Alibaba is wooing American business by positioning itself as the friendly marketplace partner to Amazon’s threatening retailer image, and downplaying China’s recent market upsets.
At the National Retail Federation’s annual conference today, Alibaba Group president J Michael Evans stridently outlined the differences between the Chinese e-tail giant and Jeff Bezos’ empire.
He riffed on an analogy made earlier in the conference by technology journalist Kara Swisher, who said if brands “don’t react to what [Amazon and Google] are doing and the moats they have created around their businesses ... [they] have a problem.”
“We’re not building moats, we’re building bridges,” said Evans, having noted that Alibaba is a “marketplace, not a retailer” and therefore does not “compete with brands and small and medium enterprises for consumer dollars.”
“Our bridges are between the online business and the offline market in China,” he continued. “We believe future of retail is all retail ... online and offline.”
Evans went on to placate worries over China's economy taking a nosedive this year, downplaying projections that led Apple to slash its revenue forecast down as a natural growth plateau.
“It would be quite unusual if [the economy] could continue to grow at 7% or 8%,” he said. “It may be a little slower in 2019 because of national causes in the country, but also because of the [US] trade embargo. I can't tell you what will happen in the next 12 to 18 months, but I can tell you in 10 years from now that the economy will probably be the largest economy in the world.
“Another 300 [million] to 400 million [people] will move into the middle class. The future, I think, looks very good, notwithstanding some troubling headwinds.”
Ironically, Alibaba stock began trading down just hours after Evans took to the stage.
The trade show pitch was bold and simplistic — two traits necessary for a US audience.
Although Alibaba has been making inroads in the States for some years, it has historically suffered to stand out in a competitive retail space, and a number of analysts have attributed this failure to launch on a lack of brand awarenessoutside of China.
This also manifests as a lack of understanding as to how the Alibaba marketplace actually operates among the smaller US businesses it hopes to court.
Evans reeled off sales data to the American audience while impressing that his consumer base in China are young (48% of its customers are under 28, he said) and “curious” about products “coming in from other parts of the world.”
But he added: “They actually require quite a lot of work in understanding what a brand is and what retailer sells — where the product's coming from and why it would fit into their lifestyle today and in the future.
“This is a market that requires patience ... building your brand, building your consumer base and building that consumer relationship takes time. If you're impatient, if you're in a hurry, if you're looking at this as something that will impact your quarterly results either this year or maybe next year, China's not the market for you.”
Alibaba may be buddying up to vendors in the guise of a non-threatening marketplace, but on the expo floor it is showing off a brand of its own. The company has recreated its Freshippo or ‘Hema’ concept for attendees, who could watch robot bubbles deliver (plastic) food in a pop-up restaurant and purchase grocery items using facial recognition technology.
Evans said the retail concepts, which are currently only live in China, encapsulate the parent company’s ethos of ‘new retail’ — “the digitization of the entire retail value chain for the benefit of the [vendor] and the benefit of the consumer.”
“This is technology that we're implementing, that works, and that we plan to grow in other parts of the world,” he said.