Technology

Alibaba Group Holding Ltd Rivals Eye A Bigger Pie Of Cross-Border E-Commerce

SF Express has launched a portal selling food items sourced from retailers in Japan, Canada and other countries

Alibaba dominates 80% of China’s e-commerce market. Last year, the Jack Ma-led company launched Tmall Global to promote cross-border e-commerce. Earlier this month, the company forged a partnership with LendingClub to offer easy financing to U.S. businesses buying from Chinese suppliers. However, the Chinese government’s push to promote e-commerce has created a large number of rivals for Alibaba.

Alibaba Group Holding Ltd Rivals Eye A Bigger Pie Of Cross-Border E-Commerce

Chinese buyers losing faith in local goods

Most of these competitors of Alibaba cater to Chinese buyers’ fears about the safety and quality of everyday goods, reports Brenda Goh of Reuters. Sellers on Alibaba’s Taobao and Tmall platforms sell fake goods in large numbers, though Alibaba has spent more than $160 million to curb the sale of counterfeit products. The government’s e-commerce push includes tax-relief and other programs, which have been a boon for logistics firms.

Logistics firms such as SF Express, state-run Sinotrans and others are vying to capture a bigger chunk of cross-border e-commerce market. According to the Chinese government, cross-border e-commerce will be worth $1 trillion by 2016. Last month, NetEase signed a deal with Sinotrans to set up an online marketplace to gain from the cross-border online sales.

Masa Ren, VP of international e-commerce at SF Express, told Reuters that Chinese consumers are increasingly buying from abroad. A growing number of middle-class and affluent Chinese buyers have lost faith in local goods due to lower quality and a series of safety scandals. Last month, SF Express launched a portal selling milk powder, lobster and other items sourced from retailers in Japan, Canada and other countries.

Can smaller players win business from Alibaba?

JD.com has carved out a niche by focusing its marketing campaigns on the authenticity of its products. Most Chinese buyers are wary of fake and low quality goods. Last month, it launched a food import program to sell U.S.-grown fruits, Massachusetts lobsters and California wine to Chinese consumers.

Analysts believe smaller players will find it difficult to win business from a juggernaut like Alibaba. Many high-end Western brands including Burberry, Estée Lauder, L’Occitane have set up their shops on Alibaba’s Tmall Global.  The biggest winner in this cross-border e-commerce battle is foreign brands, who have a new route to sell their goods in China.