Alibaba Is Courting U.S. Small Businesses

Its pitch: global buyers—zero commissions

Alibaba sign in front of buildings
Alibaba wants to facilitate commerce between small- and medium-sized businesses in the U.S. and local and global buyers.
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Ecommerce conglomerate Alibaba is pitching itself to U.S. small businesses as a new marketplace to buy and sell to businesses around the world.

According to Alibaba, its new tools, which are available today, can help the nearly 30 million small- and medium-sized businesses, or SMBs, in the U.S.—manufacturers, wholesalers and distributors, in particular—sell their wares to Alibaba.com buyers in countries including India, Canada, Brazil and Australia. The tools can also help businesses tap into the $23.9 trillion global business-to-business ecommerce market, which dwarfs the $3.8 trillion business-to-consumer market, according to figures Alibaba shared during a presentation on Monday.

Alibaba’s selling points for U.S. SMBs include the ability to reach customers globally through a single online storefront and no commission fees. Instead of taking a cut of each order, Alibaba charges SMBs annual membership fees, which run a few thousand dollars. Digital marketing expenses are additional and vary depending on individual business decisions.

It is not clear how fulfillment will affect the cost of doing business on the platform. John Caplan, head of North America B2B at Alibaba Group, said it depends whether SMBs build the cost into what their own customers pay or if they absorb the cost themselves. Caplan said logistics are another factor that will vary by business.

To attract U.S. SMBs, Alibaba has partnered with office supply retailer Office Depot and produce company Robinson Fresh as “anchor sellers.”

A beta test of the U.S. SMB program included three brands that also sell to consumers on Amazon: hair-care company Honey Baby Naturals, which is in 10,000 U.S. stores and is expanding internationally; Vassilaros & Sons, the coffee supplier to New York bodegas, delis and coffee carts; and Gett Clean Products and Solutions, a professional cleaning supply company that says it now receives daily inquiries from India, Poland and Germany.

In partnership with local chambers of commerce and b-to-b organizations, Alibaba is conducting what it calls Build Up workshops in Brooklyn, Los Angeles and Chicago to interact with small-business owners. To date, millions of small businesses source products from Alibaba for U.S. consumers. That’s in part because Alibaba started out as a Yellow Pages-like directory of factories, Caplan said.

Alibaba has since become more of a procurement platform that helps businesses find factories, communicate, pay and finance orders, handle inspections, and take care of shipping. In addition, it is now helping b-to-b players navigate a complex supply chain in which business is conducted largely the old-fashioned way. According to stats shared during the presentation, 61% of manufacturers do not have an ecommerce site, and 71% of small businesses do not yet sell online.

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