Part 1 – Alibaba: Showing the World Why China is the eCommerce Leader

Posted in Retail
By Laura Leslie on September 26, 2014

alibaba

The largest IPO in history is certainly something to brag about, but Alibaba is bringing some much-needed  attention to eCommerce in China as a whole. Year over year China experiences exponential growth in their  eCommerce market, and although the growth rate of internet users has slowed down, the online shopping  population has continued to grow rapidly. Last year China had approximately $30billion more in online  sales than the U.S, making it the world’s leading eCommerce giant.

The popularity of eCommerce continues to see growth worldwide for a few major reasons: The online spending per capita, increased popularity and speed in broadband, the rise of credit card use,  and the growth of the middle class. For China specifically, their growth is speculated to be a result of a  separate set of factors including:

– Brick-and-Mortar stores being difficult to come by, especially in rural areas
– A lack of independent merchants in China leaving a huge potential for growth
– Smartphones and mobile purchasing growing dramatically in popularity
– Willingness to move away from traditional legacy technologies

Online sales in China doubled last year, while the U.S only saw a 17% increase. China and the U.S are often competitors in many economic aspects. With the recent attention of Alibaba’s largest-ever IPO, many people began drawing comparisons between Alibaba, Amazon and eBay. Each one could be considered their country’s king of eCommerce in different ways. When weighing all sides, it is difficult to predict who is more prepared for global domination.

For one to truly prevail over the other, it will rely on who can most quickly and efficiently infiltrate the others market. For Amazon/eBay that would mean going up against the daunting intricacies of Chinese regulations, and for Alibaba it would mean an adaptation in business model and the willingness to fight a brand battle against “the world’s largest internet company” (Amazon).

When considering what significance a data behemoth like Alibaba will have for the big data world and data analytics alike, it is easy to assume it will be a game-changer. Alibaba has the data, customer loyalty, and engineering talent to harness the power of big data and machine learning in house. The real question is not whether Alibaba is a threat to Amazon or eBay, but whether they are a threat to all the other retailers who do not have the same resources? The mortal retailer.

To be continued…