Alibaba’s B2B Advantage Over Its U.S. Rivals

As Alibaba this week kicked off  its U.S. initial public offering roadshow,  the Chinese collection of eCommerce marketplaces may have an edge up on its chief local rivals in B2B activities, especially those that focus on business purchases of supplies and materials that most companies today buy via paper invoices, faxes and checks.

A Monday (Sept. 8) Fortune article points out that the two top U.S. online marketplaces, Amazon and eBay, have failed to focus on this B2B opportunity. “Both companies run marketplaces, but they specialize in consumer-facing goods, not wholesale items and business supplies,” the news source noted.

Such startups as Joor and NuOrder have looked to fill the gap for the fashion industry, while Handshake and Tradeshift do it for other types of businesses.

Alababa’s China dominance

In contrast, Alibaba, which hopes to raise $21.12 billion in its IPO, has been a dominant B2B eCommerce player.  In China’s B2B market, it holds a 44.82 percent share, well above such competitors as HC360.com at 4.53 percent, Made-in-China.com at 3.21 percent, GlobalSources.com at 2.98 percent, Pharmnet.com at 1.13 percent and Dhgate.com at 1.08 percent, according to Enfodesk, which says China’s B2B revenue for Q2 2014 reached 4.53 billion Chinese yuan ($740 million), up 6.1 percent from Q1 and up 57.29 percent from the same quarter in 2013.

Alibaba has a chief advantage over its U.S. counterparts in the China region, which is home to where many today’s top business-supplies manufacturers are based.

“Through Alibaba.com and 1688.com, the company provides to people everywhere access to the Chinese supply chain. This means tinkerers, builders, entrepreneurs, and small businesses can order custom motors and parts from Chinese factories without having to travel there, find a scout, and forge a relationship with a manufacturer before doing business,” the Forbes article notes. “It opens up the world of international suppliers to people who wouldn’t normally have access to it. They can buy in bulk through Alibaba, which acts as a trusted third party, vouching for the transaction.”

Access issues

U.S. companies such as Amazon and eBay, however, don’t have access to such companies. “Much of it is representative of the differences in their markets, and where Chinese products have typically fallen in the supply chain,” Mark Mahaney, an e-commerce analyst with RBC Capital Markets, said in the Fortune article. Moreover, Amazon \and eBay are able access different wholesale and B2B products than Alibaba does, the publication adds.

Alibaba’s domestic competition in China is doing what it can to compete. JQW, already an established B2B e-commerce site, made a major move in July when it announced that it had launched an English-language B2B platform. The Chinese company explained in a statement that the new site has been developed to attract international members as well as to promote the group’s fee-paying members in China to a global market.

Earlier, StockMarketWire reported that JQW was on a roll for 2014. JQW Chairman Yongde Cai said the company was confident that both revenues and profit after tax will be ahead of market expectations. Furthermore, Cai explained that JQW joined London’s AIM Stock Exchange to enable the group to further its international ambitions.

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