E-Commerce giant Alibaba wants to teach U.S. small businesses how to sell to Chinese consumers. Why now, you ask? In the 1987 film, Wall Street, character Gordon Gekko infamously declared, “Greed is good.” But these days, if your business model is selling online, and you are publicly traded on Wall Street, the updated version of that slogan is, “Growth is Good.” While Alibaba currently claims 500 million active users across all platforms, there are concerns from industry experts about the company being able to maintain that level of explosive growth. The U.S. market, however, is a wide-open opportunity.
Later this week, starting on June 20th, Alibaba, Founder and Executive Chairman Jack Ma will host the Gateway17 Conference in Detroit, MI. The two-day conference will include presentations from Mr. Ma, Marcus Lemonis from CNBC’s The Profit, and legendary businesswoman and TV personality, Martha Stewart. The conference will also feature workshops on the company’s eight different online products that sell in China, including Alimama, Alibaba’s online advertising platform, and TaoBao, their B2B sourcing product. The company is expecting 1,500 business owners to attend this inaugural event.
“We called it the Gateway17 conference because we see Alibaba as the gateway to China,” said Sharon Chan of the International Corporate Affairs team at Alibaba. She’s one of ten U.S. based employees of the Chinese e-commerce giant. She said they chose to host the event in the Midwest because they believe the Motor City is on the rise, “Detroit is the heartland of American innovation.”
Sharing some insights into the Chinese marketplace, Chan continued, “Everything is mobile first. Chinese consumers like to do everything from one platform, including shopping and social media sharing. They go online to look for things to buy and entertain themselves.” This is backed up with data Alibaba shared that the average user onsite time is 28 minutes per visit. Apparently, Alibaba has incorporated the social media functionality of Twitter, Facebook and Pinterest (all of which are blocked in China) into their various e-commerce platforms. “We are much more than a marketplace, we are a marketing ecosystem for brands and retailers to build their brands in China,” Chan said.
While this is a potentially lucrative selling opportunity, as most know, the barriers to doing business in China are vast and complex. To sell effectively in China, foreign businesses must understand culture, language, logistics, payment processing, brand protection, and marketing, among other nuances. Alibaba’s Gateway17 Conference is an effort to educate American businesses on how to use their products and services to navigate a new frontier.
Global business expert Laurel Delaney, Founder and President of GlobeTrade said Alibaba’s efforts to engage the U.S. small business market in exporting is nothing new. What is new is that Jack Ma wants U.S. small business owners to export to China.
There are four main verticals that will be the content focus for the conference: Fashion/Apparel, Everyday goods (Mother/Baby, Consumer Electronics), Fresh Foods, and B2B sourcing for wholesalers. The conference will also spotlight U.S. business owners who have already started selling on Alibaba, including Philadelphia-based health and wellness company Lucky Vitamin which sells vitamins and supplements, natural and organic beauty and skin care, groceries, snacks foods and beverages, pet products, and household cleaning products. Lucky Vitamin largely targets women who prefer a natural, organic, holistic lifestyle. I spoke with company founder Sam Wolf about what his company’s experience has been in appealing to Chinese consumers. They launched on the Tmall platform, Alibaba’s virtual shopping mall, late last year with 7,000 products. Wolf, a third generation business owner with more than 200 employees, said he has had modest, but promising results so far.
When asked what advice he would give a small business looking to sell in China, Wolf had this to say, “I wouldn’t go into it half-way, you must go into it 100%. The Chinese are not the same as U.S. consumers, the way you display images with your products is very different. They like to see cartoon-like graphics and pictures of people using the products.” Chinese consumers are very deal oriented, too, and are always looking for the best buy. He added that you’ll need dedicated customer service staff who know the language, “U.S. consumers are demanding, but Chinese consumers demand an even a higher level of customer service.”
For business owners who are yearning and motivated to start selling with Alibaba, Wolf noted that launching a virtual storefront on Tmall is like launching a brand new business. So entrepreneurs take note, here are some of the steps he took to launch:
1) Plan at least six months before launching in China.
2) Find experts who can advise you on the Chinese market
3) Leverage Alibaba to help with your tech set-up
4) Invest in sponsored advertising, and offer special pricing to be featured on the Tmall site.
5) Bring on business partners to provide translation services, and dedicated staff to provide customer service.
With amazing customer insights from their half a billion shoppers, Alibaba believes they have a great deal to teach U.S. based businesses looking to target Chinese consumers. However, Alibaba has been under fire recently for the amount of fakes sold through its online platform, with the New York Times reporting protests at the company’s corporate headquarters over the rising costs to advertise on the Alimama platform.
In today’s world, competition is not just local, it’s global. And just as Alibaba is looking for new customers overseas, you should be looking overseas as well. If you can identify a need, and carve out a niche market, doing business in China could be your road to riches.