Alibaba is building a new massive ecommerce platform

At the Consumer Electronics Show (CES) in Las Vegas this year, it was Alibaba.com’s exhibit that really blew my mind. Yes, all the robots and drones were cool, but what Alibaba.com – Alibaba Group’s business-to-business unit – is doing really sent my mind reeling.

Unless I’m mistaken, the platform is building what could be its biggest initiative yet.

Some background on the B2B biz that nobody talks about

Launched in 1999, Alibaba.com was actually Jack Ma’s first ecommerce product. It was a platform connecting mostly foreign companies with Chinese manufacturers back when China was mostly a manufacturing country. And at the beginning, it was little more than an online bulletin board, a place where manufacturers and companies could find each other online and then work out a deal (mostly) offline.

Taobao and Tmall (originally Taobao Mall) were launched later in 2003 and 2006, respectively, and that’s when Alibaba Group began to focus on consumers. Ironically, the move into the business-to-consumer space was apparently a defensive move to protect their B2B business against eBay. And as we know now, these consumer marketplaces quickly rocketed. It turns out that scalable software businesses are an awesome way to capture the spending of rapidly rising Chinese consumers.

You have to give Ma credit. He or someone on his team has an uncanny ability to spot the largest opportunities out there, typically 10 years before they manifest themselves. Chinese online retail reached US$1 trillion in spending in 2015. And today, Alibaba Group is mostly thought of as a consumer ecommerce giant with a market capitalization of approximately US$480 billion.

The company followed this up with Ant Financial, a move into global financial services and another super big idea. Ant Financial did an investment round in 2018 that priced it at US$150 billion.

Alibaba Group also moved into entertainment with Alibaba Pictures, Youku Tudou, and other plays – also huge.

And now, it’s focused on “new retail,” yet another big, crazy idea. In theory, new retail could expand online retail from 20% to 25% of Chinese retail to 30% to 50%. That makes it an opportunity in the trillions of US dollars. (Note: In 2019, total Chinese retail reached US$5.5 trillion, surpassing US retail at US$5.4 trillion.)

Alibaba Group just seems remarkably good at spotting and then capturing truly massive opportunities, while remaining mostly a highly scalable software company (which means ridiculously good economics). At its best, it’s a platform builder that uses data technology to reshape markets… which brings me back to Alibaba.com and B2B.

Next really big idea: digitizing and democratizing global trade

Alibaba.com (and 1688.com) have not gotten much attention relative to the consumer platforms. But the company has been making some interesting moves in the past one or two years.

• Ma has been active in the Electronic World Trade Platform and the working group on small and medium-sized enterprises at the G20 international forum.
• Alibaba Group has been bringing trade ministers from around the world for training at its Hangzhou headquarters.
• Alibaba.com has announced a new partnership with Office Depot in the US.
• Management has been crisscrossing the globe, meeting with governments and trade bodies.

It’s kind of weird. You see the company’s senior people spending a lot of time with governments around the world.

My take is that Alibaba Group has been bringing more foreign merchants onto their B2C platforms, but it has also been laying the groundwork for a massive ecommerce platform which would digitize and democratize global trade. It’s a really big idea.

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