Alibaba Revamps AliExpress Business Model To Take Amazon Head-On

Jack Ma, Ant Financial owner
Jack Ma, chairman Alibaba Group attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2019. (Photo: REUTERS/Arnd Wiegmann)

China's online retail giant Alibaba is reportedly revamping its business model for the purpose of competing with American rival Amazon in global markets. To achieve its goal, the company will implement reforms on its AliExpress website.

According to Retail Week, the Chinese e-commerce behemoth has started allowing foreign retailers to become sellers on AliExpress. In particular, the firm has provided website seller registration for Russian, Turkish, Spanish, and Italian small and medium-sized enterprises (SMEs).

The decision was made as part of Alibaba's efforts in expanding its reach and access permissions to globally competitive sellers whose products are reliable but need a bigger platform to grow their businesses.

Last year, AliExpress recorded a 94 percent increase in sales. The massive development led its parent company to develop new schemes for both AliExpress and its Southeast Asian arm, Lazada.

While the Chinese tech giant did not give exact numbers as to how many overseas businesses registered for AliExpress selling, Alibaba said a "good foundation" of entrepreneurs have joined the seller interface.

Previously, AliExpress was dedicated to Chinese sellers but with the new reforms in the website's seller interface, third-party sellers from the abovementioned countries now have a chance to reach other markets and target consumers.

For its latest expansion scheme, Alibaba is expected to capitalize on foreign SME recruitment, Drapers reported. A spokeswoman for China's largest online retail provider said the company aims to turn AliExpress into "a place where SMEs worldwide can thrive and benefit from global trade."

While some analysts and spectators may highlight established and titan companies but Alibaba previously said it strongly believes in the ability of SMEs to drive the economy forward through global sales.

Industry analysts noted that Alibaba's latest move was a bold one and just like other schemes, had to come with risks and downsides. However, with the company's tenure in developing new subsidiaries, experts said the new move could bring further growth.

In an interview with the Financial Times, company executives revealed that AliExpress will expand to other countries over the coming years. Furthermore, the initiative is expected to penetrate markets that have otherwise not been tapped by other firms such as Alibaba's archrival, Amazon.

Experts said Amazon will most likely heed to AliExpress' challenge as the months pass, especially with the Chinese provider's wise move of pouring its efforts on SMEs that are more prone to adapting smoothly to global markets.

In a separate interview with FT, President of Alibaba's wholesale marketplace division said founder Jack Ma established the retail titan with the goal of expanding globally. Analysts are looking forward to the positive effects of the expansion.

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