers, manufacturers, retailers and so forth.
Over the years we felt that information alone was not going to be enough. For businesses out there, they are looking for more reliable and [authentic] information. Our strategy is to provide more value. First of all, to ensure that our marketplace is a trusted and safe one. Second, we also want to implement initiatives and solutions to ensure that product quality and suppliers are reliable in the quality area. These two are our key goals moving forward, and we are doing a lot of projects that center around these two goals. For example, in order to provide a more trusted environment we are doing more due-diligence to qualify sellers as well as buyers. We work with a third-party A.M.D., they’re authentication and verification company, coupled with our own internal customer service team to do outside checks.
… We are investing in logistics right now, in warehousing and quality control and so forth. In the past, as an information exchange platform, Alibaba never touched a product, even today we are a facilitator, we are not an importer/exporter ourselves. But the challenge of this business model is that products don’t go through us and we cannot guarantee that what you see is what you get. So with the logistics infrastructure, rather than become a service provider in the logistics, our real goal is to implement solutions that allow us to eventually put a hand on the products and then work with third-party certification companies and Q.C. teams to ensure that the products go through inspection. They’ll say the product is composed of what materials, they’ll do spot checks and so forth. So those are the goals. We are just getting started and the [intention] is that we want to get deeper into the supply chain and provide real value there in addition to information.
PM: Besides the authentication and your own quality control along with third parties, how else is e-commerce changing, both within our industry and outside?
AX: I think in terms of the promotional industry, it’s still a very traditional industry. Like in any other manufacturing or traditional businesses, I think the Internet is not going to replace the model, rather it’s going to enhance that. Information is everywhere, with Google, with all the platforms out there, it’s no longer difficult to get information. But with vast amounts of information that could be dumped into finding what you really want and with the supply chain being so complicated, finding the information and finding the right information is only the first step. The majority of these steps do need to be handled by the supply chain that is your traditional way of doing business.
In terms of the overall dynamic, for Alibaba.com, obviously lots of sellers are from China, right? And we are getting into other supplier markets as well, including India, Korea and so forth. But we also want to foster more U.S. sellers from other countries other than Asia-Pacific. We feel that there are lots of innovations in the industry that are not fully leveraged, you know, maximized. As a platform for Alibaba, we feel that more suppliers in the U.S. should be more active on the fight to expand into more markets, for example neighboring countries or even, you know, countries in remote places. …
Right now if you go to the site, overwhelmingly more Asian sellers show up when you search products. For the site itself, I think we can do a better job in terms of featuring the international sellers, but at the same time, we want to encourage sellers to explore the global market. China for example is one interesting area. … There’s something we can do there, it’s our home base, and we want to bring innovative and quality brands into the China market, so it’s not only about export from China, but export to China, that we feel we have the core components to help.
That’s also the shift of e-commerce in a global economy. With the currency exchange, the economic downturn elsewhere, when we look at the opportunities, Chinese local demand is staggering. It continues to increase and we feel we could, together with the suppliers in the U.S., capture and seize opportunities there.
PM: What are some lessons that American companies could learn from Alibaba?
AX: I think first of all to have a presence in the global marketplace is very important. Like any industry, it’s always very competitive, but whoever is more savvy, whether it’s finding or foreseeing cheaper and better sources, or utilizing a platform to reach out to markets, I think those are the ones that can get ahead. … So to have a presence is a first step. And then to have a product that you can differentiate, either through quality or service or design, is also something very important. You know with similar products everywhere, product margins will erode over time. But those who keep inventing and coming up with new ideas, those are the ones that get ahead.
PM: If you had to pick the most important advice you could give a business, would you pick one of those points or something different?
AX: I would say both are very important. I think probably for the first one, many people have the consciousness and the desire, and many have already done that, but in terms of the innovation, it’s not that easy, but it’s not as difficult as people think. You look around, you look at trade shows, you look at events, you see very interesting products popping up everywhere. I think that’s really the key, even if you want to export to China, you can’t really export to China on the [price of the import], right? It has to be something different, and even if you want to export to Brazil, to South America, to Canada, if your products are unique, I think you have an advantage.
PM: With all of the global economic problems, compliance issues, all that stuff, what most keeps you awake at night in terms of you management roles at Alibaba?
AX: I think that product safety is the key challenge, and also opportunity for us. The challenge is that, as a marketplace, we don’t own product, we do not even get involved in the transaction, so we don’t have full control over the compliance, over the I.T. and so forth, but we realize it’s important. Even a marketplace has [a] level of liability. So we’re really spending a lot of time and energy on coming up with solutions to tackle those problems. We ourselves are not experts, so we work with third-party verification parties, compliance companies to bring together and establish a profile for each seller to make buyer’s lives a lot easier and to help them assess which ones are the ones that are ideal reliable suppliers to work with. So it’s a [tedious] process, it’s not going to happen overnight, but we’re really committed to do so. … We feel it’s very important in the world of information technology. Word of mouth is extremely powerful. If we can help a small group of sellers become successful, if we can help them meet with trustworthy and serious buyers, then I think the positive loop will expand and we’ll get more businesses and reliable sellers doing this. So focusing on quality over quantity is definitely the priority for our business.
