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A top Alibaba exec reveals how the Chinese giant is trying to court US businesses threatened by the coronavirus and fend off Amazon

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  • Alibaba sees the coronavirus as an opportunity to tap into B2B e-commerce and fend off rivals like Amazon, its North America president John Caplan said.
  • He said that Alibaba could help businesses go online with its global scale and high average order value, adding that Alibaba would facilitate tens of billions dollars worth of B2B business this year.
  • He said that its fixed membership structure was also a draw for small businesses, and that several new companies were starting to use Alibaba to reach new customers.
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As the coronavirus ravages retail and accelerates e-commerce, Alibaba sees an opportunity.
The Chinese e-commerce giant, which began allowing small businesses in the US to start selling on its platform in July 2019, sees a chance to grow its B2B e-commerce business and fend off rivals like Amazon, its North America president John Caplan said.
"Now that COVID-19 is accelerating the requirement of businesses to get digital, we see that as a real opportunity for us because we are an ally to small businesses," said Caplan, speaking on a virtual panel on the future of e-commerce by agency BVAccel on May 5.
He said that Alibaba could help businesses with its global scale and high average order value, adding that Alibaba would facilitate tens of billions dollars worth of B2B trade this year.
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Alibaba gets business buyers from over 190 countries and regions and their average order on Alibaba is $4,000, he said.
"That is really important for business, as sitting on inventory is the worst thing that you could possibly do at a terrible time like today," he said.

Alibaba is pitching itself as an alternative to Amazon

Alibaba charges sellers a membership fee of about $2,000 to create online stores on its site. It sells no inventory of its own. Caplan said this, coupled with its global footprint, makes Alibaba attractive to sellers.
"Whether you sell $100 million dollars worth of goods or you sell $1 million dollars worth of goods, you pay the same amount on Alibaba.com," Caplan said.
Amazon, on the other hand, charges third-party sellers per month or per item. It also sells its own inventory, lets third-party vendors list products for sale on its website, and lets them store those products in its warehouses.
"[The fixed membership fee] is a distinction, and is not trivial when there are some businesses that describe themselves as marketplaces, but in fact they're actually retailers that use the data from their marketplace to compete as a retailer," Caplan said in a thinly veiled swipe at Amazon.

Alibaba's platform has benefitted from more businesses going digital

With states mandating the closure of non-essential stores and people curtailing their spending, many companies have been trying to grow their online sales. Alibaba has seen that demand on its own platform, Caplan said.
"In the past eight weeks, we've seen the PPE category grow by 10-20 times, the health and medical category grow by two to three times, personal care grow by two times and large increases in cleaning and health verticals too," he said. "There's a real opportunity for the folks that haven't been digital. It's no longer about doing it next year — it's an imperative to do it now."
Alibaba's pitch is that it helps companies do business around the world with its communication, logistics, and financing tools. For example, it has an ocean shipment service that is growing as air express shipments become less frequent due to the coronavirus.
He cited firms including shipping company C.H. Robinson and food and agricultural products company Cargill that were starting to use Alibaba to reach new customers.
"Competing locally alone isn't enough in this environment for just about any company," he said.
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Source - https://www.businessinsider.com/?hprecirc-bullet

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