Chinese online retailer Alibaba Group is one of the largest most inclusive online retailers in the world. Now, the behemouth is preparing itself to include the wider Australasia marketplace. We spoke to New Zealand and Australian managing director of Alibaba Group, Maggie Zhou, about how Kiwi businesses can benefit from getting involved with the platform.
The Chinese market can be difficult to penetrate for our smaller Kiwi retailers. But as the Chinese market far surpasses our own in terms of population and buying power, it is worth it for retailers to look into expanding. The Chinese market is huge and is multiple markets within one country, so getting involved or knowing where to start can be, unsurprisingly, intimidating.
By the numbers, Alibaba is the largest ecommerce company in the world (bigger than Amazon and eBay combined) and it’s also the most comprehensive directory that connects suppliers (mostly from Asia) with buyers from all over the world.
New Zealand and Australian managing director of Alibaba Group, Maggie Zhou, says Alibaba supplies various platforms where businesses can target consumers directly, or, source their own raw material for production purposes, all while offering support and advice with transactions.
“What I’ve said before is that Alibaba works as an ecosystem. It comes down to the different stages, if they have a different demand for what they want – we have different ways to suit them… Businesses can also work with us by direct sourcing or we can buy directly and help those brands to promote in our platforms.”
Zhou says New Zealand’s presence is already strong within the global marketplace, with more than 400 New Zealand brands already on the platform. The perception of New Zealand’s clean image apparently is a draw card for consumers after a more ‘pure’ product.
“New Zealand is seen as much cleaner, greener and safer. That’s the image for New Zealand, it is a pure space. So, the Chinese consumer already has that perception of New Zealand products. It is amazing, many Chinese consumers haven’t stepped outside of China, but they can experience all these fresh New Zealand products because of the platform.”
Zhou says there aren’t any restrictions on what businesses can use the platform, but says skin care products and those with a ‘natural’ ethos will ultimately do better with resonating with the Chinese consumer.
The group’s vision is to build the operating infrastructure needed to enable local businesses to expand globally, but according to Zhou, retailers still need to do their work and know the market before expanding.
“I think for first-time retailers coming in, they need to understand the Chinese Market really well. So, the smart way is to work with those third-party service providers, but that doesn’t mean they don’t need to do anything themselves.”
Maggie Zhou addressed around 300 Kiwi and Chinese business leaders at the ASB Lantern Forum last month organised by Auckland Tourism, Events and Economic Development (ATEED), Auckland’s economic development agency.
Zhou spoke about the huge opportunities China’s ecommerce platform brings to Kiwi exporters. While in New Zealand, Zhou and the Alibaba group also promoted the platform, as well as signing up more Kiwi businesses to Alipay, Alibaba’s own payment system.
Alipay is the dominant mobile payment service in China, and New Zealand retailers allowing its use alongside Visa or Mastercard means easier buying for Chinese tourists.
As the retail giant takes steps ahead of Amazon to penetrate the New Zealand market, retailers who are reluctant to join may see competitors jump ahead into the Chinese Market.
What is important for retailers to note is that the platform is not just a load and sell page. Businesses are still required to know the market and can use third parties to better understand the platform. Zhou says retailers need to analyse trends, and when it comes to the Chinese consumer, trends come hard and fast but can be strongly capitalised upon.
“If [businesses] know what the Chinese consumer likes they can even customise their products in the market. You can target culture in a big way. For example, around the Chinese Festivals, [Chinese customers] want to see their parents and visit their families, so they want good, fancier, more souvenir like packaging for the products. And that is a big learning curve for New Zealand and Australia who often don’t think about that packaging.”
Ecommerce, although still a fraction of global retail spending, is growing at a faster rate. Zhou highlights that getting involved with the platform early can give retailers a head start to cater their offerings and websites to suit the growth in mobile shopping.
“We have a growing base of active mobile users using our platform. I think that ecommerce is always a great channel for businesses. For those who don’t know their market 100 percent, that ecommerce site will help you with that data and know your consumer… You can use that big data and build a better experience for you and your consumers. And those new technologies coming in and giving you new opportunities, and therefore you can create better competition within the market.”
For retailers looking to get involved with the platform and extended their market reach, Zhou recommends, looking outward of your business for advice from someone who better knows the cultural expectations of the foreign marketplace.
“We also suggest that those businesses have Chinese staff, who know the companies’ strategy well and then can be a good bridge between their own business and the third party, or even our platforms. And even then, you can deliver the right message to partners. Once people sell throughout our platform, we’d direct source and help them to do that. The other way would be to get some capable people, or some local merchandisers or partners.”
Knowing your market is no new requirement for retailers, but coming into a foreign market can be intimidating for businesses. Zhou says the best option is to find the right platform within Alibaba and utilise the advice they can provide.
“This will make [businesses] more capable for their market. Along with this, they need to find the right product, know the audience or the target consumer and what they’re looking for and adjust yourself towards it. You also need to monitor that channel well and keep up with the proper price points for that market.”
The news of Amazon coming to our shores created an uncertainty for New Zealand retailers seeing first-hand the evolvement of the retail landscape. The arrival of Alibaba cause less of a concern thanks to our already strong relationship with China, according to Pam Ford, ATEED’s acting General Manager Business, Innovation and Skills.
“China is one of the world’s fastest-growing economies and its vast population and growing middle class represent huge potential. Maggie Zhou spoke of there being 600 million Chinese in rural areas alone and platforms such as Alibaba present a great opportunity for our exporters, along with Chinese consumers increasingly looking for quality, safe, design-led products which our country has a reputation for providing.”
The value of New Zealand’s trading relationship with China has almost tripled over the past decade. China is New Zealand’s second largest overall trading partner. Two-way trade between both countries reached more than $24 billion dollars in the year ending 30 June 2017.
Ford, who has a strong knowledge of the relationship between the two countries, says there shouldn’t be a worry about international competition taking away from our own national retailers.
“On the contrary, the rapid evolution of cross-border e-commerce means that it’s easier for our exporters to take advantage of these platforms and reach millions of potential customers.”
Ford says Alibaba presents an excellent opportunity for many Kiwi exporters, along with Chinese consumers who are increasingly looking for quality, safe, design-led products which our country has a reputation for providing.
Along with the signed partnership between NZ Tourism and Alibaba in 2016, Ford says there is a range of Chinese programmes available to companies wanting to take advantage of these channels.
“Auckland Tourism, Events and Economic Development (ATEED), as Auckland’s economic growth agency, is part of the Tripartite Economic Alliance. This historic alliance, formed in 2014, is between Auckland, Guangzhou (China) and Los Angeles (U.S.A.). The alliance focuses on increasing trade and investment between the three cities and their regions – and provides a gateway to Southern China and the West Coast of America.”
Ford echos Zhou’s advice to retailers looking to get involved within the Chinese market for the first time, and that is getting to know the marketplace by, “understanding it first-hand, meeting with potential customers and learning selling techniques.”
There is a strong relationship already between our two countries, with cultures combining in fashion, food, and business now more strongly than ever. Alibaba gives retailers that opportunity to reach out and strengthen their consumer base as well as that relationship.
Exert of a Maori fashion show held in China.
An example of the groups retail influence would be Chinese Singles’ Day, which is a shopping holiday.
It’s been popularized as a ‘global shopping festival’ by Alibaba, and gets bigger every year. For the day in 2017 which fell on Novemember 11, Alibaba reported that US$25.3 billion of gross merchandise volume was settled during the event.
The US$25.3 billion GMV earnings represents an increase of 39 percent compared to 2016, when it raked in US$17.8 billion.
The event that Alibaba has developed Singles’ Day into since 2009, when just 27 merchants participated, is now staggering.
Alibaba’s global shopping festival took two minutes and one second to break US$1 billion in gross merchandise volume. Within the first hour, Alibaba’s payments system Alipay processed 256,000 payment transactions per second at peak, and more than 60 brands each generated more than RMB100 million (US$15.1 million). These included international brands like Apple and L’Oreal.