Headquartered in Hangzhou in eastern China, Alibaba.com (HKSE: 1688), a member of the Alibaba Group of companies, is one of the world's premier e-commerce brands. Jack Ma, lead founder and chairman, and 18 other founders launched Alibaba.com in his Hangzhou apartment in 1999. Originally Alibaba.com operated as a bulletin board service for businesses to post buy and sell trade leads, and later became a vibrant marketplace for small and medium enterprises around the world to identify potential trading partners and interact with each other to conduct business online. Mr David Wei is the Chief Executive Officer of Alibaba.com. He joined Alibaba Group in November 2006 as the president of the B2B business division and as an executive vice-president of Alibaba Group. Mr Wei was the president, from 2002 to 2006, and Chief Financial Officer, from 2000 to 2002, of B&Q China, a subsidiary of Kingfisher Plc, a leading home improvement retailer in Europe and Asia. Under his leadership, B&Q China grew to become China's largest home improvement retailer. From 2003 to 2006, he was also the Chief Representative for Kingfisher's China sourcing office, Kingfisher Asia Ltd. Mr Wei also served as the Managing Director and head of Investment Banking for Orient Securities Co. from 1998 to 2000, and as a Corporate Finance Manager at Coopers & Lybrand, now part of PriceWaterhouseCoopers, from 1995 to 1998. He holds non-executive directorship positions in HSBC Bank (China) Company Limited and the China Advisory Board of IMI plc, a FTSE 250 company. On academic front, Mr Wei holds a bachelor degree in International Business Management from Shanghai International Studies University. In Interview with Face2Face team, Mr David Wei shares his views elucidating potential of B2B vis-à-vis B2C segment.
What are the services offered by Alibaba in China, and in other countries?
Alibaba.com provides an efficient, trusted platform connecting small and medium buyers and suppliers from around the world. We operate two marketplaces: our international marketplace (www.alibaba.com) focuses on global importers and exporters and our China marketplace (www.alibaba.com.cn) focuses on suppliers and buyers trading domestically in China. Together our marketplaces form a community of more than 24 million members from over 200 countries and regions.
Majority of Alibaba's present customers are Chinese suppliers. How will you accommodate other South East Asian suppliers?
We currently offer two membership packages for suppliers of our international marketplace: Gold Supplier and International TrustPass. The Gold Supplier membership package is for suppliers based in China and Hong Kong, while the International TrustPass membership package is for suppliers based outside of China. We already have hundreds of paying customers in South East Asia, with India being our biggest market in that region.
We had over 10,000 International TrustPass members at the end of June 2007, including a large number from India.
How do you visualize the success of B2B vis-à-vis B2C segment? In your opinion, which will grow faster?
Alibaba.com is focused on B2B e-commerce. Our sister company, Taobao.com, is China’s largest consumer e-commerce website and facilitates both C2C and B2C transactions. The Internet has become a powerful medium for content, communication and commerce in China and globally, and this is driving all forms of e-commerce activities. The number of Internet users in China has grown rapidly in recent years. According to China Internet Network Information Center, or CNNIC, the number of Internet users in China grew from 59.1 million in 2002 to 137.0 million in 2006, with Internet penetration rates increasing from 4.6% to 10.5% over the same period. This trend is expected to be further accelerated in the next few years with the growth of broadband access in China which will benefit both B2B and B2C marketplaces.
What motivates the customers to pay for the services offered by Alibaba and what is the retention ratio?
Suppliers and buyers come to our marketplaces to establish their presence on the Internet, identify potential trading partners and interact with each other to conduct business online. We offer basic features and services to all users at no charge. We earn our revenue from suppliers who purchase premium services from us, including priority placement in search results, third party authentication & verification, and value-added services.
While we don’t give out our customer renewal rate we can say that a substantial majority of our customers renew their contract with us. Our market leadership position creates a strong network effect that helps grow our community. The more buyers that the website attracts, the more suppliers it will get, and vice versa. This network effect coupled with our extensive sales force and customer service network, means we are able to maintain healthy rates of renewal.
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.