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China's E-Commerce Giant Sets Eyes on U.S.

  |  July 2, 2010   |  Comments

Alibaba.com, a global leader for small businesses, just acquired its first American company.

Hong Kong-- Alibaba.com asserts the U.S. is one of its most important markets globally. The Hangzhou, China-based company, which claims to be a global leader in e-commerce for small businesses, last week acquired its first American company, Vendio Services. The move will allow Alibaba.com to gain access to more than 80,000 targeted small businesses in the country.

Linda Kozlowski, director of international corporate affairs at Alibaba.com, said the U.S. is the largest international buyer's market that makes up 16 percent of its total user base on the international marketplace.

The e-commerce firm believes America is a major buyer's market of goods from Alibaba.com suppliers around the world, especially now that the economy is recovering from the downturn.

"We believe small businesses are the key to the economic recovery in the U.S. and with this acquisition we will be able to provide another tool to help small businesses succeed and grow," she added.

With recent survey results showing more than 80 percent of Vendio customers have never used online supplier services and nearly 90 percent have never tried to take advantage of import-export, the acquisition aims to create an opportunity for Vendio customers to expand their supply chain and lower their cost through instant, free access to the more than 1.4 million supplier storefronts on Alibaba.com and its wholesale transaction platform, AliExpress.

But how will the integration of Vendio Services, which will allow small business owners to source from Alibaba.com's supplier network and sell through online channels such as eBay, Amazon, and its own Vendio-supported store, fit into the e-commerce giant's business strategy?

Mark Cochrane, managing director for Business Strategies Group, a consulting firm specializing in mergers and acquisition support and strategy development in B2B markets in Asia, said the acquisition will diversify Alibaba's user base outside of China.

According to Alibaba's financial results for 2009, total registered users on the China marketplace increased by almost 6 million during the year, up to 36.2 million. Registered users on the international marketplace rose by 46.3 percent (3.7 million), reaching more than 11.6 million as of December 31, 2009.

Prior to an aggressive push into the U.S. this year, Cochrane pointed out that the company has invested $30 million in a global marketing campaign that accelerated global buyer acquisition, spurred higher traffic and buying activity on its marketplace, and raised the brand profile of Alibaba.

He said the acquisition also underscores the company's mission to build a business ecosystem that will bring success to Internet entrepreneurs around the world, enabling them to not only sell to businesses but directly to consumers.

Vendio's acquisition is part of the $100 million investment plan for AliExpress that Alibaba.com announced in April this year. Terms of the Alibaba-Vendio deal were not disclosed.

Cochrane expects the "cash rich company," which completed its $1.7 billion IPO on the Hong Kong Stock Exchange in November 2007 (the biggest Internet IPO at the time since Google's 2004 offering on the NASDAQ), to continue acquiring companies in the U.S. and Europe.

Founded in 1999, Alibaba.com offers three marketplaces that make it easy for millions of buyers and suppliers around the world to do business online: a global trade platform for importers and exporters; a Chinese platform for domestic trade in China; and an associated company facilitating trade to and from Japan. When combined, these marketplaces boast more than 50 million registered users in more than 240 countries and regions.

The company has offices in more than 60 cities across greater China, Japan, Korea, Europe, and the U.S., in Santa Clara, CA.

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ABOUT THE AUTHOR

Adaline Lau

Adaline Lau, ClickZ Asia editor, oversees day-to-day editorial operations covering digital marketing from search to social media, mobile to analytics in the region. Before ClickZ, she was senior reporter at Marketing Magazine and has worked as a journalist for The Singapore Marketer and Asia Pacific Broadcasting. Connect with her @adalinelau or Google+.

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