Alibaba expands AliExpress footprint

E-commerce giant Alibaba Group Holding Ltd is allowing businesses from select countries to sell goods on its overseas platforms, as part of its efforts to take on US-based Amazon.com, the world's largest online site hosting third-party vendors.

The move to enable foreign merchants to sell on AliExpress, a business-to-customer site traditionally selling Chinese goods to buyers in 220 countries and regions, is part of Alibaba's broader globalization strategy, according to Dai Shan, president of Alibaba's wholesale marketplaces division.

The company has piloted the initiative by allowing notably small and medium-sized businesses in Russia, Turkey, Italy and Spain to register and sell their products to other countries in the AliExpress network, the company told China Daily on Monday. Expansion to other markets might be in the pipeline.

"This is the first year of our 'local to global' strategy," Dai told the Financial Times in an interview published last week. "This strategy is intimately connected to Alibaba's broader globalization strategy."

Last year, AliExpress registered a 94 percent growth in sales. By September, over 150 million shoppers outside of China had snapped up goods from toys to electronic appliances from Chinese retailers at reasonable prices.

The practice of hosting local merchants on AliExpress dates back to popular discount events like Nov 11 and Black Friday last year, where around 170 Russian and Spanish retailers promoted their offerings on the website, Wang Mingqiang, general manager of AliExpress, told China Daily in an earlier interview.

"With the introduction of merchandise of different origins to AliExpress, we see a growing proportion of high-quality, mid-to-high-end products being sought after by customers," said Wang.

According to the 2018 E-commerce Foundation report, AliExpress is among the most popular retail apps across mobile devices in Spain, whereas one in six Russians have made purchases from the site.

As it expands its global footprint, Alibaba is employing a number of localization strategies to boost influence. It has, for instance, leveraged leading social media platforms, such as Facebook, Instagram and YouTube, to draw in shoppers through personalized advertisements.

It also formed a joint venture in September with Russia's sovereign wealth fund, telecom company MegaFon and internet firm Mail. Ru Group to expand customer base.

The addition of foreign vendors marks a major step to boost the scale of the local e-commerce economy and drive consumption, said Wei Hao, head of the department of international trade and economics at Beijing Normal University.

"The move represents a radical change in the operation model. Alibaba is on its way from being a Chinese company with international ambitions to a global company with global offerings," he said.

By working with AliExpress, less scalable foreign brands also stand to better understand how Chinese businesses operate, which could potentially accelerate their entry into the Chinese market, Wei said.

But international e-commerce can also be a tough business. Amazon had decided to close its China stores earlier this year due to fierce competition. Meanwhile, China's online retail market is expected to slow down to a 15 percent compounded annual growth rate, according to estimates from consultancy firm Mintel, suggesting the likes of Alibaba have to look out for new sources of income.