Alibaba scales back global expansion plan to compete with Amazon

Alibaba’s push to rival Amazon by attracting American companies to its e-commerce platform has struggled to achieve its goals, dealing a blow to the Chinese tech giant’s global expansion plans.

The group launched Alibaba.com, its business-to-business e-commerce website, in the United States three years ago with the aim of recruiting more than a million local businesses and competing globally with companies like Amazon, which has a similar platform for wholesalers. .

But Alibaba.com’s U.S. operation fell short of its original goals, forcing the Chinese company to readjust its growth plans, according to three people familiar with the operations. The project has also been hit by dozens of staff departures from its New York office.

The problems at its U.S. business-to-business arm come as Alibaba steps up its international push as its domestic operations continue to be hit by Beijing’s tech crackdown, slowing economy and growing competition.

However, Alibaba.com has struggled to retain US sellers since its launch, in part due to the difficulty of competing with prices from global merchants.

“American manufacturers are not as competitive, the cost of everything is much higher, including labor. The team doesn’t have enough internal support, so they can’t recruit enough vendors and vendors,” said a current employee.

The majority of US sellers cancel their subscriptions after a year, according to past and current employees. Alibaba.com has now cut its goal of listing one million small American businesses to just 2,000 each year, one person said.

Meanwhile, at least 35 employees working at Alibaba.com in New York have left their jobs in the past year, more than half of the team, as the platform underperforms. as well as complaints of bullying from senior management and long working hours, said three people familiar with the US office.

Most roles are not replaced by the platform to quietly withdraw from the US market, two such people added.

Alibaba.com is a central pillar of its global push and the group’s original business. Although it represents only a small part of the group’s overall business – which is mainly focused on selling to consumers – at the time of its launch in the United States in 2019, Alibaba cited a US government report that the B2B e-commerce market represented a $23.9 billion opportunity. This is six times larger than the global B2C e-commerce market.

The site has more than 20 million active buyers on the platform from around 200 countries, as well as 200,000 global sellers, but only a few thousand of them are American companies. It charges subscribers $3,000 per year to sell on the platform.

In the fiscal year ending at the end of March, international wholesale trade, including Alibaba.com, generated Rmb18.4 billion ($2.9 billion), or about 2% of the total revenue of the band.

In 2018, Alibaba acquired US software company Opensky for an undisclosed amount to expand in North America. Co-founder John Caplan, along with some Opensky staff, have been redeployed to launch Alibaba.com in the United States.

Caplan left the company in May this year to become co-chief executive of Payoneer, a payment services company, while the majority of former Opensky employees have now left the company unhappy with the takeover, sources said. people close to the team.

Alibaba did not respond to requests for comment.

Additional reports by Eleanor Olcott in London and Ryan McMorrow in Beijing

Back To Top