Industry Report: Alibaba on the Rise While Google and Amazon Wage War at Home
Export Now | Industry Report
Anyone wondering about the future of E-commerce in China doesn’t need to look far to see emerging trends, and massive market growth. Die-hard followers of news in the export industry will already be aware Alibaba.com is China’s largest eCommerce portal. What they might not be aware of yet is the fact that Alibaba.com’s sales are set to outstrip both Amazon and eBay this year. Amazon and eBay combined, that is.
While eCommerce wars rage at home between giants Google and Amazon, massive online markets continue to develop and mature in China.
“Google fights to unseat Amazon as the top online mall
Trying to stave off the competition from Amazon, Google has recently changed Google Shopping to require e-commerce companies to pay to be included in shopping results, so product listings are now ads. Inclusion used to be free. If a company does not pay to be listed, consumers will not see what they have to offer.
ChannelAdvisor, a marketing firm for e-commerce companies, said that among the hundreds of retailers it manages, 63 percent have begun paying. For those sites, revenue per click on a product listing has tripled. One, ToolKing.com, an online hardware store, said traffic from Google and the number of people who make purchases had both risen more than 50 percent.
Will this ruffle feathers over at Amazon? You bet it will. If paid listings on Google get results like this for online vendors, you can bet Amazon will be firing back with a response of their own in short order. Media and PR firms will be on the story like their lives depend on it, market shares will shift around, but the size of the market will remain the same. Guess where the size of the market is continuing to balloon?
That’s right. Over in China.
Zeng Ming, the chief strategy officer of the Alibaba Group, China’s largest e-commerce company, told reporters this weekend that the firm’s sales this year will be greater than Amazon (AMZN) and eBay (EBAY) combined.
Ming also said that the company is aiming for 3 trillion yuan ($473 billion) in annual transaction value from its Taobao e-commerce units on average over the next five to seven years. The Taobao unit’s sales for 2012 are expected to hit 1 trillion yuan this year, company founder Jack Ma said last year. Alibaba does not how much Taobao contributes to the top line, but Taobao is the main retail brand of Alibaba Group.
So if you want to give paid listings in Google a shot, or wait to see how Amazon responds, go for it. Maybe you’ll see your revenues go up like the source quoted in the FT article above. However, if you are a long term thinker and have a macro level perspective on the industry, you’ll see Alibaba as the new gold standard. As the bread and butter of the future of online commerce.
As the legacy online giants in the US go to war over market shares and try to exclude each other from the search engine rankings, lesser known and grander opportunities abroad become more and more appealing.
If you and your company have been considering expanding into into the Chinese eCommerce space, feel free to check out additional informational posts on our blog, or drop us a line and speak to one of our Export Now specialists.