eCommerce

Wait, Jack Ma Wants Alibaba To Grow By How Much?

Jack Ma, Alibaba’s ambitious founder and executive chairman, has some equally ambitious plans for the future of his eCommerce giant. He wants Alibaba’s sales to become the equivalent of the world’s fifth-richest country in four years.

That means that, by 2020, Ma wants Alibaba — sort of a Chinese mix of Amazon and eBay — to be generating income or “gross domestic product” only surpassed by the economies of the U.S., China, the European Union and Japan.

That’s a hefty goal, which Ma unveiled for the first time at the company’s first-ever Investor Day as a public company on June 14 at Alibaba’s headquarters in Hangzhou, China.

But it’s hardly the first time Ma has made some bombastic or grandiose statement about the future of Alibaba.

On Nov. 11, 2015, coming off the success of Alibaba’s latest Singles’ Day promotion — think of Singles’ Day as Alibaba’s equivalent to Amazon’s Prime Day, only centered around a “holiday” in China, where people celebrate being single by shopping online — Ma told Bloomberg TV that he hoped to transform Singles’ Day into a “global holiday” that would see more than 50 percent of its sales come from outside China.

When asked how Alibaba intended to achieve this feat, as the majority of the company’s sales currently are generated from within China, Ma responded that Alibaba has already begun planning for just such a scenario.

“Everything we do, we have a 10-year plan, since the first day,” Ma said.

But is Ma’s latest ambitious plan for Alibaba simply too much too fast?

TechCrunch estimated that, in order to achieve its goal by 2020, Alibaba would have to serve about 2 billion customers and do gross merchandise volume (GMV) of about $991 billion; the company had a GMV of about $463 billion last year (more than Amazon and eBay combined), and Ma himself has stated that there is about 30 percent of the current Chinese population of about 1.36 billion people that Alibaba expects it will never be able to reach.

So, how is Alibaba going to more than double both its sales and customers in four years?

That’s where Ma and Alibaba’s ambitious global expansion plans come into play.

Alibaba has already begun expansion efforts into Australia, Russia and India (which itself has a population of about 1.25 billion people), but Ma acknowledged during Investor Day that eCommerce alone would not be enough to propel Alibaba to its vaunted goal.

In fact, Ma told investors that Alibaba wasn’t just an eCommerce company any longer but instead was going to rebrand itself as a “data business.” He also said that the company would be shifting a majority of its focus to its cloud computing business, Aliyun, and its payments business, Alipay, in the coming years.

But again, these shifts in strategy are things that Ma has always said a successful internet company must do.

In that same Bloomberg interview last fall, Ma said that Alibaba views itself as a 100-year company and that, in order to continually stay relevant, the company will have to continually change with the times and habits of its consumers.

“Many internet companies have failed and will fail in the future, because they do not change themselves for future needs of internet users,” Ma said. “Because the users, the consumers of the internet, they change so fast, so quickly. It’s almost impossible to keep yesterday’s wonderful life.”

If Ma is bullish on Alibaba’s future prospects, investors seem somewhat less so.

When Alibaba held its IPO in Sept. 2014, which raised $25 billion to become the largest global IPO ever, investors couldn’t wait to get their hands on the stock, sending it skyrocketing from its IPO price of $68 to open at $92.70 per share the first day, according to The Wall Street Journal.

Flash forward a little bit less than two years, and those investors still have not been rewarded (unless they sold when the company peaked at $115.10 per share on Nov. 14, 2014), as Alibaba closed the day at $83.59 per share on Tuesday (July 26). That’s nearly $10 less than its opening price two years ago, despite a market cap of $202.76 billion.

Part of the problem may be Alibaba’s controversial reputation as a “haven” for black market and counterfeit goods, something that Ma himself did no favors for when, during that same Investor Day address, he revealed that many of the “knockoff” items found on Alibaba were actually assembled in the same factories by the same workers using the same materials as their much more expensive luxury brand competitors. Sometimes, Ma told investors, the knockoffs were of even better quality than the originals.

Alibaba has been doing its best recently to try and massage and repair its reputation as a black market bazaar, but it remains to be seen how effective its efforts will be or how committed Alibaba actually is to stemming the flow of knockoff goods on its platform.

And then, there is the final domino that many see as a roadblock to Alibaba’s ambitious global expansion plans that it must someday face: the inevitable showdown with the U.S.’s own eCommerce giant, Amazon, as Alibaba begins to expand into more Western markets and compete for many of the same customers.

Ma told Bloomberg TV last fall that Alibaba was not looking to “compete” with eTail giants, like Amazon and eBay, in the U.S. marketplace five years from now but was rather viewing the U.S. as a way to expand its product offerings to its existing customer base.

“We do not go there to compete. If we go there, we want to help the small business, helping them to China, helping them to Asia, because we have such a huge demand of China’s consumers online,” Ma said. “We need good products, we need unique products, of which U.S. has a huge potential.”

When the interviewer asked Ma if Amazon should be worried about Alibaba’s inevitable U.S. expansion plans, he smiled.

“Well, I don’t know,” Ma replied. “If they worry, they worry; if they don’t worry, they enjoy it.”

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