Alipay's Great Expectations

Most Americans are entirely unaware of Alipay - and to the limited extent they are they are, their quick heuristic definition is something along the lines of “Chinese PayPal.”

Which isn’t a bad starting point for a comparison. Like its American counterpart, Alipay got its start as a the payments platform of a major eCommerce player, Alibaba Inc. However, the comparison misses the difference in size between to the two firms.

Alipay is nearly triple PayPal’s size - with over 400 million users - and is a much more ubiquitous part of its home market.

That massive consumer base is still overwhelmingly Chinese — and those consumers use Alipay to shop online, on mobile, in-store and as well as in the context of hybrid contexts, like paying for on-demand services.

Since spun off from Alipay directly — and now run by Ant Financial — Alipay in a relatively short time (11 years since founding) has not only become the mobile wallet of choice for Chinese consumers, it is increasingly becoming their payment method of choice in general, as it shows it is up to the task time and time again.

Singles' Day - its parents company’s massive shopping holiday - as celebrated in 2015 saw Alipay processing $14.3 billion in sales by Alibaba in a single day. The firm further reports having power 710 million transactions overall, moving at a rate of 85,900 transactions processed per second during the height traffic.  

And while any brand might spend some celebrating this monumental achievement, Alipay doesn’t seem to have much in the way of time to. Because while they might like to celebrate their recent victories on the homefront, they have an entire planet to convert to paying the Alipay way.

“Among the savviest shoppers in the world, Chinese consumers are continuously seeking high quality U.S. products and Western merchandise that they can’t find in China,” said Jingming Li, President of Alipay U.S. “With better logistics and localized payment options now available to make cross-border purchases, we expect this tremendous growth of Chinese consumers to continue throughout the holiday season, particularly as U.S. eCommerce retailers provide more discounts and promotions.”

Chinese consumers are hitting American retailers this season — and given the early season results from Thanksgiving-Cyber Monday, it seems their efforts throughout the year to gain traction with American merchants is starting to pay dividends in bringing Chinese consumers to American shore for shopping purposes.

Big Black Friday Results

Despite recently coming off a big Singles' Day spending fest — and a slowing economy — Chinese consumers showed up big on Black Friday.  

And not in retail tourist form - with foreign nationals through the hallowed shopping highlands in the U.S. major urban centers, though PYMNTS' on the street observations would imply there was plenty of that as well.

But even among middle-class Chinese consumers who many not have had a budget suited to an American shopping holiday, shopping from Chinese shores and paying with Alipay seemed to be a very viable option.

According to figures released by the firm, Chinese consumers buying U.S. brands online during the holiday season’s weekend start off increased seven times above their 2014 levels in 2015. Those figures are drawn from Alipay early shopping review, which measured consumer commerce activity between Nov. 15 and Nov. 30, 2015. During the time period as a whole, China-based purchases of American goods online was up 15 times year-over-year.

It is notable that Alipay released how much purchases had increased, but there is no hard data on the absolute number of purchases either as measured in number of transactions or in the value of said transactions. It is possible that those big gains are possible because of such historically low participation in American online retail hubs from China-based consumers that it is easy to rack up big gains. This means that though increasing seven and fifteen-fold increases are notable, seven or fifteen times a very small number is still quite possibly a pretty small numbers.

But given the spate of recent headlines — not to mention the years-long saga about the concerns over counterfeit goods (particularly in parent-company Alibaba’s online marketplace) in China; not to mention American retailers looking to boost their online sales to balance out falling foot traffic who are doubtlessly very excited for a crack at such an enthused group of shoppers to jump into the mix of available consumers.

Culmination Of  Efforts

Alipay's reach into the American marketplace this holiday shopping season rode in on the various retail partnership and tie-ins the payments platform has spent 2015 developing with some of the U.S.'s biggest name retailers. Those tie-ins, which include Macy's, Sak's and other name players (particularly in luxury and high-end goods, which suffer from the aforementioned severe counterfeiting issue) are made possible by September 2014, the Alipay ePass program. The  cross-border eCommerce Alipay expansion is designed to allow U.S. brands and retailers to sell directly to Chinese consumers using localized payments and direct shipping.

Alipay is committed to expanding those efforts around the world, primarily to satisfy the Chinese consumer demand for high-end American goods.

Still, the expansion in and of itself with so many name brand American retailers does pose an interesting question; If Alipay can make enthusiastic enough converts of enough American retailers, might it have a chance of moving in on some American customers of its own?

A long shot now, since few Americans have ever heard of Alipay, but then 12 years ago no one anywhere had because the company didn't exist. And with a hold on American merchants, it seems at least possible Alipay just might want to make a future run on American customers for its payments platform. It might just be worth watching in 2016.



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