Alibaba

Not every month has a notable event, but February was a rare exception. As many of you know, Bill Walton made a trip to China late 2015 and networked into the executive team at Alibaba. (In case you forgot, Bill is our number 1 talent scout!)

Bill arranged a preliminary meeting for Nick and me in San Francisco. We made the trip, met the Alibaba executive team and had a good dialog about the California SAL scene. On the way out, the senior exec, Jim Wilkinson, said “if you have companies in your membership that would like to sell more in China, bring them up to the office sometime.”

“Sometime” was this month, February 10th. I invited a representative group of our members to come along: Jinx, SKLZ, VerifiR, Eagle Creek (VF) and Road Runner Sports made the trip. The mission was to see if Alibaba could facilitate members' efforts selling in China.

As many of you know, I have been sourcing in China for 20 plus years and actively selling into the Chinese retail high fashion footwear market for several years. I don’t think of myself as “China naïve” or as uniformed about the Chinese market, or Alibaba for that matter. Big mistake!

Here are a few notes from the meeting. The numbers are not typos!

• The Alibaba.com is a Market Place for living. It is not a Yahoo or Google site. Imagine a single site that combines Amazon, PayPal, eBay, Google, Yahoo, Facebook, email, Twitter, Netflix, Yelp, Fed Ex, Kayak Travel and more.
• China is more than 90% mobile device based. Last year 409 million people used the Alibaba website, almost all mobile based. They transacted on average 50 times per user…around 20 billion annual transactions.

Alibaba is an everyday life experience for more people in China than live in total in the U.S.A. The average day for these people is often centered around the site. They go there first to plot out their day…food shopping, restaurants, movies, brand buying, travel, navigation, etc.

• Alibaba is a marketing monster. On China “Singles Day,” November 11, 2015, Alibaba sold $14.32 billion. That amounted to 1,640 transactions per second!  There are over 1.1 million people in the delivery process, moving 467 million packages per day.
• Basically this makes the opportunity almost overwhelming. Imagine if you wanted to start selling in the U.S.A. just to reach around 100 million active users across all the disciplines…then multiply it times 4…mega challenge that will require a serious strategy and funding!

Now, it’s not easy to sell B to C , or B to B in China. It’s not perfect for every brand. There is risk of counterfeit, or channel conflict, or perhaps conflict with your brand’s distributor. It takes money (imagine SEO costs to access this many people). On the other hand, it's a huge opportunity.

SDSI is working on a model to facilitate access to China via Alibaba. I suspect it will take several months to get it done. Of course we will get the plan out to everyone as soon as we can.

It’s not often that a small business accelerator group like SDSI can bring a real opportunity to its members, certainly not of this scope. I am very anxious to see if we can help members who are interested to make the big step into this market!

bob