Alibaba views Spain as launching pad for international expansion
Alibaba headquarters in Hangzhou, China, Jun.14, 2016 EFE-EPA/Victor Escribano
Alibaba's sorting center for packages in Hangzhou, China Jun.14, 2016 EFE-EPA/Victor Escribano
By Victor Escribano
Hangzhou, China, Jun 14 (efe-epa).- Chinese e-commerce giant Alibaba has been tilting toward Spain as a possible point of entry in its strategy for global expansion and is on the lookout for increasing number of firms, especially small and medium-sized enterprises, to join its platform AliExpress and sell their products in China and abroad.
The group founded by Jack Ma sells more than 100 million products manufactured by Chinese firms or those registered through an already established subsidiary.
However, it has sought to revolutionize its international e-retail platform and allow vendors from four pilot countries – Spain, Italy, Turkey and Russia – to join its venture.
In the Iberian country, one of the three major markets with more than five million active users per month, it has already succeeded in registering more than 1,000 vendors, and the aim is to get over 10,000 by the end of this year, the company's head in Spain, William Wang, explained to EFE.
EFE visited Alibaba headquarters, in the eastern Chinese city of Hangzhou, as a part of a trip organized by the technology group.
One million Spanish products are available on AliExpress, but what are the sectors the firm is most interested in?
"To be honest, we’re interested in every category, but some of them are particularly strong in Spain and world-known, like fast fashion for example, also in the long, long future, food and wine," Wang underlined.
Three years ago, the platform opened AliExpress Plaza – a local sales channel – in Spain, that included Spanish, Chinese and global firms.
At the moment, the plan is that firms from the four selected countries can first sell in the Eurozone – and from September onwards in Russia – before going on to do so at a global level, a plan that presents challenges such as currency exchange rates and mechanisms for addressing them.
However, AliExpress does not sell in China, as Alibaba has separate platforms such as Tmall Global for its local market.
The long term objective of AliExpress is to have 500 million clients globally and have more than one million registered SMEs. Since its creation in 2010 till 2018, the firm has managed to attract 150 million clients.
Looking at the immediate future, the company has realized that the public and vendors in Spain have an image of AliExpress that will not be easy to change.
"We need to find a way to build an ecosystem around AliExpress platform to help us educate and communicate with our sellers in Spain, to make sure they understand our philosophies, marketing practices, operations, etc," said Wang.
Although they have made progress in this respect, the e-commerce penetration in Spain is still low, "between five and six percent," according to Wang. "We’re at a very early stage of e-commerce in Spain. There is big room for e-commerce in the future."
In fact, in the second half of this year, AliExpress – which has some 50 employees dedicated to towards its Spanish subsidiary – will double its efforts on social media for more visibility before its target client – young people between 25 and 34 years who use mobile apps for making purchases.
Wang underlined that his company was looking to maintain the image of sales channel with products having a good price-quality ratio.
For now, the firm has decided not to charge an entry fee from sellers – in China it is 10,000 yuan ($1,444) – and "redefine" its system, conceived for the Chinese market, and make it more attractive for global players. The long term goal is to have local sellers accounting for half the market and the other half, Chinese.
The presence of products from the Asian country will continue to be crucial for the platform, and it has opened a 10,000-square meter warehouse near Madrid that Chinese vendors can utilize to ensure their products reach the consumer sooner.
"With the warehouse, delivery is faster, and the clients are more satisfied. So they will leave better comments and this leads to more sales," underlined Jason Zhu, assistant general manager of switch making firm Livolo.
The future of this infrastructure in Spain could also be defined by the presence of El Corte Ingles, a departmental store chain that Alibaba tied up with around the end of 2018 to help it sell its products, especially in Russia, and which otherwise too has been doing fairly well on AliExpress.
The Chinese firm, which seeks to become a part of the local ecosystem, envisions a future where clients can collect their packages from El Corte Ingles stores and even buy products offered on AliExpress from there.
The presence of another of the Spanish partner is noticeable even at a sorting center EFE visited, where more than 600,000 packages were processed everyday, 10 percent of which go to Spain and with a tag to expedite the delivery process, thanks to an agreement between the postal service and Alibaba's logistics subsidiary, Cainiao.
These facilities, owned by Yanwen – Cainiao's local partner –, are among the last steps the packages go through before being air shipped to Spain, where it reaches within a period of between three weeks and five days, depending on the client's urgency.EFE-EPA