Ex-VP of Alibaba Porter Erisman on clash of ecommerce models in Asia, costly mistakes

Photo credit: Porter Erisman.

Porter Erisman stood transfixed as he saw a monkey jump atop a pile of dabbas (lunch boxes), trying to prise one of them open, in Mumbai’s teeming Churchgate station. The former Alibaba VP had wanted a first-hand experience of logistics in India and was getting more than he had bargained for. He watched bemused as the dabbawalas (lunchbox delivery men) in crisp white shirts and traditional Gandhi caps finally got the monkey’s handler to distract it, and the entourage could get going.

Dabbawalas carry 130,000 meals each day, mostly in multi-layered steel tiffin carriers, from suburban homes to offices in central Mumbai. It operates on a hub-and-spoke system, with one set of dabbawalas handing off the boxes to the next set. Erisman was shadowing them to understand how it overcomes India’s infrastructure bottlenecks and what made it a Harvard Business Review case study.

I remember my old boss, Jack Ma would say the Amazon model in China was like putting a Rolls Royce jet airplane engine into a hand-glider.

The author of Alibaba’s World and maker of the documentary Crocodile in the Yangtze was researching for his new book Six Billion Shoppers, which was released a month ago. He had joined Alibaba in 2000 when it had just moved out of Jack Ma’s apartment, so he had a pioneer’s view of ecommerce in China. Now he was exploring other emerging markets for insights on new opportunities and evolving models.

From the streets of Mumbai to Thailand’s boat market, parts of the book read like a travelogue. But mostly, it dives into ecommerce strategies across the world, both from a historical perspective as well as conversations with the likes of Flipkart founders Sachin Bansal and Binny Bansal in India and Tokopedia founder William Tanuwijaya in Indonesia.

Erisman looks at new opportunities for local entrepreneurs as well as the battle of the giants in the ecommerce boom towns. “It’s sort of like a cold war where you have the emerging market model of Alibaba competing head-to-head in these markets with the developed country model of Amazon,” he tells Tech in Asia in an in-depth interview.

Porter Erisman with Alibaba boss Jack Ma. [A still from Crocodile in the Yangtze.]

Here are edited excerpts from the chat, interspersed with some explainers for context:

Your book talks of Amazon’s mistake in China. Could you elaborate on that?

Everywhere I went, whether it was India or Southeast Asia or Africa, I saw a common trend – which is that pioneers all tried to apply either the eBay or Amazon model. Even Amazon tried to apply its US model to the China market.

The problem is that to build an Amazon – especially on the original model from the US that was more inventory-led – you need scale and efficiency, both of which are very difficult to get in the early stages of ecommerce in an emerging market. So for example in China, Amazon wanted to apply the US model through their acquisition of the local player [Joyo], but it was difficult because you didn’t have efficient logistics and payment yet. For Amazon to try and manage everything in the whole purchase process was just too expensive.

Jeff Bezos was saying all along that Amazon would not make the same mistakes other US companies made in China, but then they made all the same mistakes.