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August 10, 2015

5 reasons Alibaba could dominate Asian ecommerce

The online retail giant is pushing its home advantage throughout the continent.

By Jimmy Nicholls

Since exploding onto the Western stage by going public on the New York Stock Exchange last September, the Alibaba Group has been making ever greater moves on the global ecommerce market.

After the largest initial public offering (IPO) ever the Chinese firm has been investing in markets around the world as it squares up to Amazon and other giants of ecommerce, none moreso than in Asia.

As such, CBR has compiled a list of the deals signed by the firm since it went public, showing just how deep into Asian markets the firm is going right now.

1. Investment in Snapdeal

Whilst Alibaba is known for its prowess in its native market of China, the company has also been pursuing growth in the world’s second most populous country as well.

Last week’s investment in Snapdeal, India’s biggest etailer, can be seen both as an investment in a burgeoning consumer market and as a challenge to Amazon, which put £1.3bn into the country last July and plans to keep spending there.

Joshua Bamfield, director at the Centre for Retail Research, told CBR at the time: "Online in India is growing very quickly, so it’s quite logical for companies like Alibaba to put money into it."

2. Stake purchase of Suning

On Monday, mere days before its quarterly earnings report, Alibaba announced a bold partnership in traditional retail, long the subject of the company’s scorn.

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By buying a fifth of Suning Commerce, an electronics retailer that boasts 1,600 outlets throughout China, Alibaba bagged itself a significant logistics partnership, securing the firm’s position in a country whose stock markets have recently been facing huge setbacks.

Sean Donnelly, senior research analyst at Econsultancy, said the move would allow Alibaba to handle relationships rather than transactions online, adding that customer experience was a hard sell online, where customers generally seek the lowest price above all else.

3. Nabbing Goldman Sachs’ Asia boss

Alibaba’s executive chairman Jack Ma and Michael Evans, an Olympian and former Goldman Sachs staffer, are said to go back a whole decade, when they struck up a friendship over shared business interests in China.

Last week Ma managed to convince Evans to join his company as president in charge of international operations, the former financier having sat on Alibaba’s board since last September, a position he is believed to have been hunted for since leaving Goldman Sachs at the end of 2013.

"Michael has been a close advisor to Alibaba Group for many years, and we greatly value his deep knowledge of our business, his experience as a proven business builder and leader globally, and his more than 20 years of experience in China," said Daniel Zhang, chief executive of the Alibaba Group.

4. Inking deal with Unilever China

Unilever has enjoyed a partnership with Alibaba for some time, making use of its consumer-facing platform Tmall to run an online store for five years.

This partnership was extended back in July when Alibaba agreed to open up more Chinese retail channels for the British-Dutch consumer goods firm, which owns products such as Magnum ice cream, Hellman’s mayonnaise and Pot Noodle. Better analytics capabilities were also touted as part of the deal.

Marijn Van Tiggelen, president of Unilever North, said at the time: "Alibaba has changed the shopping habit of Chinese consumers. Its mission is to make it easy to do business everywhere, and its vision is to build the future infrastructure of commerce. This meets the Unilever’s development needs in China."

5. Cainiao expansion in east China

Logistics is proving to be a defining differentiator in the ecommerce game, with companies like Amazon pressing their advantages of scale to open ever more centres to improve delivery services and product choice.

Presumably with this in mind Alibaba’s logistic affiliate Cainiao opened the largest distribution centre supporting the ecommerce giant in east China back in April, taking in 60,000 square-metres of housing and 1,200 employees.

Located near in the south-east coast of the country in the city of Jinhua, the head of supermarket logistics at Cainiao said the centre would be used to advance plans for same-day delivery, an increasingly common service in ecommerce.

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