In less than a decade, heavy-hitter ecommerce site AliExpress has secured its place as one of the world’s most internationally used retail destinations. The Chinese-based platform, which is not a retailer itself, launched in April of 2010 and rocketed in popularity almost immediately. But this is no surprise; under the umbrella of CEO Jack Ma’s Alibaba, AliExpress completes the hole in his ecommerce empire that satisfies online shopping from every angle.
UPDATE on June 25, 2020: AliExpress’ History and its Expansion to Latin America
It’s been twenty years since Ma launched Alibaba in China, and in that time he’s become an icon in the digital business space. Even after leaving the president position at the company, AliExpress keeps being a prime example of what Ma’s vision has accomplished, and where the future of ecommerce is poised to go.
Setting the Stage: Before AliExpress
The first time Jack Ma interacted with a computer was in 1995, when he was in the United States working as an interpreter – his side gig from his fulltime job as an English language teacher. At the computer, Ma typed in what any young man might: “Chinese beer.” The results were disappointing – nothing came up in the search. Nothing much on China at all, in fact. Still, Ma was intrigued, and so he made a webpage for his translation agency. In under eight hours, he had five emails. In this, Ma saw the power of the web.
In 1999, Ma left his job to begin Alibaba with 17 friends. He’d raised $80,000 from 80 investors to launch the Alibaba, which is a Chinese marketplace for companies. The site attracted small Chinese manufacturers looking for an easy way to reach buyers. The business model worked. They received a staggering $20 million USD investment from SoftBank, essentially making Alibaba’s success possible.
Bit by bit, Ma erected businesses that met the needs of each niche. In 2003, Taobao was established. Taobao is a consumer-to-consumer shopping platform. In 2004, a payment platform using QR codes for online store purchases called Alipay launched.
What is AliExpress? How a Mega Platform was Born
On April 26, 2010 Alibaba created another business: AliExpress. Small and medium sized Chinese-based companies sell on the platform to customers all over the world. When it launched, Alibaba explained that the purpose of AliExpress was to help small businesses be more competitive.
We believe that small businesses are the key drivers to economic growth and stability as well as job growth. AliExpress is one of many offerings planned to help small businesses grow and create jobs in their communities all over the world
David Wei, the CEO of Alibaba.com, in Alibaba Group’s press release in 2010
In executing the site, Alibaba used its experience to make sure it had a lot of important features, like their escrow service. This asset was designed to protect buyers and sellers through account holdings and release, creating a secure and reliable network. This kind of thought process is what made AliExpress work: it thought ahead and concentrated on what the parties would need in order to thrive. AliExpress also offers a Dropshipping agent option, to help business owners who may not be able to keep a high inventory.
Alibaba vs AliExpress
These two sites are often confused for one another, partly because of the name, and also they’re in the same corporation, but they do have different functions. Mainly, Alibaba is a B2B platform for wholesale trade and its suppliers, while AliExpress is B2C concentrated, connecting small to medium businesses with consumers directly. Unlike other sites like Amazon, AliExpress doesn’t create its own products for sale, it’s strictly a middle man.
ALSO READ: “AliExpress opens its first physical store outside China“
What makes AliExpress such a contender in the marketplace is its low-cost wares and its appeal to international buyers. All over the world, buyers seek out AliExpress for goods. AliExpress is unique in that all its sellers were Chinese based. But that’s about to change.
International Expansion – Latin America as an AliExpress Investment Target
Today, Alibaba is the leading internet retailer in China, which according to The Economist, is one of the biggest ecommerce markets in the world.
Because its parent company, Alibaba, was successful by the time AliExpress launched, it seemed to grow with Alibaba. The appeal of AliExpress was the worldwide influence. Still, according to an article in Bloomberg, Alibaba was directly linked to the fluctuation of the Chinese economy. To cut itself free from economic vulnerabilities, Alibaba is growing overseas, both acquiring companies as well as expanding its own footprint.
To lure in an even bigger worldwide marketplace, this year AliExpress has opened its Global Shopping Festival, or “Singles Day” the largest shopping day of its kind, to sellers from Italy, Spain, Turkey, and Russia. These markets, particularly Russia, are already big supporters of AliExpress. The move, which happens on November 11, is a major departure from the nine years run of AliExpress sticking to strictly China businesses serving the world consumers.
ALSO READ: “AliExpress is putting efforts to make Double 11 popular in Brazil“
Perhaps a bigger step involves investing in Latin America. Reports state that the retailer is planning to open a distribution center in Brazil motivated by the huge success in the country. According to the recent research launched by EBANX about international ecommerce in Brazil, AliExpress is the sales leader in the cross-border ecommerce category in the country, data that is also supported by the Webshoppers report.
According to analysts at Market Realist, the expansion strategies used by AliExpress could indicate a desire to go head-to-head with American ecommerce giant, Amazon, who is also increasing investments in Brazil. Digiday’s report on Alibaba’s global growth indicates that as Amazon has not been able to have a total international ecommerce presence (mostly thanks to China and AliExpress’ power), AliExpress is now in position to take that lead. It’s a power move to go into Brazil. “Where Amazon builds moats, Alibaba builds bridges,” Mike Evans, Alibaba’s President states in the report.
ALSO READ: “Brazilian retail giants are feeling the pressure of Amazon Prime’s arrival“
International growth isn’t just a reaction to Amazon, though. In a 2011 article in CIO, Tony Liu, the General Manager of AliExpress, stated that their Premium service could include merchants from outside of China. The entire concept of AliExpress was founded on serving international consumers, in many ways, this is the natural next step.
The Future of AliExpress Without Ma
Amid the ecommerce wars, in September Jack Ma stepped down from Alibaba. The former English teacher will remain a member of the Alibaba Partnership, but will ultimately return to his roots in education.
ALSO READ: “How AliExpress Became Brazil’s Largest Ecommerce Store“
Alibaba will continue, of course, and has for the last year prepared for life after Ma. The company’s original mission statement was “to make it easy to do business anywhere,” and has been updated to add “in the digital era.” According to CNN Brock Silvers, the Managing director for Kaiyuan Capital in Shanghai, Alibaba will have a strategy that’s intent on shorter term financial growth. His thoughts on globalization concern identifying with consumers around the world. This, it seems, is what AliExpress is doing with its Singles Day expansion.
