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E-Commerce And Alibaba’s Grand Vision

Jack Ma and co. have grand designs for the now-established market

28Oct

E-commerce is at once a fledgling industry and a behemoth, one of the most established applications for digital yet also one with the most scope for expansion. Amazon, for example, is over 22 years old and employs over 268,000 people, yet it still looking to grow, experimenting with technologies such as drones to drive delivery times down and expand their customer base. Amazon is the country’s leader in an industry set to completely reshape the way consumers interact with brands and products. Yet e-commerce in the US still represents just 8.1% of all retail sales. 

Brick and mortar is still the dominant retail form by a distance; convenience and user experience have come on leaps and bounds since Amazon’s beginning, but there are huge areas of huge markets yet to be encroached on in any significant way. As mobile grows, though, and the generations most attuned to it grow with it, e-commerce will only balloon and it is already growing at an exponential rate.

To see e-commerce quite a distance further down its adoption curve, one has to look to China. The world’s second-largest economy has embraced online shopping with open arms, with it making up 19.6% of the country’s retail spend, according to Statista. By 2019, that number is projected to rise to 33.6%, and it’s being led by the country’s biggest online shopping platform, Alibaba. The Chinese e-commerce market has become by far the largest in the world and, in just two years time, is expected to total $1.6 trillion. In fact, China is so far ahead with e-commerce that it represented 40% of the total global spend, from some 486 million digital shoppers.

Alibaba’s Jack Ma believes the burgeoning industry will very quickly become ‘traditional business’ as consumers grow more accustomed to buying online and on mobile. ‘We anticipate the birth of a re-imagined retail industry driven by the integration of online, offline, logistics and data across a single value chain,’ he said. ‘This is why we are adapting, and it’s why we strive to play a major role in the advancement of this new economic environment.’

The company is well placed to speed the process along - its $25 billion IPO in 2014 was the biggest stock market flotation in history, and Ma intends to use Alibaba’s success to help businesses all over the world grow, not just those in China. ‘Over the past two years, we have seen growing resistance to globalisation due to the uneven distribution of its benefits,’ he said. ‘We believe the commerce infrastructure we have created in China – marketplaces, payments, logistics, cloud computing and big data, all working in concert – can be applied on a global scale to lift up small and medium businesses and ordinary consumers around the world.’ Alibaba is, of course, the platform on which some 10 million small businesses operate in China.

Alibaba’s vision of the future is not one dominated only by online stores, though. In a letter to its shareholders, Chief Executive Daniel Zhang Yong said: ‘From our perspective, the most important opportunity on the horizon is not growing online sales in isolation, but rather helping traditional retailers upgrade into a brand new retail model.’ The company is looking to produce a physical infrastructure for ‘the future of commerce,’ one that marries offline and online and serves ’two billion consumers around the world, [empowering] 10 million profitable businesses and [creating] 100 million jobs,’ according to Ma.

Ma and his team recently took a gamble, extending their ‘Single’s Day’ promotions to a period of 24 days rather than the usual 24 hours. The unofficial national holiday is largely led by Millennials and has, as a result, become a huge opportunity for e-commerce sites. According to Forbes, last year’s Single’s Day earned Alibaba $14.3 billion in gross merchandise volume, a figure that broke several world records for one-day sales. The scope of the day is immense, and Alibaba will hope that extending the spectacle to over three weeks can further spur the growth of e-commerce among its most receptive generation. 

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