The name Alibaba may not be a household name in the U.S. and Europe, but the Asian eCommerce giant is one of the largest global online retailers and is continuing to grow. The most notable directive of this growth initiative is their massive IPO last week to raise approximately $8 billion in cash. With Alibaba leadership looking to invest not only in Asia but also in the U.S. and Europe, what should online retailers know about Alibaba and the impact of its continued movement into the global eCommerce market? Here’s our quick list of 15 things to know about Alibaba and its global eCommerce impact…
1) Alibaba was founded in 1999 by entrepreneur Jack Ma and leads online retail initiatives in China with popular sites such as Taobao and Tmall.
2) Alibaba’s sites generally do not own merchandise but serve as a platform for other online merchant to sell products. They help small businesses sell online and they “fight for the little guy”.
3) Unlike its U.S. competition, Alibaba wants small brands on their site to “stand out” and offers unique site customization options to these brands.
4) Alibaba’s history with smaller brands in China could potentially have a major impact in the U.S. and Europe by enabling smaller brands to grow and emerge online with their solutions.
5) Alibaba has a wide array of diversified investments and acquisitions including car navigation systems, mobile technology, Lyft, the Singapore mail service, and even a Chinese soccer club.
6) With a total IPO value of approximately $25 billion, the Alibaba IPO was the largest IPO ever.
7) Unlike other recent tech IPOs, Alibaba is a profitable company but some investors say the company must become accustomed to proving its worth each quarter.
8) A potential short-term impact of the IPO for Alibaba will likely be assisting brands in bringing their U.S. products to Asia. The credibility of being on the NYSE can help build trust with U.S. brands to sell on sites like Tmall.
9) The IPO also gives Alibaba immediate flexibility to potentially use shares along with cash to make acquisitions of online-only and multi-channel retailers in multiple geographies.
10) Alibaba isn’t the only company who will benefit from their IPO. Yahoo! invested approximately $1 billion in Alibaba nine years ago and is estimated to make more than $8 billion from the IPO.
Alibaba’s Future in Global eCommerce
11) According to Forrester Research, it will take Alibaba at least five years to compete with the current leaders of the U.S. online retail industry.
12) Currently Alibaba appears to have its primary focus on growth in China (particularly infrastructure), which compared to the U.S. and Europe is still an emerging eCommerce market with many growth opportunities.
13) Alibaba has done its research and understands U.S. consumers are more likely to trust smaller eCommerce merchants than Chinese consumers. This means their competition will be exponentially larger in the U.S. than it is in China.
14) 11main.com, the latest Alibaba effort in the U.S., is a site for small U.S. businesses to sell online. Currently invite only, it has received mixed reviews by online retail professionals and experts.
15) Alibaba’s current and future moves into the U.S. and Europe may include catering to Chinese clients who trust them, offering these clients long-term access to new geographies.
In conclusion, the growth of Alibaba will likely play a dynamic role in the future of global commerce. With its record setting IPO, the company now has the ability to solidify its Asian operations and expand into future geographies. The global eCommerce impact of Alibaba remains to be seen, but the company has emerged as one many retail industry professionals will continue to monitor in the coming years.