Your privacy is very important to us. Your data will not be shared and you will only receive news regarding Netonomy posts.
Each year on Nov. 11th, China celebrates an event called Singles’ Day. The date (11/11) is a symbol for those unwed and stands as an anti-Valentine’s Day celebration. Chinese retailers have turned it into a sales mega event and this year it has turned global, with a lot of help from Alibaba’s marketplaces.
Inspired by US sales shopping events Black Friday and Cyber Monday, Alibaba decided to take the event global. The campaign was a huge success and overcame any expectations. It was so big that it accounted for more sales than Black Friday and Cyber Monday in the US. Combined.
But let’s have a look at the hard facts post-sales bonanza:
Pretty good for a singles’ holiday.
Amazon – the biggest online retailer in the world has recently turned 20, and my, has it grown. In these short 20 years, the American wonder has managed to reach more than $70 billion in revenue. In its path to world dominance it began selling everything from books, to ebooks, to apps and recently even groceries.
From across the globe, Amazon’s hegemony itself has been challenged by AliBaba, a company founded in 1999 by former English teacher Jack Ma. Just like China’s economy and ecommerce spending, AliBaba has grown to match its mightiest competitor.
The Chinese company is the product of a splendid growth in China’s eCommerce, a market that is expected to reach $655 billion by 2020. Encouraged by these developments and pushed forward by global ambitions, AliBaba will take its IPO to the US, later this year.
Now how would these two companies look side-by-side? The good folks at SmartIntern decided the world was ready for a comparison between the two behemoths. Have a look at the infographic below. The full version opens in a new window.
Chess is the oldest and most popular strategy game in the west. It’s main object is gaining superiority through a decisive move against the opponent. The chess player looks for a decisive action that can lead to victory, in as few moves as possible.
Unlike their western counterparts, asian states have developed their military strategy around a different philosophy. Wei Qi, or the game of Go (as referred to in Japan) is the traditional game in China. Players use 180 pieces, each having the same value, to build fortifications and capture enemy positions. Unlike chess, the players don’t have a clear view of the competitor’s strategy, as the pieces are continually laid down. Matches are hardly seen as win or loose and the score can be overturned during the match, multiple times.
While chess players look for decisive actions, Wei Qi players use continuos movement to avoid being surrounded. The game, just like its western equivalent, is based on centuries of difficult wars. Due to China’s long and troubled history, its strategic approach has become less about direct confrontation and more about avoiding defeat and gaining relative advantage toward the opponent.
Henry Kissinger expressed his view that Wei Qi is the path to understanding China’s strategy. In his book “On China” he starts describing Chinese policies through this ancient game. Although Kissinger’s metaphor is aimed at politics and military actions, it can just as well be applied to economics and for that matter, online retail.
When Ebay tried to access the Chinese market in 2004, Jack Ma, the founder of AliBaba Group, has sensed that this move may be detrimental to his own company, then providing internet marketing options to small and medium companies in China. He felt that although Ebay addressed the individual sellers, there was no clear distinction between individual businesses and small/medium companies in China.
Ebay had just laid the first stone on Jack Ma’s Wei Qi board. He decided he had to escape this potentially dangerous situation and launched Taobao, a company directly competing Ebay in China. The companies fought valiantly, with eBay trying to form partnerships against Alibaba and Taobao and investing $100 million in its Ebay EachNet operations.
While Ebay was buying all ad spaces it could find online, in a search for the decisive move, AliBaba bought TV and radio ad space, knowing the Chinese consumers were more influenced by traditional media at the time. Ebay focused on increasing product listing numbers, while AliBaba focused on customer service. Piece by piece, AliBaba laid down all its advantages and finally pushed Ebay out of the Chinese market, in 2006.
Unfortunately, Ebay was not playing the right game in China. It’s strategy was flawed as it wasn’t able to find the check-mate move. Jack Ma made sure his strategy encircled and captured Ebay’s future earnings. But it was not enough. His game of Wei Qi was not just a timely thing. It was a prolonged campaign.
This year AliBaba decided it will get listed in the United States. After it has managed to grow to handle almost 84% of China’s Ecommerce market, it has now decided to cross the Pacific and try an offensive move inside what is now the second biggest ecommerce market, the US.
AliBaba is not the only Chinese company reaching for the US online retail market. 58.com, a Chinese company dealing with classified ads and listed on the US market, has just received a $736 million investment from Tencent, another Chinese internet company.
Although both these companies are now tapping the capital market in the US, their long term intentions are probably more ambitious. Their presence in the US is a sure way to avoid encirclement. Whenever their position will become endangered, they will push farther.
While the Chinese – US economic dynamics are far more complicated and it cannot all be reduced to a game, one thing is for sure. The Yangtze crocodiles have crossed the Pacific and they are not there to play chess.
What comes to mind when you think digital payments? That would probably be PayPal. We all know Ebay subsidiary PayPal leads the game in digital Payments but now the game is set to change.
Although it does have the first mover advantage and has been going strong into omnichannel retail, PayPal is threatened by the largest tech companies in the world:
Now this is the real Game of Thrones in the omnichannel world. Five tech monarchies are reaching for our wallets.
Online retail is a fast moving sector and there are lots of outstanding business leaders out there. Among the best of the best, some really stand out. The way they’ve founded their companies and directed their investments have placed them in the higher echelon of influence in online retail.
Let’s have a look at them and their stories:
Net Worth: $9.6 billion
Company: AliBaba Group
Jack Ma, a former English teacher in China, got his first taste of internet entrepreneurship in 1995, when he founded China Pages, a directory of Chinese businesses. He previously worked as a lecturer in English and International trade in the Hangzhou Dianzi University.
After founding and running China pages he briefly worked for the Chinese Ministry of Foreign Trade and Economic Cooperation, between 1998 and 1999. In 1999 he founded Alibaba, a B2B marketplace connecting Chinese manufacturers to the world.
Alibaba’s spectacular growth pushed Ma and his associates to add new companies to the group. AliBaba Group now owns Alibaba.com, Taobao Marketplace, Tmall, eTao, Alibaba Cloud Computing, Juhuasuan, 1688.com, AliExpress.com and Alipay.
The company is now only outmatched by Walmart in terms of revenue. Recent developments and an increase in online retail spending have made the Chinese market the largest online retail market in the world. The big winner: Alibaba Group. Through its subsidiaries, the AliBaba Group now handles $248 billion in transactions, 84% of the total online retail market in China.
But Jack Ma is not to be stopped. He is preparing one of the largest IPO’s in American history, after failing to reach an agreement with the Hong Kong exchange. His ambition is fueled by a sense of mission to run his company as an army conquering the world:
“I had always wished that I was born in a period of war. I could have been a general, I thought about what I could have achieved in war.” – Jack Ma, AliBaba Group
All signs point to Jack Ma building the hyper company he dreamed of. He is an effective leader, running the monopoly on online retail, in the world’s future largest economy.
You wouldn’t think of the fifth wealthiest man in the world as one of the most influential persons in online retail. But he is. Through it’s flagship company and different personal investments, he is in control when it comes to online retail infrastructure and software.
For once, Larry Ellison is Oracle and Oracle means, first and foremost, databases. Ellison started his career working for the Ampex Corporation in 1970, on a relational database for the CIA. His designs were based on a paper written by Edgar F. Codd, called “A Relational Model of Data for Large Shared Data Banks”. The same design was implemented by IBM, but the company didn’t have time to solidify its dominance on the market. Challengers soon began to emerge.
One of those challengers was Larry Ellison’s Software Development Laboratories (SDL), founded with two partners and later renamed Oracle, based on the database Ellison developed when he was working for the CIA database.
After a long struggle against the largest competitor, IBM (which would push its DB2 and SQL/DS products) and other challengers (Informix, Sybase, Microsoft) – Oracle eventually took lead in the database war. In 2010 the European Union approved Oracle’s acquisition of Sun Microsystems. One of the most important assets Oracle got was the wide-spread, popular MySQL database.
So for one – Oracle now dominates the database market, the underlying infrastructure of connected systems and retailers worldwide.
And that’s just the begging – Oracle is currently on a purchase streak, aiming to build a strong multichannel retail presence. It is second only to Adobe Systems, with its customers registering over $200 billion in revenue in 2013.
It’s presence is split between Social marketing, ecommerce platform software, site search, customer service, personalized content and transportation management.
To give you a glimpse on how serious Oracle is about its investments in multichannel retail – they paid $1.5 billion in 2011 for Right Now Technologies, a company providing customer service software and services to the likes of Overstock.com.
Net Worth: $30.1 billion
Jeff Bezos is the one man we all picture when we think about ecommerce. He is a Princeton graduate with a degree in Computer Science. After graduating from college he pursued a career in investment banking in Wall Street, which he left to found Amazon, after noticing the fast growth in Internet usage.
He set up his company in the proverbial garage with few employees and in 1995 launched the beta version for 300 friends. Days after the launch the book selling eshop managed to ship books across US and 45 foreign countries. Yearly sales in the first year reached $510 000, much more than Bezos envisioned. The company grew and grew, survived the dot com and went on to register $74.5 billion in 2013 revenue.
By expanding the initial book selling operations into CD’s, videos and later clothing, toys, electronics, home & garden, jewelry and even art, Amazon essentially became the “everything store”. Amazon is now the biggest online retailer and a disrupting force in retail.
Everything from the ecommerce revolution to online payments, shipping and marketing has been heavily influenced by Amazon and guided by Jeff Bezos, both a star-gazing visionary and a focused micromanager.
In 2007 Amazon launched the Kindle which soon became a revolutionary device that changed the way we think of books and digital content. In 2013 the company hinted at the idea of using aerial drones to enable faster shipping and in 2014 it announced that it’s now testing its 7 and 8 generation aerial vehicles.
But beyond his influence in online retail and retail at large, Bezos is a special human being. A libertarian, he invested in projects most of us would consider unreal and unattainable. He was one of the first investors in Google, financed a clock that would run 10 000 years and a company that’s working on lowering space flight costs, to allow humanity to explore the great unknown.
This short list, headed by Jeff Bezos, is prone to change. The world around can change as well, partly due to these people’s and efforts. To get a deeper glimpse on how they did it and what motivates them, have a look at Jeff Bezos’ Princeton graduation address, “What matters more than your talents”:
China’s Ministry of Commerce released data showing huge growth in terms of Online Retail. Chinese consumers spent $296.57 billion online in 2013, 13% more than their American counterparts ($262.51 billion in 2013). That means China is now the biggest market for online retail.
Chinese online retail market showed a 41.2% growth rate from 2012, a result of a) an increase in online spending and b) an increase in the total number of internet users. The number of internet users in China grew 8.5% to a total of 618 million users at the end of 2013. As a result, China showed an increase of 52.4 million in online consumers.
Although China surpassed the US in total online spending, one must not ignore the fact that the US still spends almost twice as much online than China. The total number of internet users in US, according to Internet World Stats is 277 million, 54% less than internet users in China.
As such, American users spend 945$ per year online, whereas Chinese users spend 478$ per year. Moreover, online retail in China is more or less a monopoly ran by the Ali Baba group, a company preparing for an american IPO. With $248 billion in transactions handled in 2013 through its many subsidiaries, Ali Baba accounts for 84% of all Chinese online retail. That is NOT a balanced market.
Although the numbers amount in favor of Chinese online retail (large growth rates, increased number of consumers and a lot of room to grow) Ali Baba’s dominance does not paint a pretty picture. Whereas US online retail is a competitive and balanced market, the Chinese behemoth has clay legs. Sure – it had a astonishing growth and there certainly is a market there, but can the Chinese leaders take on mature, innovative markets? My bet is on NO. The centralized, planned uber-organization can work pretty well in China but in the competitive world of global markets it might run into trouble.
Europe shows a healthy, double-digit growth rate in terms of online retail, yet still lags behind the US and China. Forester shows that Europe will grow with a CAGR of 12% until 2018, when the market is expected to reach €233.9 billion ($318 billion).
This is neither good nor bad. Europe is still making peace with it’s new-found unity. The European Union still has to battle inequality between countries, has had a rough time battling recession and has just recently considered online retail as a viable alternative to classic retail.
Northern Europe is more mature in terms of online retail development, thus shows smaller growth. Southern and Eastern Europe has increasingly adopted online retail as means to reach its uncovered consumers and shows larger growth rates.
Make no mistake, however. Europe is a large market. It has 518 million internet users and there is still room to grow. There are more money to spend and surely Europeans will get moving soon. Just as soon as they get over this recession thingie.
In terms of global Ecommerce, this was a very interesting day. The Chinese wonder, Alibaba Group Holding, has decided to take its IPO to the States. The company, founded by ex-english teacher Jack Ma in 1999, is now on track to extend its influence outside China.
The company’s growth has been mostly fueled by its B2B division, one very important gateway to China’s manufacturers, and its connection to Yahoo. The american company, although not in its best year, was lucky (wise?) to invest in AliBaba, when it was just starting. Although the group has been buying back Yahoo’s stocks, it is still largely (24%) owned by Yahoo.
Given AliBaba’s growth, Yahoo’s stocks have been bumped up. Some analysts suggest that 21$ out of Yahoo’s 37$ stock price come from AliBaba. The future looks great for both Yahoo’s stocks and AliBaba. In the IPO the Chinese company is expected to raise $15 billion, at a valuation north of $140 billion.
The answer is … probably not. This might not be its target. As mentioned in an announcement on the corporate blog, AliBaba initially intended to be listed on the Hong Kong exchange. Its management structure, however, would not have the same influence in the case of a Hong Kong listing. Senior management, owners of 10% of the company are not willing to bend to Hong Kong’s rules and have thus decided to switch markets.
“We wish to thank those in Hong Kong who have supported Alibaba Group. We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong.” – Source
Even though the company says it wants a global approach and a more transparent communication to the market, its senior executives still want the full control.
AliBaba needs two things right now: cash and popularity. It needs cash to keep up with its historic growth, as China’s economic growth is slowing down. It is still based in China, its main assets are Chinese manufacturers and it is China where AliBaba controls 80% of ecommerce. But Jack Ma was wise enough to share its company’s growth with Yahoo, which was a bless in terms of global reach and brand awareness. The company now needs to go a little further. The global media has its eyes on the New York stock exchange and AliBaba needs to show it is more than just another Chinese company.
It doesn’t matter that the company is already listing a tenfold increase in B2B transactions or the fact that the Chinese ecommerce market will reach$655 billion by 2020 . The spotlight is somewhere else. And AliBaba needs to be there.
Banks are one of those things people take for granted, whether they understand them or not . Their systems and inner workings are unknown to most of their customers. Their influence has, to some extent, shaped the modern world. Strength, rigidity and, until recently, stability have been the common attributes for banks.
Change rarely, if ever, happens in the banking sector. When it does, it’s usually for the worse. Recently, however, something seems to have been shaking its very foundation: the evolution of electronic markets and peer to peer cooperation.
Commerce has been liberalized by the likes of eBay, Amazon and AliBaba. These companies are responsible for shortening the supply chain from manufacturer to the end consumers. As recent developments show, the banking sector is next. Who knows, maybe the companies that changed retail will also be those able to change banking.
Although just recently launched, some new companies have been taking the banking world by storm. These companies match lenders and borrowers, through a common marketplace platform, usually using auctions.
Zopa, UK’s leading P2P lending company, offers a 5% return to lenders and charges 5,6% on personal loans. Apparently it works great as overall acceptance has been steadily rising. In the past 6 months alone the company has lend 100 million pounds, 25% of the total lend since it was founded in 2005.
Among the things responsible for a growth in P2P lending acceptance was the fact that traditional banks’ risk aversion that slowed lending to a halt. Savers have also been ignored by banks so they had no other choice but to turn to new methods of growing their savings. “UK savers seem to have been forgotten by the banking establishment, so it is not surprising more people are giving Zopa a try”, says Giles Andrews, CEO of Zopa.
It’s not just the UK or the western world that seems to have an appetite for P2P lending. IsePankur, an Estonian based P2P banking startup, has just added lending options to investors outside Estonia. The company was accepted quickly as an reliable financial player and now it lends money to 60 000 people. Although it tackled the acceptance issue, it still has to deal with higher risks than UK-based Zopa. It manages this issue with the help of a high return on investments (aprox. 22%) that seems to be enough for everyone willing to lend against a default rate of 3%.
Google itself is pretty interested in the P2P area as it purchased a share of Lending Club, valuating it at $1.55 billion. The company, based in San Francisco, is boastful about providing loans in 43 states and earning its investors more than $300 mil so far.
Lending Club was founded in 2007, 2 years after Zopa, by Renaud Laplanche and it has lend more than $2 billions in 2013.
AliBaba.com, China’s main digital company, the biggest online retailer in the world has joined the banking digital revolution. It has recently launched the Yu’e Bao (“Remnant treasure”) fund , that allows its customers to capitalize on AliPay’s growth by depositing money in this fund.
Customers will use money parked in their accounts. Their funds can thus increase with the company’s development. Although it is taking on some of the largest and richest banks in the world, it shows an outlandish growth rate. “Yu’E Bao fund reached 4.24 billion yuan (USD 693 million) in Q2 2013, growing by 1211.33% in Q3″ it is reported.
Achieving clarity in Omnichannel Retail is no easy task. Retailers, especially large ones, need to get all departments, all sales channels, suppliers and fulfillment operations on the same page. And that’s just the first step. Then comes the IT integration where legacy systems are connected to a central management tool that handles at least inventory transparency, CRM […]
What does it take to turn a store visitor into a loyal customer? Any retailer that can answer this question is surely a leader in its respective niche but it is not a simple question. There are a multitude of factors at play and we thought we might ask the experts. We’ve reached out to George Skaff, CMO of TouchCommerce, […]
Here are 5 companies whose combined online sales in 2011 amount to almost $75 Billion, US and Canada only. Let’s also have a look at their background and how did they manage to reach the top 5. The winner is one of the fastest growing companies in the world, a company born and raised online and […]
What better way to get advice on implementing and improving omnichannel retail than asking the experts. So we did ask the experts and we started with Mattias Pihlström, founder and omnichannel consultant at Brightstep AB. Mattias is experienced in implementing ecommerce, multi-channel and omnichannel processes with industry leaders such as ABB, Apoteket, Ericsson, SCA, Indiska, Interflora, TeliaSonera and […]
Shopping cart abandonment is one of those dreaded issues both online and omnichannel retailers hate. There are many reasons for customers to just leave a webstore after they have picked their products, instead of completing the order. Some customers find better prices elsewhere, some fail to navigate the store but most (56%) give up on their order […]
If you are here you're probably thinking about opening an online store and you need some help to get your business up and running. The good news is you've come to the right place. This guide contains all the information you need to get your business started. I'll guide you through the most important steps in […]
There is ongoing change in the retail landscape. Both offline and online retailers now migrate towards hybrid solutions. Just as brick and mortar retailers have shifted towards online retailing, so did online pure-plays started engaging customers offline. Retailers now need to combine the in-store pick-up options (which most online pure plays don’t have), an offline presence for […]