The Alibaba Playbook

The Alibaba Playbook: A Guide to How the
World’s Best eCommerce Company Thinks
Author: Ken Leaver Date: March 2018

Sections
● Why is Alibaba the world’s largest marketplace?
● eCommerce in China
● About me
● The Marketplace Mindset
1. Introduction
2. Alibaba’s Businesses
3. The eCommerce Storefront
4. The Omni-everything Approach
5. The Seller Experience & Tools
6. Operations
7. Software
8. How they will go global

Who is Alibaba?
● Founded by Jack Ma in 1999
● Market cap of $490bn in
January 2018 (top 10 most
valuable companies in the
world)
● IPO’d in 2014 (biggest IPO in
history)

Just how big are they?
2017 GMV (General
Merchandise Volume)
$547bn
$136bn
310m users
3m sellers
340,000 employees
493m users
10m sellers
50,000 employees
Source: https://www.seattletimes.com/business/amazon/amazon-revenues-hit-by-stronger-dollar-miss-wall-street-expectations/
https://www.businesswire.com/news/home/20170518005564/en/Alibaba-Group-Announces-March-Quarter-2017-Full

Alibaba’s GMV growth
● Partially from riding the tidal
wave of China growth
● However platforms like
Alibaba.com and
Aliexpress.com have had
tremendous success selling
overseas
Source: https://www.reuters.com/article/us-alibaba-results/alibaba-beats-on-earnings-as-e-commerce-remains-core-revenue-driver-idUSKCN1AX153

The operating footprint
Source: https://www.cbinsights.com/research/amazon-alibaba-international-expansion/

Alibaba’s companies
The “Core” The “Investments” (50+ deals)

How they’ve fared against competition
After investing many billions in China,
Amazon has now been divesting its
warehouses and essentially conceding
defeat.
Famously beat eBay 10 years ago,
who later pulled out of China
completel
Aliexpress is far and away the #1
eCommerce platform in Russia
overcoming local incumbents like
Ozon and Ulmart

Internet usage in China is booming
● 751 million internet users in
china in 2017 (~54% of the
population)
● Urban = 550m users (73.3%
penetration)
● Rural = 201m users (26.7%
penetration)
Source: TechinAsia

eCommerce is expected to dwarf the US by 2020
2020 eCommerce Market
$1.7 Trillion$632 Billion
Amazon = 3% of US retail Alibaba= 11% of China retail
Source: http://multichannelmerchant.com/news/chinese-ecommerce-market-pegged-1-7-trillion-2020/

Leapfrogging the US in areas like Mobile
● Compared to Americans,
Chinese use their phones
much more to:
○ Shop
○ Pay
○ Entertainment
○ Info search while in a
retail search
Source: https://www.chinainternetwatch.com/whitepaper/china-internet-statistics/

eCom in the rural areas of China
● 620m people live in the
countryside
● Online rural shopping already
topped $50bn in 2016
● 84.4% of rural residents
already shop online
eCom expected to continue to grow at >20% per year over next 5 years in China, driven
mainly by rural communities
Source: https://atelier.bnpparibas/en/retail/article/china-rural-e-commerce-market-gold-mine

Brands have jumped online wholeheartedly in China
● In 2016 there were over 14,500
overseas brands selling on
Tmall alone
● Chinese are very brand
conscious
● Online allows brands to extend
their reach well beyond the
major cities where their retail
presence is

The logistics boom
Alibaba has slated $16bn for future logistics investments to improve reliability and speed of delivery
Source: https://seekingalpha.com/article/4012458-chinas-logistics-sector-structural-uptrend

A bit about me, Ken Leaver
Born in New York. Graduated from Cornell. MBA from IESE Business School.
1999- 2008: spent 7 years as a business consultant (BCG, Mars & Co)
2008 - 2011: Visa senior manager in charge of acquiring in Russia, then issuing products
business in Eastern Europe / CIS countries
2011 - 2013: Groupon CEO of Ukraine: took it from ~10 to 100+ employees and making groupon
the top 10 ecom companies in Ukraine in 2012
Feb 2014 - April 2017: Worked in Lazada (based in Vietnam)
● Feb > Dec. 2014: Senior PM in charge of Ops
● Jan 2015 - Dec. 2016: VP of Ops & Finance product
● Jan 2017 - Dec 2017: SVP of Ops, Seller Platform and Finance Product
● Jan 2018 - April 2017: SVP Product for eLogistics (fulfillment & logistics company that was
separated out from Lazada)
April 2017 - Current: Wayfair

A bit about Lazada
● Founded in 2012 by Rocket Internet site
as an ‘Amazon’ play for SouthEast Asia
● CEO: Lucy Peng
● Markets
● Indonesia, Thailand, Vietnam,
Malaysia:, Singapore, Philippines
● Model:
● Retail + Marketplace
● 130,000+ sellers (in Sept 2017)
● eLogistics (in-house fulfillment &
logistics provider)
Timeline
2012-3: Raised $186m from Rocket, Kinnevik,
Summit Partners, Tengelmann Ventures & others
Dec 2013: Raised EUR200m from Tesco
Nov 2014: Raised EUR 200m from Temasek
Apr 2016: Alibaba invests $1bn
June 2017: Alibaba invests another $1bn
March 2018: Alibaba invests another $2bnSource: https://www.techinasia.com/who-is-lucy-peng-lazada-ceo
https://www.reuters.com/article/lazada-strategy/planes-trains-and-
automobiles-lazadas-logistics-battle-to-win-se-asia-idUSL8N1M906S
Source: https://www.crunchbase.com/organization/lazada-
group#section-funding-rounds

Alibaba is a marketplace ONLY, they do not
compete with their sellers
● What is a marketplace?
○ Provide a platform where 3rd party
sellers can sell and pay you a
commission
○ These sellers choose their own price,
write their own content, etc.
● How does it differ from a retail model?
○ In Retail the platform buys from suppliers
at a negotiated purchase price and
selects the price to sell to consumers
● Amazon is a hybrid Marketplace + Retail model
○ They will often compete against their 3rd
party sellers, creating some distrust
● Alibaba is only a marketplace

Marketplaces are more efficient than retail period.
● 10m sellers will be better at finding new
product niches and trends better than a
small in-house team
Product
Selection
PricingContent
● Sellers generate the content
themselves, no need for in-house
resources to be spent creating /
reviewing them
● Sellers compete with each other to
find the optimal market price
The metaphor i like to use is capitalism (marketplace) vs. retail (communism). One is
simply a more efficient model by definition.
The Pyramid of Marketplace
Advantages

Pricing optimized by many sellers & buyers
● Similar to a stock market, the multiple
seller model assumes basically that if you
have enough sellers & buyers that they
will be naturally inclined to optimize price
over time
○ enough buyers/sellers will always
perform better than an algorithm, as
proven by stock markets
● And if you are the largest marketplace, as
time goes on you will tend to have the
lowest price of anyone else
○ Due to the fact that suppliers will be
willing to drop margin more, knowing
that they will get the volume to
maintain an overall profit target
Many sellers compete for sales of Apple iPhone 6 on Amazon

Long tail = Great SEO
● Marketplace model makes it easy
for many sellers to sign up quickly &
easily
○ Alibaba has 10m+ sellers in
China
● They create many products = lots of
long tail keywords
○ There are 1bn+ SKU’s for
sale on Alibaba websites
● On Taobao sellers are also
constantly optimizing for SEO

Never lose money like in Retail
Retail models face the difficult question:
Do I enter categories where i am not the
most price competitive?
● If I do and I don’t price down to be
competitive: my perception is hurt as
Im not the cheapest
● If I do price down, i often make a
negative margin
Marketplace models never face this
problem
● If you get the same sellers they will
likely price competitively across
channels
As a retail model, how do you maintain price competitiveness
with Amazon on a product that you do a small fraction of
their volume?

Sections
1. Introduction
6. Operations
7. Software
● The eCommerce Marketplaces
● Logistics
● Entertainment
● Finance

Taobao
Source: https://expandedramblings.com/index.php/taobao-statistics/
● Founded in 2003 by Alibaba
● In 2017 had $350bn GMV (58% of all Alibaba
marketplaces)
● The biggest C2C ecommerce site in China
○ Most of what is sold is new
● 580 million monthly active users (top 10 most
visited sites in the world)
● Over 1 billion product listings in 2016
● Close to 10m sellers on Taobao
● Focuses a lot on engagement of its users
through videos, etc.

Tmall
Source: https://www.emarketer.com/Article/Alibabas-Tmall-Maintains-Ecommerce-Lead-China/1016432
● The B2C eCommerce site established by
Alibaba in 2008 after being spun out of
Taobao
○ Leading B2C player in China with
~53% market share
● Focused a lot on brands
○ 75% of the consumer brands in the
Forbes Top 100 World’s Most
Valuable Brands are selling on TMall
○ More than 70,000 international and
Chinese brands
● Business model:
○ Charges annual fee and commissions
○ Difficult process to be accepted as a
Tmall seller

Aliexpress
Source: https://www.chinainternetwatch.com/20230/aliexpress-100m-cainiao/
● Founded in 2010 as the platform for selling
Chinese seller’s products abroad
○ Users from over 220 countries
○ 100m+ active buyers in the past year
○ Daily visitors is over 20m
● Creating more of a local presence overseas
○ Key markets are Russia, US, Spain,
Brazil, France and UK
○ Establishing local presence in countries
like Russia by adding Tmall to the
platform
○ Establishing overseas warehouses in
countries like Europe
● Business model
○ 5% commission on transactions + annual
fee

Alibaba.com
Source: alibaba.com
● The world’s largest online B2B trading platform
for small businesses
○ Handles sales b/w importers and
exporters from more than 240 million
countries
○ Typically have a fairly large Minimum
Order Quantity
● Size
○ Has over 150,000 businesses as
members
○ 18m+ buyers
● Also provide services to sellers such as
logistics, etc.
○ Partnerships with 3PL’s like Fedex, ,UPS,
Maersk, etc.

1688.com
● The Chinese version of the B2B commerce
site, Alibaba.com
○ Mainly used for sales by factories &
wholesalers to small businesses
○ There is a minimum order quantity
○ Has over 961,000 paying members and
230 million suppliers
● Typically the procurement site for Taobao
sellers
● Business model
○ Charges annual membership fee as well
as value added services (ads, order
matching fees, etc.)

Juhuasuan: The flash sales platform
Juhuasuan site
Source: http://www.alizila.com/juhuasuan-alibabas-daily-deals-marketing-muscle/
● Juhuasuan, a Groupon-styled flash sales
marketplace, was integrated with Tmall & Taobao
● It provides an excellent way for sellers to launch
promotional events and introduce new products
● Integrated with Tmall in 2016 so that brands can
launch new products thru Tmall and run a marketing
campaign for them thru Juhuasuan
● About 70% of products are new or hot products,
excess inventory is a small proportion
● The reach:
○ 450 products and 25 brands on the platform
daily
○ 30m unique visitors daily

Fliggy (online travel platform)
● The online travel platform designed as an online mall for brands such as airline companies and
agencies
● Was launched in 2016 and targets the younger generation as a one-stop service for planning
trips
○ Already has over 200m users and 100m downloads
Source: https://www.tnooz.com/article/fliggy-online-travel-platform-China/

About Cainiao
● The logistics company of Alibaba founded in 2013
with a consortium of logistics companies (Alibaba
owns 48%)
● Services the deliveries of Alibaba’s eCommerce
platforms but also services non-Alibaba platforms
● Has a network that covers 224 countries and
processes about 70% of all packages in China
(about 42m per day)
● Over 200 warehouses and 1800+ distribution
centers.
● Has a stated goal of being able to deliver anywhere
in China within 24 hours and anywhere in the globe
within 72 hours
Source: http://www.alizila.com/wp-content/uploads/2016/09/Cainiao-Factsheet.pdf?x95431

Youku.com: The Chinese Youtube
● Acquired Youku Tudou for $4.7bn in 2015
(Youtube is not accessible in china)
● Gave access to 500m users and 800m+ daily
video views
● Streams both video games and videos
● Invests in their own original content, in
particular live events on news, music, sports,
etc.
● Alibaba uses the platform as its only “shopping
while watching live streaming videos” service
Source: https://thenextweb.com/asia/2014/08/20/chinas-youku-tudou-now-serves-500-million-users-per-month-half-of-youtubes-reach/

Weitao: the social layer to
Alibaba’s eCommerce
● Weitao is like a social network geared
towards shopping and integrated with
Taobao
● Users and brands create their own
pages
● Users follow brands that they like and
read articles, etc.
● They can also find products they like
and shop
Users can purchase
from Weitao
Users & brands create their own pages and have followers

Sina Weibo: the micro-blogging site
● Launched in 2009
● 2 main businesses:
○ News platform - kind of like
yahoo
○ Twitter-type social network
(140 character limit to each
post and there is a follower-
followee network)
● Alibaba invested $586m in Sina
Weibo in 2013 to drive more traffic
to Taobao
○ IPO’d in 2014 and Alibaba
owns ~32%
● Had ~400m monthly active users in
2017
● $30bn+ market valuation
Source: https://www.techinasia.com/why-alibaba-invest-sina-weibo

Alibaba Pictures: their own movie studio
Jack Ma calls Alibaba “the biggest entertainment co in the world” b/c of the time chinese spend
browsing the ecom sites. And similar to Bezos sees avery symbiotic relationship b/w
entertainment and ecom
● In 2014 paid $804m to buy ChinaVision Media
Group (HK film & tv producer) and renamed
Alibaba Pictures Group
● In 2015 invested in first Hollywood film by
taking a stake in Paramount’s “Mission
Impossible: Rogue Nation”
● Plan to use Big Data to help determine what to
produce
● Ticket platform (Tao Piaopiao) was selling over
3m tickets a day in 2016

Tmall Box Office: their own video-streaming service
● In 2015 rolled out Tmall Box Office, a
subscription video streaming service similar to
Netflix
● Gives viewers access to Chinese & foreign
shows and movies for <$10 per month
● A lot of original content from Alibaba Pictures
● Creating deals with companies like Disney to
create specific channels (eg. DisneyLife) on the
platform
● Alibaba has also started selling tv set top boxes
powered by its smart tv operating system
○ Via a partnership with Skyworth

UC Web
● Operates UC Browser, one of the most popular
mobile browsers globally
○ Founded in 2004 and acquired by Alibaba
in 2014
● Is a leading content distribution platform
○ UC News - content distributor
○ 9Apps - Android app store
○ UC Union - mobile traffic and
monetization platform
● Revenue is mainly from ads
● Connects users to the Alibaba media
ecosystem of eCommerce, music, video
streaming and social networks
● 252m MAU as of Sept 2016
○ Largest mobile browser in India
Source: https://www.fungglobalretailtech.com/research/alibaba-group-strength-strength-overview-business-units-worlds-largest-e-commerce-company/

Alibaba Sports
● Established in 2015 to develop and operate
sports IP, sporting events, e-sports contests,
sporting venues, merchandise, etc.
● Vision is to digitalize the traditional sports
industry by integrating Alibaba’s eCommerce
and media assets
● Strategic partnerships with all major sporting
associations like boxing, rugby, FIFA, NFL,
Olympics, LPGA
● Streamed the 2016 Rio Olympics via Youku
and over 380m viewers watched through
Alisports

Xiami
● A music streaming service founded in 2006 and
acquired by Alibaba in 2013
● Earns fees from advertising and paid
subscriptions (similar to Spotify)
● Has int’l and domestic licensing partners like
Universal, BMG, K-POP, etc.
● Over 14m MAU as of Sept 2016 and app
installed on 9m devices

ANT FInancial: The financial services group
● What is ANT FInancial?
○ Alipay = Paypal equivalent
○ MYBank = online bank that provides
consumer loans based on online eCom
transaction history
○ Yue Bao = money market fund
● How big?
○ $100bn valuation
○ 450m active users
○ estimated that 58% of all chinese online
transactions go thru Alipay
https://qz.com/1204717/chinas-ant-financial-plans-to-raise-5-billion-reportedly-at-a-valuation-of-100-billion/

Alipay: the Paypal of China
Source; https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/quora/2017/06/20/is-wechat-pay-taking-over-
alipay/&refURL=https://www.google.com/&referrer=https://www.google.com/
● Alipay started out as the
Chinese “Paypal” to help
Taobao sellers get paid
● Alipay is now accepted in over
500k Chinese offline merchants
and is a common way of paying
in China
● 54% share of China’s $5.5 trillion mobile payment market
○ 520m active users / 200m transactions daily
○ Competes against Tencent’s WeChat Pay
● Business model:
○ Interest income - when transactions temporarily deposited in Alipay
○ Commission from merchants
○ Advertising fees - from ad space on app

Alipay has led to a mobile commerce boom in China
● In China it’s not uncommon for a bridesmaid to wear a QR code
to facilitate payments from guests during a wedding
● Not your typical financial app as it includes sections like:
○ Merchants - users can learn the locations of nearby
locations of shops, get discounted coupons and settle
payments at merchants’ e-shops
○ Friends - contains social features like messaging, instant
money transfer, an IOU feature, etc.
● Additional features:
○ Use public services like check the status of visas and
passports, motor vehicle licensing, pay for traffic
violations, etc.
○ In China when you scan a QR code in hotel room rented
via the payment app, they can control the temperature,
lighting, room service, etc.

MyBank: the online bank
● Launched in 2015 as a traditional bank taking
deposits and making loans up to $800k
● Takes no collateral from debtors, but instead
looks at the customer’s Alipay financial data
○ As a result cost of approving a loan is <$1
as compared to the $320 average in China
● Has no branches and thus reaches rural areas
well
● Targeted Alibaba’s small and mid-sized Taobao
sellers for initial customer base (5+ merchants)
○ Targets China’s 70-100m small businesses
that are underserved by traditional banks
● Non-performing loan ratio so far is ~1%
Source; hhttps://www.techinasia.com/alibaba-launches-online-bank-mybank

Sesame Credit: credit scoring for consumers
● Sesame credit is Alibaba’s credit-scoring system for
consumers
● Based on factors such as social media interactions,
purchases on Alibaba / Alipay
● Score allows them to get loans from Ant Financial and
having a more trustworthy profile on Alibaba’s
ecommerce sites
● Anyone w/ 750 pts can select a car online, pay 10% initial
fee and pick up their new car from a vending machine.
● At hotels a high score will allow you to book and stay
without paying in advance
● Testing using it on Chinese online dating sites to allow
suitors to check the credit score and make sure the
person is not ‘sketchy’

Yuebao: the world’s largest money mgmt fund
● Launched in 2013, in a short amount of time
became the world’s top money market fund with
over $210bn USD under mgmt
● Convenient to invest in and take money out of.
And no minimum.
● Surpassed 300m users in early 2017
○ In particular from rural and underbanked
segments
● Pays ~4% annual return (stable and better than
most commercial banks)
Yuebao mobile app
Source; https://www.bloomberg.com/news/articles/2017-08-17/world-s-biggest-money-market-fund-to-get-even-bigger-fitch-says

The Lending Club tie-up
● Alibaba teamed up with Lending Club, the
American fintech co, to enable small US
businesses to apply for credit up to $300k in
under 5 minutes
● Must be used to pay an Alibaba.com vendor for
goods purchased from China
● Being done to encourage US businesses to buy
more from China

Sections
1. Introduction
6. Operations
7. Software
● The eCommerce Marketplaces
● Logistics
● Entertainment
● Finance
● Other

Alibaba Cloud (Aliyun)
Source; https://techcrunch.com/2017/01/24/alibaba-q3-january-2017/
● Founded in 2009 and started out as a private
cloud to serve Alibaba’s eCommerce
businesses
● The largest cloud computer service provider in
China with a market share of over 50% (very
similar to Amazon Web Services)
● Does about $2bn in revenue (up 115% y-o-y)
● Number of paying customers increased to
874,000
● Expanding aggressively to increase capacity
and improve its technology

Ali Health
Source: http://www.scmp.com/tech/china-tech/article/2094681/alibaba-health-revenue-soars-robust-online-pharmacy-sales
● Online pharmacy and seller of health
insurance
○ From acquisition of Citic 21CN in 2014
○ Objective is to improve healthcare
services
● Revenue: $69m in revenue in 2016
○ Mainly from online drug tracking and
pharmacy online system
● Has partnership with Tmall for driving
customers to Ali Health
● Traded separately on HK stock exchange

Autonavi
● Digital map and navigation provider in China
○ Partner of Google Map, Bing Map, and 360
map in the chinese market
○ Captures users’ driving patterns in real-time,
powered by Big Data and Cloud
○ Collaborates with police & transport offices
to capture info about traffic accidents
● Established in 2001 and acquired by Alibaba in
2014
○ 29m MAU in 2016
● Revenue through Value add services like:
○ Commissions from location-based services
such as car hailing company, Didi Chuxing
○ Advertising
Source: https://www.fungglobalretailtech.com/research/alibaba-group-strength-strength-overview-business-
units-worlds-largest-e-commerce-company/

YunOS
● An Internet of Things (IoT) operating system that brings
cloud functionality to IoT and mobile devices
○ 2nd largest operating system for smartphones in
China (behind Android who has 80%, but ahead of
IoS)
○ 70m phone users (about 14% share)
● Users can access applications without having to
download to their devices
○ Used in smartphones, smart cars, wearables,
smart home applications, etc.
● Revenue model: sells cloud-based services on YunOS.
Doesnt charge hardware manufacturers license fees.
● Being used in new retail applications like face
recognition mirrors that allow you to project cosmetics
on the person

DingTalk
● An enterprise messaging platform aimed at
improving B2B communication and
collaboration for SME’s in China
● Launched in 2015 and is the no.1 ranked
enterprise messaging app in China
○ Similar to Skype for Business
● Offers video, voice conferencing, cloud storage,
etc.
● Revenue model: currently free
● 3 million corporate users as of 2017

Koubei.com: the platform for selling services to
consumers
● $1bn invested by Alibaba & ANT Financial into a JV
aimed at selling local services that are paid by
smartphone called Koubei.com
○ The key O2O (online to Offline) play for Alibaba
● Services range from car repairs to movie tickets to
take out lunches to booking hospital appointments
● Had 1.5m third party service providers signed up
○ 15m transactions daily
○ $10.5bn in payment volume in Q4 2016
● Local merchants can conduct mobile marketing
campaigns
● Accessible through Alipay Wallet app, Mobile Taobao
app, AutoNavi, Weibo and UC Browser

Sections
● Attract
● Engage & Boost
● Keep
● Get Feedback
1. Introduction
6. Operations
7. Software

Alimama: the marketing tool set available to sellers
● A wide range of advertising available to sellers &
brands on Alibaba platforms
○ TANX - real-time online marketing exchange
that automates the transaction of ad inventory
○ Data Management Platform (DMF) - allows
marketers to identify targeted audience groups
thru big data
○ Taobao Zhitongsche - marketing service that
returns personalized product recommendations
on Ali marketplaces from keyword searches
○ Diamond - displays customized banners and
visual ads across Alibaba’s platforms
● Ads appear across all ALibaba platforms:
○ Online marketplaces, Youku Tudou, weibo,
Dingtalk, UC Web, AutoNavi

Big data is at the core of all advertising
● Alibaba has extremely advanced analytical tools that encourage sellers to upload their customer data
(from offline channels and their own direct online efforts) and leverage it to improve their reach and
conversion on their platform
○ Most of the large international brands are using these tools to sell on TMall
● Brand Data Bank
○ Online dashboard that shows brands how many consumers interested in their products and
where they are in the product lifecycle
● Example: Skincare
○ If brand launched flagship store it could use the data to engage anyone who previously
purchased
○ Knows who is inactive vs. active and target them differently

Promotion events on the platforms
● Alibaba’s sites spit out hundreds
of theme-based promotional
events that sellers can opt into
each day
● Sellers participate in these
events by providing a discount
● Humans only play a small role in
deciding on themes of events,
rest is automated
● Products are selected for events
using algorithms, as well as
targeted discount
○ data science helps to
determine which products
are best applied for which
themes

The Ad Exchange Network (TANX)
● Alibaba’s ad exchange where
advertisers can buy ads on
Alibaba-owned and non-
Alibaba owned sites
● Real-time exchange
● Participants include
merchants and brand
advertisers
Alibaba’s very own ‘DoubleClick’ ad exchange network

Seller paid sponsored ads
● Taobao does not charge commissions from its
sellers at all. Its main revenue stream is just
advertising
○ eg. for positioning at the top of search
results
● Similar to Google Taobao’s long-term goal is to
have all search results be paid ones
○ but these should also be the ‘best’ search
results as these advertisers also can
afford those positions by having great
prices, conversion, etc
○ and so taobao tries to ‘blend’ these paid
results with the organic ones more and
more (just like google is doing)
● Advertisers can even design their own popups
and banners, including multimedia (see right)

Sellers can bloggers to write about their products via
Alimama
● Brands can use Alimama to connect with
hundreds of thousands of bloggers in an
automated way
● The blogger writes an article about the seller’s
product with a link back to their Tmall store and
can earn a commission on sales
● For int’l brands looking to create a brand in
China this has been a very powerful way of
entering the market and conveying their brand
attributes
Leading US toymaker, Mattel, used the
Alimama platform to connect with bloggers
to help create their online brand in China

Sections
● Attract
● Engage & Boost
● Keep
● Get Feedback
1. Introduction
6. Operations
7. Software
Recommended Reading
Why Alibaba's store-centric
approach is better than
Amazon's search-focused one
By Ken Leaver

Entertainment via video streams
● On average Chinese spend about 30 minutes
shopping on Taobao
○ This is 3x longer than the avg customer
spends on Amazon
○ This is because Taobao customers look
to have fun during their experience
● 20,000+ live stream video sessions in the lead
up to 12.12 promotion
● Taobao has started running a series of
‘webisodes’
○ in 2016 a series called “One Thousand
and One Nights” helped drive the sale of
537,000 dumplings in just a few hours
○ video was watched 2.7m times
Source; http://www.alizila.com/mobile-taobao-pushes-webisodes-targeting-night-owls/

Live shopping events
● Many live events are broadcasted on Tmall and
Taobao encouraging consumers to watch and
then purchase
● Tmall Global Fashion show had 200 models
showing off apparel from 80 different brands

How social ‘Circles’ work on Alibaba
More than 1000 ‘Circles’ where hobbyists can talk about their pastimes and favorite products
Q&A feature that allows shoppers with questions about a product get answers from the community
● big data is used to identify the person who is most qualified to answer the question
● 25% of questions are answered within 1 minute and 60% are answered within 10 minutes
● 1m questions per day, 2m consumers participate
Source; http://www.alibabagroup.com/en/ir/article?news=p160726

Engaging in news and content via Weibo
● Weibo has 5000+ live streams daily, with 40%
of viewers visiting the virtual stores being
promoted
● Provides consumers with engaging news and
content related to shopping and retail
○ aimed at increasing the amount of time
consumers spend on the marketplaces
○ # of active users has climbed to over 80m
● 1,300 media outlets provide content
Ava Foo has a fan base of 340,000+ on Weibo
for her fashion blog
Source; https://www.techinasia.com/weibo-live-streaming-china

Interactive offline shopping experiences
Starbucks in China has special
features built into the Taobao
shopping app that provides
info about the products
Users who collect all the badges by visiting all
the right spots in the Starbucks cafe, win a
prize.

Sections
● Attract
● Engage & Boost
● Keep
● Get Feedback
1. Introduction
6. Operations
7. Software
Recommended Reading
Alibaba has elevated the game
in product content... and the
world will soon realize it
By Ken Leaver

Alibaba’s loyalty system optimizes “stickiness”
● In 2017 combined the TMall and Taobao programs into a
single club called “88 Membership”
● Offers members exclusive discounts, benefits and brand
services
○ Including invitations to special member-only events
○ Incorporates ‘new retail’ by offering discounts to
offline retail stores
○ Shopping pages that are viewable only to them
● More than 50 top brands participate (like Hugo Boss,
L’Oreal, etc)
● Loyalty tiers that reward greater levels of consumer
engagement
○ Not just purchases but accounts for visits, sharing to
social media, posting questions in forums, and writing
product reviews
The user’s loyalty score, or ‘Taoqizhi’, is
viewable to customers on all Alibaba sites
Super members got invited to court time
with NBA star, James Harden

The high-end membership - APASS
Alibaba Passport (APASS) is a membership club
created for the biggest online shoppers (who spend
$15,000+ per year)
Benefits:
- Assigned personal account managers
- Access to special events like wine tastings and
automobile test drives
- Exclusive daily deals from top brands
These consumers spend 8x more time on average
than others
~100,000 members
Source; https://www.bloomberg.com/news/articles/2016-11-18/how-alibaba-turns-wealthy-shopaholics-into-a-marketing-squad

Sections
● Attract
● Engage & Boost
● Keep
● Get Feedback
1. Introduction
6. Operations
7. Software
Recommended Reading
Alibaba's "New Manufacturing" and
why you should be worried
By Ken Leaver

Sellers are given tools to get customer feedback
● Alibaba’s sites encourage as much
transparency about the product being delivered
as possible
● Only purchasers of a product can leave
feedback
● They are encouraged to leave quality
descriptions and photos thru incentives (like
coupons, etc)
● They can also answer questions posed by
future would-be purchasers
Sellers can offer coupons to buyers to post
photos of the products they have bought

Sections
● Online-to-Offline (O2O)
● Multi-channel
● New Retail
● Global Approach
1. Introduction
6. Operations
7. Software

Driving customers to offline merchants
● O2O, or “Online to Offline”, means using online
to drive customers to stores offline
● According to McKinsey 71% of Chinese
consumers are already using O2O services
● O2O grew 38% in 2015 to $51bn
● Drives very significant traffic during promotions
(similar to Groupon)
● Categories include housekeeping, education
courses, housing, dental practice, food, etc.
Alibaba bought Ele.me for $900m, a food delivery
business, to push into the local services market
Source;http://www.alizila.com/o2o-commerce-is-generating-real-money-in-china/

Sections
● Multi-channel
● New Retail
● Global Approach
1. Introduction
6. Operations
7. Software
Recommended Reading
Would Alibaba's shopping
formula in China work in
Russia?
By Ken Leaver

Multichannel is the standard in China
● For many years already, most chinese sellers
are selling on at least 8 platforms, which are
plugged into an in-house built ERP or an off-
the-shelf ERP.
● platforms they were typically selling on
included: Amazon, Taobao, Tmall, Aliexpress,
eBay, Wish, Walmart, Price Minister
● Cainiao was setup to be cross-platform to allow
it to best fulfill sellers’ needs
● Sellers want to have a single workflow for order
processing for their teams, which is enabled
thru Cainiao’s cross-platform approach and
systems

Build your order management system to be cross-
platform
● When building your seller portal, you should
distinguish between platform-specific and non-
platform specific services
● Platform-specific = things that you do that are
specifically tailored to that ecom site
○ SKU creation: a sku’s attributes on Taobao
may differ from Tmall
○ Promotions: a promo on Taobao will differ
from one on Tmall
● Non-Platform-specific
○ Order mgmt: when you fulfill an order you
don’t really care what platform it is for
● If your seller portal is simply a portal linking to
various services, then no matter whether you are in
Taobao’s or Tmall’s or Aliexpress’s seller portal,
when you click on order management, they can all
take you to the same page.
Services on Seller Portals of different eCom platforms can
contain services that are platform-specific or not
Taobao TMall Aliexpress
SKU Creation
Order Management
Promotions
Not platform-specific!!!!
Analytics

Use standard seller API’s
● Sellers wants API’s to be similar across
platforms so that they plug in easily into their
ERP’s
● Most large sellers are working across many
platforms, and therefore their teams only use
their ERP and dont even log into individual
seller portals
● Therefore don’t put any ‘critical’ features into
your seller portal that is not accessible via API
○ And don’t build features with API’s that
most ERP’s won’t support
Taobao
Tmall
Aliex
pressSeller ERP
Typical Seller ERP setup
● Order api
● Ready to ship api
● Inventory api
● Order api
● Inventory api
● Order api
● Inventory api

Understand what ERP’s your sellers are using
● In 2016 Lazada organized a cross-border mini-conference for the large Chinese ERP’s and some
of the large sellers in Shenzen that I attended, where some clear messages came out:
○ All large sellers in China are either using their own ERP or one of the off the shelf ones (like
Mango ERP). They are not using each portal of each ecommerce platform.
○ They want to be able to plug & play platforms and are not willing to do a lot of work to add a
platform unless they see a business case
○ eCommerce platforms that ‘get this’ like Wish are widely adopted in China
The user interface of MangoERP, a popular ERP in ChinaWish’s ‘Help’ page for MangoERP users

Use standard SKU attributes to make it easy for sellers
● Sellers wants SKU attributes to be
similar across platforms
○ This allows them to plug in
the platform to their ERP with
little extra work
● If you use standard SKU’s you can
easily plug in millions of Chinese
sellers
● If you make non-standard SKU
attributes mandatory then the seller
will do a business case to see
whether it is worth his while
Inside
Seller’s ERP
Amazon Taobao Wish.com
Name iPhone 6 Mandatory Mandatory Mandatory
Category Electronics Mandatory Mandatory Mandatory
Subcategory Cell Phones Mandatory Mandatory Mandatory
Color Black Mandatory Optional Optional
Length - Optional Optional Mandatory
Width - Optional Optional Mandatory
Wish.com will be a relatively small seller for most large Chinese
sellers, and therefore if they ask for attributes that are not already
in the seller’s ERP, its unlikely the seller will bother to add them

Sellers want to hold their offline & online inventory in
a single place
● Cainiao offers the ‘One Inventory’ system to
sellers
● Nestle used to integrate warehouse stock
across all Alibaba platforms into a shared
industry
● Enabled % of products offering 2nd day delivery
to jump from 30 > 70%
● Next they are looking to integrate offline
channels as well
Source: http://www.alizila.com/one-inventory/

SKU data should be separated b/w frontend and
backend attributes
● Many eCommerce platforms mistakenly pack
warehouse sku attributes into the Frontend sku
● Why is that problematic?
○ Because the seller is selling a single product
on multiple sites and when he makes a
change to that sku he wants to be able to do
so once and not many times
○ Also when you bundle products into a single
sku on a platform (eg. iPhone + cover) this
may then map to 2 different warehouse
SKU’s. And it would be inefficient to have
that bundle as a single warehouse SKU as
you may also want to sell them both
separately
● At Lazada we needed to unpack warehouse SKU
attributes from our front end SKU
Tao11
Warehouse SKU: AA1
Weight: 1kg
Length: 1m
Storage: Normal
Tmall1 Amz1
Warehouse SKU is typically mapped to multiple
Frontend SKU’s inside the seller’s ERP
Front end SKU
Name:
Warehouse
SKU
Taobao Tmall Amazon

Supply chain software is built cross-platform
Cainiao’s ‘BMS’ system is essentially a cross-
platform tool that also enables supply chain
planning across all of the seller’s platforms and
inventory locations
● This is more valuable to the supplier as it
tells him not just how to forward position
within Cainiao’s warehouse network, but
also how he should forward position
products in all of his own warehouses
● Takes into account demand from not just
one eCom platform, but multiple
It is much more valuable to a seller to accurately
forecast what he will sell in all channels than just a
single channel
BMS
Own
warehouse 1
Own
warehouse 2
Cainiao
warehouse 1
Cainiao
warehouse 2
Taobao Tmall JD.com
Shanghai
Taobao Tmall JD.com
Beijing
Forecast: 20 Forecast: 8 Forecast: 11 Forecast: 35
Forecast: 24Forecast: 7Forecast: 15Forecast: 10Forecast: 8Forecast: 10
BMS architecture diagram

By understanding how to play in the multi-channel
world, you can scale fast
● Jet.com launched in July 2015 and hit a
$1bn run rate by end of its first year
● How? They tapped Chinese sellers and
knew that to get them to plug them in, in
needed to be easy as a push of a button
● Chinese sellers typically have a single ERP
connected to many platforms. If you use
standard api’s to connect to the ERP, then
they can plug you in almost instantaneously
● Also allows Chinese sellers to put millions of
SKU’s on your platform at the click of a
button
Source: BI Intelligence April 2018

Sections
● Multi-channel
● New Retail
● Global Approach
1. Introduction
6. Operations
7. Software
Recommended Reading
8 Things every eCommerce
platform should know about
China
By Ken Leaver

The “New Retail” experience
● Partnering with brick and mortar (and
sometimes investing) to focus on being good
showrooms
● Eliminates the need to hold inventory
● Have access to a much wider catalog.
Customers can order things that are not in-store
● Purchase made online and delivery by Alibaba
● Retailers can eliminate a lot of competencies
and focus on being a great showroom

Changing how retail works
● Introduced the Hema concept
supermarket, which blends online
and offline shopping
● Deliveries from the store itself to
customers in a 30km radius as
quickly as 30 minutes
● Operates about 20 stores and
doesn’t intend to scale it. But rather
aim is to showcase the benefits of
the “new retail” experience to
customers
A customer at a Hema supermarket scans the barcode
to get a ton of info about the product. Plus get a
recommendation on similar products.

Investing in offline retail to bring ‘new retail’
In end 2017, invested ~$3bn in a 36% stake in Sun
Art Retail, one of China’s leading retail operators
● Operates 446 hypermarkets in 29 provinces
Invested in Lianhua Supermarket chain
● Operates 3618 outlets
Invested in EasyHome, #2 furniture chain in China
● 223 stores in 29 provinces
Source:http://www.alizila.com/alibaba-amps-up-new-retail-with-easyhome-investment/

How to choose what to put in-store
● Alibaba opened Home Times, a
concept store for ‘new retail’ in
Furniture and plans 15-20 stores in
2018
● Tmall analyzes the behavior and
preferences of users within a 5-mile
radius of the shop
● Products picked from these users’
top preferred categories
● Cuts the time required to source
products worldwide for retailers to a
single day
● Store offerings will change every
10-15 days
Customers just scan a barcode with their app to
purchase and it will be delivered to their home

New technologies taking online to offline
“Magic mirrors” are an augmented reality powered
digital screen that allows shoppers to try on and
purchase cosmetics
A woman checks how different lipsticks look on
her digitall in a woman’s bathroom at a mall and
then orders the one she wants.

Changing the shopping experience
● Tmall offers test drive experiences from their
own “Super test-drive centers”
● These centers are completely unmanned
● Customer can schedule a test drive directly
from Tmall and use their phone to unlock the
car
● Free 3-day test drive of over 100 models like
Mercedes, BMW, Volvo
● The results:
○ Maserati sold 100 cards in 18 seconds
during a flash sale on Tmall to mark the
opening of their flagship store
○ Alfa Romeo sold 350 Giulia Milano cars in
33 seconds during its own flash sale
Source: http://www.alizila.com/tmall-teases-car-vending-machines-with-super-test-drive-centers/

Pop-up stores
● Pop-up store in trendy shopping area only for
promotional event
● Divided into 5 sections - kitchen, study,
bedroom, bathroom and living room
● All rooms host connected products that can be
remotely controlled by smartphones
● Customers can scan QR codes for product info
or to purchase on an Alibaba online store

Providing the supply chain to mom and pops
● Mom and Pop convenience stores from China
can now select from a large Alibaba-enabled
assortment and eliminate having to work with
multiple distributors
● Restocking is done next day
● Can fine tune their merchandising, product
display and in-store promotion thru the app
● App tells them what products are in highest
demand
● Can offer many digital services for sale

Sections
● Multi-channel
● New Retail
● Global Approach
1. Introduction
6. Operations
7. Software
Recommended Reading
Learning about how Alibaba
thinks about logistic network
design
By Ken Leaver

Alibaba enables Chinese sellers to sell globally with
little effort
● Aliexpress is marketed and
dropships almost all over the
world
● Enabled by:
○ Cheap and relatively
fast dropshipping from
China
○ Automated translation
from Chinese to many
languages

Automated translation of products
● Alibaba has a huge team working on
translation and in a meeting said they
believed their translations were better than
Google’s
● As a seller on Aliexpress you can either
use automated translation or invest in
doing a manual translation
Aliexpress is #1 eCommerce site in Russia

When shopping offline abroad, buy online and have
it ship from china
● Chinese are traveling more and more
and love to shop
● Some retailers abroad have begun to
take advantage of this, and win
Chinese customers by providing a great
experience
● For example:
○ Summerhill Wine in Canada
attracts many Chinese tourists
○ They allow customers to
purchase using Alipay and then
ship to them to their address in
China

Sections
● Customization
● Motivating seller performance
● Great tools
● Providing great data
● Access to services
1. Introduction
6. Operations
7. Software

Sellers create a shopping experience that matches their
brand
Sellers shop for their own page templates on
Fuwu’s seller marketplace, similar to how
Wordpress templates work
Brands can create the look and feel for
their shop that matches their brand
identity (unlike Amazon and most other
platforms)

Sellers select their own logistics packages
● Another unique element of Cainiao’s approach to logistics is
the flexibility it provides in allowing merchants to select their
own logistics packages
● How does this work?
○ When a merchant wants to use Cainiao’s services
they go to Fuwu, the Services marketplace, and
choose from a set of options
○ These options consist of ‘resources’, which are things
like warehouses and certain capabilities (such as
handling large goods, valuable goods, fresh food,
etc.)
○ By selecting an option, the merchant is essentially
defining what and where his goods can be sold as the
eCommerce platforms will check these capabilities
when they offer customers delivery options
○ When selecting a service on Fuwu, the merchant is
signing an e-contract with defined pricing for those
servicing
Sellers can choose which warehouses/countries
they want to fulfill from and what carriers they want
to use. These are the only options that will show
up to the customer on checkout.

Sections
1. Introduction
6. Operations
7. Software
● Customization
● Great tools
Recommended Reading
Jack Ma's 'New Retail' will
change eCommerce as we
know it
By Ken Leaver

The Seller Rating is a very important criteria to the
customer’s purchase decision
The amount of deposit the seller
has paid (to protect against fraud
of not fulfilling)
Taobao product page
Seller’s overall rating, which is based on numerous
factors that the consumer can click and see broken
out as below
Performance specifically about
the accuracy of the description of
the project, quality of customer
service and logistics (on-time,
etc)

This rating motivates the seller to perform well in key
operational areas
● Seller rating is an integral piece of how all
Alibaba’s marketplaces work
○ the reason they work well is that they
have a major impact on sort rank and
participation in promotions, so sellers take
their rating very seriously
● Ratings are based on things like:
○ fill rate
○ damaged product
○ contact response time
○ return rate
○ on time delivery
● Ratings typically update once a week but are
based on a longer period, depending on the
specific KPI

By using automated systems to get sellers to
perform they only manage the very top of the tail
● The account management at Alibaba is almost
completely automated except at the very top end (eg. the
Nikes and GE’s of the world)
● This is not at the expense of poor service. Taobao and
Tmall middle and long-tail sellers are still extremely
happy
○ Why? Because great tools keep the sellers happy.
○ It is very rare that sellers need to interact directly
with someone at Alibaba b/c the tools are so
automated and intuitive
○ Due to the fact that most things are automated
well, when there are requests that need human
interaction, Alibaba is able to handle these very
quickly with relatively few people involved

Alibaba also gets sellers to do a lot of the operations
for them, like customer service
● Alibaba allows buyers to contact sellers both pre-
purchase and post-purchase
○ Pre-purchase issues typically include questions
about product specs
○ Post-purchase issues are typically around
returns, how to assemble/install, etc.
● on such issues the customer can always escalate to
an Alibaba service agent if he is not happy with the
seller’s response
● Sellers’ response time to such inquiries is part of their
seller rating
● Sellers in China often outsource the management of
these chats to 3rd party customer service companies
that they find on the Services Marketplace

Sections
1. Introduction
6. Operations
7. Software
● Customization
● Great tools

Sellers have a lot of great tools to develop their own
business
● Driving traffic
○ Alimama, Weibo,
● Customer Service
○ 3rd party providers and services on Fuwu
○ Free Alibaba customer-seller
communication platform
● Order management
● ERP Software
● Content creation / Photos
● Store design
○ 3rd party providers and services on
Fuwu
● Analytics
○ Mix of Alibaba and 3rd party
platforms
● Finance / Accounting
○ 3rd party providers and services on
Fuwu

Sellers can push promos to past customers
● Alibaba offers sellers
templates to push messages
to past customers
● They don’t get the customer
email so can only advertise
thru Alibaba platform

Sellers can follow up on dropped carts
● Sellers on Alibaba platforms can
see when customers have dropped
their shopping carts
● They have the option to send
automated messages to find out
why the customer dropped and try
to get them back

Sections
1. Introduction
6. Operations
7. Software
● Customization
● Great tools
Recommended Reading
eGrocery Player Analysis
By Ken Leaver

The Seller Analytics platforms
● There is a mix of paid and free analytical
platforms for sellers, some of which are
provided by Alibaba and others by 3rd
parties (using Alibaba API’s)
● Some of the popular ones include:
○ Hao Dian Pu - provides paid
analysis of traffic and customers
○ Taobao Quantum (by Alibaba) - offers a free package (traffic, sales, customer, promotion
analysis) and paid (traffic source analysis, store experience analysis, etc.)
○ Taobao Hang Qing (by Alibaba) provides keyword trends, product name optimisation,
product ranking, competitor price analysis, etc.
● I also saw the paid Alibaba analytics platform and was blown away by the crisp UI and breadth of
data. Unfortunately i could not find screenshots online.

Sellers even upload their own offline data
● Many brands upload their offline customer data to ALibaba platform
● The reason: Alibaba offers advanced tools to leverage this data to make their online marketing more
impactful
● International brands even market their Tmall shop in their own direct communications with
consumers, thus doing Alibaba’s marketing for them
○ this is rarely the case with Amazon as the brands often view Amazon as more of a threat that
tries to ‘squeeze them’

Sellers outsource services to providers on FUWU, the
service marketplace
● Alibaba has built their own services marketplace
called Fuwu where sellers on all Alibaba platforms
can find 3rd parties for services like:
○ Photography
○ content writing
○ creation of store templates for taobao
○ banner ad creation
○ outsourcing of fulfillment
○ outsourcing CS tickets
○ and many more
● This Fuwu marketplace does $10bn+ in annual
sales
● It is key to allowing sellers to outsource pieces of
the value chain they are bad at, and allow them to
focus on what they are good at.

An ecosystem of agents provide services to sellers
● Alibaba has cultivated a large network of “certified”
agents that essentially help sellers sell
● These partners either offer a one-stop solution or
some specialized services that can include:
○ Design of the store
○ Setup of hte store
○ Merchandising, price, promo mgmt
○ IT integration to ERP/WMS
○ Customer service
○ Etc
● Typically charge a fixed monthly retainer
or % commission, or combo

Outsourcing services and providing financing has
been key to getting even rural areas to sell online
● 1000+ ‘Taobao Villages’
● More than 200,000 active online shops in 17
provinces
● Villages now can sell cross border
● Get financing from ANT Financial
○ More than 180,000 rural SME’s selling on
Alibaba platforms have gotten financing
● Planning to invest $1.6bn over next 3-5 years to
build eCommerce facilities in rural china
○ Local “service centers” where villagers
can purchase and sell goods through
Tmall and Taobao
Source: http://www.alizila.com/an-introduction-to-taobao-villages/

Sections
● High-level approach
● Logistics
● Warehousing
● Manufacturing
● Customer Service
1. Introduction
6. Operations
7. Software

Jack Ma believes strongly in not owning physical
assets
● Alibaba owns very few trucks, planes, fulfillment
centers, delivery hubs, etc.
○ This is in major contrast to the Amazon
approach, which is very asset intensive (ie.
Amazon owns tons of buildings, vehicles,
etc.)
● Instead Cainiao has created an intelligent
network that connects 3rd party owned assets
and manages their performance
○ Easy to plug in warehouses, carriers, etc.
● It has even created Cainiao, its
fulfillment/logistics arm, into a separate company
own by separate investors
The standard eCommerce Delivery with
assets involved

You are more free to generate competition
● By not owning the assets Cainiao gets them to compete
○ They make barriers to entry as low as possible… it
will soon just be a 30-minute sign up process to
become an Alibaba carrier
● Thousands of carriers compete with one another to get
volumes on routes
○ Who gets the volume depends on price, reliability
and who gets it there faster
○ Cainiao can adjust how these volumes are
distributed among carriers real-time
○ They also adjust volumes to achieve volume-based
price incentives
● Fulfillment centers in the Cainiao network are starting to
work similarly
Have a scooter and want to become a
carrier for Cainiao? Just sign up!

Competition has drove Chinese logistics from being one of
the worst to the best in the world in a short span of time
● 20 years ago logistics beyond the main cities
of China was broken, creating major
distribution issues for companies trying to get
their products to those areas
● Now China has probably the most competitive
and advanced eCommerce logistics network
in the world
● Why? Competition. Pure and Simple
○ The number of carriers that have
sprouted up in China is simply immense
○ And due to this they have had to invest
in cutting edge technology and
operations to compete with one another
● A key enabler to this has been the plug-and-
play approach of Cainiao
○ Carriers can plug into the platform and
compete very easily
○ They are given access to incredible
amounts of data to optimize their
business

Why fulfillment & logistics was put into a separate
org from Alibaba
● Alibaba realized that logistics & fulfillment costs
decline with volume as its a heavy asset-based biz
○ Relying on their own volume was too slow
So they created a separate company, Cainiao,
that would service not just Alibaba but other
eCom platforms
● Entirely different technology stack was built
○ The eCom platform (eg. Taobao, Tmall, etc) was
split technologically from operations
○ Everything operated via clean, industry-standard
APIs
● Lazada took this painful step soon after Alibaba made
its first investment
A new company, eLogistics, was created and all
warehouses + LEX (the carrier) were moved into it.
Shareholder structure of Cainiao
Source: https://ecommerceiq.asia/cainiao-logistics-southeast-asia/

Cainiao has created a large, intelligent network
● Alibaba tries not to own any of its fulfillment network
○ 200+ warehouses operated by 3rd parties
○ 3000+ carriers and delivery agents
● Instead Alibaba tries to connect them all in an intelligent
network that Cainiao has built
○ carriers & warehouses enter their own network details in
a ‘Resource Center’ that Cainiao has built
● For each node in the network they track capacity, start/end
times and reliability
○ the network can reroute to other partners when reliability
of one node goes down
● Delivery leadtimes are given at the time of the customer order
○ They are able to deliver within promise 95%+ of the time
○ by deciding at the time of the order the carriers, they are
able to tell carriers days in advance what to carry
Source: Cainiao website

Carriers can participate easily
● It is simple and easy for carriers to become part of
the Cainiao network
● They just enter their route information, (including
things like capacity, cost, etc) in a Cainiao portal
and sign an electronic agreement
● The better their reliability and lower their cost, the
more volume they will get
● This flexibility has encouraged massive
competition in the logistics space in China, which
has resulted in costs dropping very quickly
Source: Cainiao website

Everyone is just a node in a network
Above is a high-level schematic of how Alibaba’s ‘Smart Routing’ system works.
The key thing to note in this design is:
- You can plug in as many nodes as you want and can have many legs to a route without disrupting the logic
- You can decide the exact carrier + date + time of every leg in the journey at the time of the customer order,
which is absolutely huge from a logistics planning perspective
Supplier WH - NJ
Days: MTWRF
Cut time: 10:00
Start time: 12:00
End time: +1d 12:00
Capacity: 100
Reliability: 94%
Sept 1(M)
9:00
By: Sept 4 (R)
12:00
*input by supplier in
portal
By: Sept 5 (F)
16:00
By: Sept 8 (M)
14:00
By: Sept 9 (T)
9:00
By: Sept 9 (T)
16:00
By: Sept 10 (W)
14:00
Carrier A
Days: MWF
Cut time: 13:00
Start time: 14:00
End time: 16:00
Capacity: 50
Reliability: 93%
*input by carrier in
Resource Center
Resource Center
Resource Center
Resource Center
Resource Center
Wayfair NJ Sort
Days: MTWRF
Cut time: 9:00
Start time: 10:00
End time: 14:00
Capacity: 5000
Reliability: 99%
OPTION 1
Linehaul A: NJ > CA
Days: MTWRF
Cut time: 16:00
Start time: 17:00
End time: +1d 9:00
Capacity: 200
Reliability: 99%
Wayfair CASort
Days: MTWRF
Cut time: 12:00
Start time: 13:00
End time: 16:00
Capacity: 7000
Reliability: 99%
Carrier C
Days: MTWRF
Cut time: 8:00
Start time: 9:00
End time: 14:00
Capacity: 50
Reliability: 94%
Customer Promise =
Sept 10 @ 14:00
WH Processing PickupCustomer order Sort Linehaul Sort Last Mile

Smart sorting
● An integral part of the sort center operations is routing inbound packages to the correct
outbound lane
● Alibaba’s Smart Routing system is integrated with the software running the package
conveyor in sort centers so that this all happens automatically and packages are put on
the outbound truck that was scheduled at the time of the customer order
○ Ensures that sort center does not get clogged
Inbound
Outbound
Storage Storage
Package Conveyor
To Beijing North
To Beijing South
To Beijing East
To Beijing West
From Shanghai
From Suzhou
From Guangdong
Sort Center Operations

Key partnerships overseas to widen the network
Cainiao has been making key overseas partnerships
to speeden and reduce the cost of dropshipping from
China to key markets like Europe, the US, etc.
These partners just connect by API
● Warehouse operators can even use their own
WMS systems
One example is the partnership with the US Postal
Service for Aliexpress parcels

Even shipping documents are done scalably
● Alibaba has centralized all documents to a single
‘Cloudprint’ system, which works in conjunction with
an ‘e-AWB’ system that handles variables
● This allows for all documentation (like airway bills,
picklists, etc.) to be managed in one centralized
place
○ which is a key enabler for allowing sellers to
completely process orders on their own ERP
and just call by api for the appropriate
document
● Enabled by the fact that carriers maintain their own
document templates in Cloudprint and maintain
their own data mappings for things like location tree,
carrier codes, etc in e-AWB

Pickup stations to reduce failed pickups
● Cainiao pledged in 2017 to set up 40,000 pickup
facilities close to residential areas, including 2000
on college campuses
● Opened 5000 self-collection outlets with China Post
with plans to expand to 100,000
● Partnering with convenience stores such as C-Store
for pickup
● Developing facial recognition technology to allow
users to unlock delivery drop boxes
Source: http://www.advangent.com/2015/04/08/china-post-5000-self-collect-outlets-for-alibabas-logistic-network-cainiao/

Convert stores into last mile fulfillment centers
● Inefficient to fly packages from
another city for a 200 mile+
delivery
● Simpler to deliver it from a store
nearby
● That is why Alibaba is making a
big play into retail with their “new
retail” strategy
Source: http://www.alizila.com/tag/new-retail/

Delivery robots being tested
● Robot “Xiao G” is an autonomous delivery vehicle
that interfaces with a transport mgmt system to
optimize a delivery route
● Uses a deep learning algorithm to predict the
trajectory of moving objects, vehicles and
pedestrians
● Testing with Zhejian University a robot that learns
where students are at what time of the day to
improve efficiency, and allow students to take out
their parcels as they pass
● Planned to allow students to communicate with the
vehicle via a mobile app

Drones to be used in specific circumstances
● In 2017 Alibaba ran a test of sending unmanned
aerial vehicles (UAVs) carrying boxes of passion
fruit from Putian to the nearby Meizhou Island over
water
● Expected that this will cut transport time to the
island in half and save on logistics costs
● Plans to use drones to delivery high value add
products such as fresh food and medical supplies
over water
Cainiao drone that delivered passion
fruit to a nearby island

Smart logistics vehicles
● Cainiao has pledged to putting 1 million smart
logistics vehicles into the market
○ Expected to save as much as $1.4bn annually
● Vehicles co-manufactured with auto companies like
SAIC Motor Corp and Dongfeng Motor
● Optimize the delivery route for couriers based on
Cainiao’s advanced big data algorithms
● Trials in Shenzen and Chengu in process
Source: https://rctom.hbs.org/submission/is-alibabas-smart-logistic-platform-sufficient/

Cainiao outsources much of its warehouse footprint
● Operating over 200 warehouses in its network,
Cainiao is collaborating with over 40 domestic
partners to operate them
● Cainiao only self-operates in the top tier of the
network warehouses (top 8-10 cities). The
rest are run by partners
● Cainiao swaps the operator of the warehouse
fairly frequently based on performance
● I visited a warehouse in Shanghai that they
had bought from Amazon and they’d recently
swapped the company that operated it due to
performance / cost

Plugging in 3rd party WMS’s
● Cainiao is able to plug in many different
WMS’s via standard API’s to its warehouse
integration layer (WHC)
○ This allows them to plug into
warehouses operated by 3rd parties like
DHL and Fedex
● Why is this powerful?
○ You do not need to own and operate all
of your own warehouses
○ Particularly helpful for overseas
expansion and pop-up warehouses for
campaigns
● What does the Warehouse Integration Layer
do?
○ Routes inbound/outbound requests to
the right WMS and sends responses
back to the eCom platform
○ Is the ‘inventory master’ for warehouse
stock
Taobao Tmall Aliexpress
Logistic order intake layer
Dropship (seller)
platform
Warehouse integration
layer (WHC)
WMS1 (Cainiao) WMS2 (DHL) WMS3 (Fedex)
Rough architectural sketch of how Cainiao connects to
multiple WMS’s
Dropship orders WH orders

Smart warehousing
● Cainiao’s Guangdong Tmall warehouse is the
largest warehouse of “automated guided
vehicles” in China
● Manned by ~200 robots that are equipped
with sensors that prevent them from bumping
into one another
● Goods move to human workers who arrange
them for packing
● Worker efficiency increased significantly
○ From 1,500 products sorted during a 8hr
shift to 3,000
Source; http://www.chinadaily.com.cn/business/2017-10/18/content_33409509.htm

Working to help tailor manufacturing to eCommerce
Alibaba has a program where they work with regional
Chinese cities to develop ‘Tao Factories’
● its estimated that there are already more than
15,000 such factories
What are ‘Tao Factories’
● Basically they aim to give eCommerce sellers
access to small manufacturers
● These factories are able to provide smaller-
quantity manufacturing (thus reducing the risk
to sellers of testing new products)
Source;http://www.alizila.com/alibaba-china-digital-economy-bcg/

“New manufacturing” = customizing what is
produced based on real-time data
● Anticipates the near real-time consumer
data to help manufacturers become more
nimble and responsive to purchasing
trends
● Enabling large scale customization to
individual customers
● One example is how farmers in China use
Alibaba’s big data to decide what
products they should produce and in what
quantity (this helps avoid producing too
much or little)
This farmer in Shandong Province entered new fruit
categories and invested in more land based on the
data that Alibaba gave to them
Source;http://www.alizila.com/

Helping farmers choose what to produce
● Alibaba is giving farmers access to big data
analytical tools to determine what to produce
and in what quantities
this has drastically reduced the risk associated
to producing, and thereby enabled them to
expand the business
● They also give farms the ability to sell direct to
customers, thereby cutting out all the
middlemen
● Over 10,000 farms are now using this software
● Now Alibaba is working on helping these
farmers sell their products to the entire world
Source;http://www.alizila.com/

You don’t need to have armies of customer service
reps to provide great service
● Most seller-related issues/questions are directed straight to sellers
○ The question becomes, how do you ensure the seller is equipped to
handle them in a timely fashion?
● The answer that Alibaba has come up with?
○ Fuwu provides access to many 3rd party customer service
outsource providers and software systems
○ Alibaba also provides a free customer service platform that
integrates very well with their ecommerce numerous platforms
○ Response time and quality of response to customer queries is a
key criteria in a seller’s rating, thus motivating them to do a good
job
■ This is typically motivation enough for sellers to outsource it
ot professionals in order to maintain competitiveness
● Many other non-seller customer service queries on Alibaba platforms are
now answered by bots with AI

Customer<>Seller disputes are automated via a jury
● Even customer<>seller disputes are automated
using a community of users on Alibaba’s
platform using pan.taobao.com
○ in beta testing, over 800,000 people
volunteered to be dispute assessors
○ over 340,000 disputes were resolved
○ target is to reduce dispute resolution time
from 3-5days to 2 days
● For example if a customer returns a
taobao item and it comes back
broken to the seller but both disagree
on who broke it
○ a team of resolution assessors
would be assigned and
presented the evidence via the
platform
○ they would then decide based
on the evidence provided
Source; http://www.alizila.com/alibaba-allows-users-to-play-judge-in-e-commerce-disputes/

Sections
● Tech driven org
● Work hard & smart
● Clean architecture
● Service-oriented product teams
● Being an open platform
● Artificial intelligence
1. Introduction
6. Operations
7. Software

A true tech driven org
● Alibaba is probably the most tech-driven eCommerce
company in the world
● What does that mean? That means the tech teams
drive the solution/business process more than the
business teams
● How does this work in reality?
○ The business teams in the field at Alibaba are
typically very small
○ They provide the ‘context’ to problems to the
PM’s in China, but the PM’s have a lot of leeway
in designing the solution
○ While other eCom companies may say that it
works like this, the reality i have typically seen is
not even close to the reality at Alibaba

Senior leaders at Alibaba are not “typical”
● Compared to western companies Alibaba’s
management teams and leaders are much more
technical and soft-spoken
○ “Charisma” seemed to be much less important a
factor in moving up the ladder
● Why is that?
○ Alibaba tends to put more weight on intelligence
and strategy and less on charisma
○ I saw this consistently in the leaders that i met.
The CTO’s often become the CEO’s in Alibaba
● Is that a good thing?
○ In my view it definitely leads to a more technical /
architectural viewpoint being taken into account
in how the company develops
Not what your typical Western CEO
looks like…

A culture of the best solution wins regardless of rank
● Many large companies are impacted by the HiPPO
(Highest Paid Person in the Office) effect, but i
specifically felt like this was much less the case with
the teams I saw in Alibaba
● While watching Alibaba teams discussing a problem
the pattern i noticed was:
○ It was difficult to tell who was an engineer vs.a
product manager. The engineers were just as
versed in the business problem and highly
engaged in designing the solution
○ Junior team members felt free to voice their
opinions and were listened to based on their
merit, not on their rank

As an organization, Alibaba is both secretive and
humble
● When it comes to guarding their technology design, Alibaba is
probably one of the most secretive large organizations in the world
next to Apple
○ Note that this is not true of their business strategy where Jack
Ma is probably one of the most transparent CEO’s in the tech
world
● What do i mean by secretive?
○ Even thought they bought Lazada, they would not allow any of
their internal documents to be sent to us electronically and we
could not take anything out of their office
● Why do i think they are that secretive?
○ Their software and how they have designed it is extremely
smart and clean. They understand that this is one of their
main competitive advantages against Amazon and others.

They get stuff out fast by working hard
● One of the biggest things that was immediately noticed by any Lazada folks that visited the
Alibaba tech center in Hangzhou was that…
… they worked HARD. VERY HARD. It was not rare to see the team working well past
midnight all week, and even on the weekends.
● What drove this? In my mind several things can potentially explain it:
○ Teams were extremely devoted to the team’s success. The teams I met almost felt like
families in that they had such close relationships with each other and felt very comfortable
disagreeing with one another.
○ For many employees of Alibaba, their job is their life. They often work on-campus, marry
someone else from Alibaba, and their entire social life revolves around Alibaba.

But they also work smart
● When watching a tech team during their internal
meetings it was interesting to note that:
○ Everyone in the room seemed to be shouting
at each other as at least one person was
scribbling on a board
○ It was nearly impossible to differentiate who
was more senior to who
○ It was nearly impossible to differentiate who
was a product person vs. an engineer
● Why? My interpretation:
○ It felt as if they had a true culture of “the best
argument wins”... regardless of your rank, job,
etc.
● And by following “the best argument in the room
wins” consistently as a culture, you tend to make
better decisions, which allow you to work smarter..

Product Managers are tooled to work very efficiently
● Alibaba is creating a platform that essentially allows PM’s to create user interfaces on their own that
eliminate the need for designers to be involved, and have the engineering built in
○ Will not be used for customer-facing tools but more for operational / seller tools where UX is
simpler
Align
requirement with
business
Typical Product Mgmt Flow
Product
Manager
Create Design
Specifications
UX Designer
Make UX design
Provide
feedback on UX
Give to
Engineering
Product Management setup of Alibaba
Multiple iterations
Align
requirement with
business
Product
Manager
Make UX
using drag &
drop interface
Give to Engineering
only if non-standard
elements
Release
Release

Clean tech architecture
● Alibaba’s tech teams work very
independently by taking a
service-oriented architecture
● Alibaba eliminates legacy code
almost as a culture by rewriting
and replacing systems
● I asked a PM about bugs, and for
core systems it sounded like they
were almost non-existent
● Despite this they are able to
release amazingly fast

Little redundancy
● One problem i have seen in non-Alibaba eCommerce companies is
redundancy in logic, and my perception was that this happens far
less frequently at Alibaba due to clear ownership:
○ Ie. when two teams build a service that is similar in nature
○ Or when a team builds a service that really should be owned
and built by a different one
● Why is this a problem?
○ It becomes a problem because when one of the teams
changes the logic and it impacts downstream systems in
unpredicted ways
● For example, the promotions team builds some pricing logic into
their service despite the fact that the pricing team should own this
○ Then the pricing team changes their logic forgetting that the
promotions team also has their own logic
○ As a result there are unforseen bugs in the promotion logic
after the pricing team makes their changes

Build once for many platforms
● Alibaba technology teams work like separate products
that try to sell themselves to as many of the ‘platforms’
(ie. Taobao, Tmall, Aliexpress, Juhuasan, Lazada, etc.)
as they can
● Their incentives are based on the gmv that they handle
and therefore its in their interest to be as flexible as
possible to be able to plug into the max # of platforms
● This allows product teams to develop very deep
expertise in a product vertical (eg. order mgmt, seller
platform, etc) as they will build for many different use
cases
● For example the order mgmt team could build a system
that works for both Taobao and Didi (the Uber
competitor that Alibaba backs)

Service-oriented architecture
● During my participation in the integration of
Cainiao’s operational systems i was surprised by
how little their various product teams interacted
● Why was this? Each team provided a service that
was available via API’s, which were all clearly
published in a consistent format
● So if any other team wanted to use the service it
was clear how it worked
● This allowed teams to release code quickly without
being dependent on one another

Service-orientation of product teams prepares them
for integrating acquisitions
● Each product team at Alibaba plugs into the
various eCommerce platforms almost as if
they are an external customer using open
APIs
● This service orientation makes them better
prepared to plug in acquired eCommerce
platforms as they already have very deep
integration experience in many different
contexts
● This is why Alibaba will be more willing/able
to purchase and integrate large eCommerce
platforms than Amazon (whose products are
likely much more spaghetti’d together).
Product team 1
(eg. Order mgmt)
Taobao
Tmall
Aliexpress
Lazada
New
acquisition?
Product team 2
Product team 2
Product Management setup of Alibaba
Open APIs
Alibaba teams

Jack Ma understands that the core value Alibaba
brings to any acquisition is their software platform
● Why does one eCommerce firm buy another one? They
obviously see synergies. But most of the time these
synergies are never truly realized.
● This is because it is too messy and challenging to ever fully
integrate the systems
● For example, when I was Groupon CEO of Ukraine, both
Russia and Ukraine were on a different platform from the US
Groupon.
○ It was deemed too ‘difficult’ to integrate the two
platforms
○ So I was not getting off of the great new features that
were being released in the US
● Amazon is another great example as there is a long list of
companies that they never integrated like:
○ Pets.com - never integrated.. Now exists as Petsmart
○ Drugstore.com - sold for a 90% loss to Walgreens
○ Zappos
● Lazada was the testbed for Alibaba’s ability to
integrate its software platform into acquisitions
○ This essentially gives you the true control of
the company
○ Enables you to automate more and more,
thus reducing manual-based tasks (and
people)

Open API’s to encourage 3rd party developers to
build non-core software
● Similar to Amazon, Alibaba has created a
robust set of API’s for all kinds of data from
its platforms to encourage and foster 3rd
party developers to create apps for sellers
● These tools are available to be purchased
(and sometimes free) on Fuwu Service
Marketplace
● Tools include things like:
○ ERPs
○ Customer service software
○ Analytics
○ Order management tools
○ Finance tools
○ Promotion tools
3rd party ERP’s available for purchase on Fuwu Service
Marketplace

Helping tailor what they show shoppers
● Alibaba has developed software it calls the ‘E-
Commerce Brain”
● It uses real-time online data to build models for
predicting what consumers want
● Reflects not just what they’ve purchased but also
browsing, bookmarking, commenting and other online
actions
● Can home in on consumer’s preferences for categories,
price ranges, brands, product specifications and other
parameters Example: A mother browsing stories of
skin allergies on Taobao Headlines (a
news app) will then be offered to purchase
dietary supplements when shopping on
taobao

Smart Customer Service via AI
● 95% of customer calls to Alibaba are
answered by a computer system
called Ali Assistant
● Provides answers to frequently asked
questions
● Assesses personal info of caller when
making product recommendations

Personalized storefronts powered by AI
● Merchants selling on Taobao and Tmall can
offer tailored product recommendations
based on Alibaba’s AI technologies
● Based on age, gender, location, history and
many other factors
● 20% higher conversion rate on personalized
landing pages during 11.11 campaign
compared to non-personalized
3 different customers, 3 different mobile
presentations (first time visitors, new buyers, and
loyal fans)

Supply Chain powered by AI
● Ali Smart Supply Chain (ASSC) applies AI to
help online and offline merchants to:
○ forecast product demand and allocate
inventory for optimal turnover
○ Determine the right products to offer
○ Optimal pricing strategy
● AI predictive model helps forecast
demand for newly introduced products &
for promo events

AI powered logistics
Use AI to determine the fastest and most cost
effective delivery routes in a variety of complex
road networks
Cainiao partnered with major Chinese automakers
to manufacture 1 million green-energy delivery
vehicles
- Use AI to cut vehicle use by 10% and travel
distances by 30%
AI used to predict size of boxes that should be
used to efficiently pack
Source: http://www.scmp.com/tech/innovation/article/2119359/alibaba-lets-ai-robots-and-drones-do-heavy-lifting-singles-day

How ANT Financial uses AI
● If you get in a car accident, you can pull
your your smartphone, take a photo, and
file an insurance claim with an AI System
● The AI system can assess auto damage
by an algorithm in 6 seconds and list
nearby repair shops with their prices to fix
the damage
Source: http://www.alizila.com/china-auto-insurance-claims-adjusters-get-ai-boost-ant/

Sections
● Global-to-global vision
● The railroad tracks to global ecommerce
● Chinese sellers are the locomotives
● Lazada as a blueprint
● The final showdown with Amazon
1. Introduction
6. Operations
7. Software

Jack’s global-to-global vision
• Jack Ma has stated that he sees eCommerce moving
to a “global-to-global model” and he wants Alibaba to
be the best at it. What does this mean?
- I as a seller in any country of the world can sell
on all of the major ecommerce platforms
anywhere else in the world and it will be as
easy as selling on a single platform
- I as a consumer can buy from any eCommerce
platform in the world and have it delivered
quickly and cheaply
• We are still many years away from fulfilling this vision
and putting together the logistics puzzle is going to be
the hardest piece

Enablers to the global-to-global vision
1. Sellers all around the world will work multi-platform
a. They will work on cross-platform ERP’s where they
create content, manage inventory, orders, mange
customer service and do marketing in a single place
for many ecommerce platforms
2. Operations will be simplified
a. A single pickup from Chinese sellers each day.
b. They will pack packages for Amazon, Aliexpress (to
Russia), Lazada (to SE Asia), Taobao (to China),
TMall (to China) and other platforms without even
knowing or caring where it goes.
3. A global logistics chain that pieces thousands of
carriers/warehouse providers
a. Cainiao is piecing together this network thru partners
and investing to fill missing capabilities
b. Quality and price will improve with time
Folks like this in China are already selling their
wares to 15+ countries around the world
painlessly

Why are they likely going to continue to win?
They have the best software platform in eCommerce in the
world by a WIDE MARGIN!!!!!!!!!!!!!!!
● In most areas they are quite a bit better than Amazon
(ex-Amazon employees that worked in Lazada and
saw Alibaba’s tech stack during the integration even
said this)
● Why is it so good? Because it has been designed to
be extremely clean, flexible, and scalable
They are ‘inclusive’ of other players in their approach, unlike
Amazon
● Amazon seeks to destroy brick n’ mortar chains rather than
cooperate
● Alibaba has instead invested in stakes in many brick n’
mortar chains to demonstrate to the rest of the industry how
they can successfully turn into showrooms for the
eCommerce industry
1
2

Why are they likely going to continue to win? cont’d
They take automation to a completely different level
● Alibaba finds ways to automate almost every
element of their business. Often this means getting
others to do the work for them (eg. sellers, carriers,
etc.)
● This means they will have a major cost advantage
against others who are not able to do it to the extent
they are
They understand Chinese sellers (who are the
manufacturing base of the world) the best
● If you control the source of goods, you are as far
upstream in the supply chain as you can be.
Meaning you can cut out the middle men to offer the
best price anywhere in the world. US-based
Amazon sellers are learning this the hard way as
they get kicked out of the game by the Chinese.
3
4

The focus is on being the infrastructure to global
eCommerce
• Jack Ma’s ambition is 100% global, but he wants to achieve it by laying down the pipes to connect others
• This is fundamentally different from Amazon’s approach, which is much less inclusive
- They do not allow carriers to easily plug into their network
- They do not encourage their sellers to sell on other platforms
- They try to kill brick and mortar rather than cooperating with them
- They compete with their sellers through their retail business rather than partnering with them

Cainiao will be the backbone to this global expansion
• Cainiao will only build warehouses when they need to.. “If its something that can be done by our partners, we
will leave it to our partners” - Senior Cainiao Exec
• Cainiao has partner warehouses in 9 countries: US, UK, Germany, Australia, Japan, Hong Kong, Australia, and
South Korea
- 10+ warehouses in the US
Source: https://ecommerceiq.asia/cainiao-business-model-2/

Being asset light is also a key enabler of being able
to globalize quickly
● By not owning infrastructure like warehouses,
trucks and drivers, Cainiao has been able to
scale operations much faster
● When rolling out FMCG delivery in China, they
expanded from a single test market to 50 cities
in less than a year
○ This would have been impossible if they
owned and operated their own delivery
network

Chinese sellers and their products are the
locomotives running on the tracks
• Alibaba’s strength in China is the key pillar to their
expansion abroad
- China is already the manufacturing hub of the
world
- There are over 10m sellers in China
- Chinese sellers are already successfully
selling abroad to consumers (via Aliexpress)
and businesses (Alibaba.com) for many
years
• These Chinese sellers will cut out the current
middle men by undercutting them in price
- Amazon 3rd party sellers are the perfect
example.
- More than 30% of the 3m Amazon sellers are
selling direct from China now
- It has become well known among US-based
3rd party sellers that it is next to impossible to
compete against these Chinese sellers
Taobao Collection is a selection of Chinese Taobao
sellers’ products on Lazada (in SE Asia)

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