After years of making products for other companies with global brands, Chinese manufacturers are ready to start making names for themselves in international markets, says Tony Liu, AliExpress General Manager.
While the number of internationally known Chinese brands can be counted on one hand, China is home to scores of companies that, after years of apprenticeship as OEM manufacturers, are now producing high-quality goods based on their own designs. Many have become familiar names in China via retailing websites such as Taobao. Now, as the profit margins of OEM manufacturers are increasingly squeezed by inflation, “they are ready to take a bigger slice of the pie” by launching their brands overseas, says Liu.
Breaking into international markets—developing distribution channels and marketing campaigns—is expensive and risky. That’s a key reason that AliExpress, a subsidiary of leading B2B e-commerce website Alibaba.com, last week announced a new online sales channel that can help Chinese companies get exposure to global markets without making major investments.The new AliExpress Premier channel was launched as a showcase for products made by about 30 top-quality Chinese brands, enabling retailers, wholesalers and consumers to source unusual fashion accessories, footwear, housewares and apparel directly from China via the Internet.
AliExpress Premier gives overseas buyers a more focused and generally more secure way to source products than Alibaba.com, which is a giant, open directory of manufacturers geared mainly for commercial users, and AliExpress, which was launched last year as an online channel primarily for small-lot wholesale orders.Liu, who before joining Alibaba served in several executive positions during a 19-year career at Microsoft, says one of his goals for AliExpress Premier is to create a more refined sales platform for Chinese goods that meets the needs of Western consumers, and particularly Americans, who are accustomed to hassle-free transactions, quality assurance and fast delivery. “I lived in the states for 20 years, so I know exactly what consumers are expecting,” says Liu, mentioning websites such as Zappo’s and Amazon.com that are known for top-notch customer service.
AliExpress Premier vendors guarantee that their products are authentic, that they will be shipped within 24 hours, and that shipping for returned merchandise is free.Like AliExpress, AliExpress Premier also features an escrow service—payment is released to the seller only after a buyer confirms he has received the goods.
Other refinements are also underway. One of Liu’s priorities has been an overhaul of the design of the entire AliExpress website so that it is less cluttered and more familiar to Western buyers. He hired an American designer and website useability expert, and has been working with Vendio and Auctiva, two U.S. e-commerce services companies acquired by Alibaba.com last year, “so they are directly in charge of the buyer experience,” Liu says. |”The look of AliExpress has changed dramatically over the last several months. We are driving further integration to truly make this a global website.”
In a significant departure from Alibaba.com and AliExpress, platforms that are open to virtually all vendors, AliExpress Premier sellers are vetted by Alibaba.com to ensure they offer unique, high-quality products and are committed to customer service.”We know their service levels, we know their skills. We handpick companies we know we can stand behind,” says Lui, noting that the “perception that Chinese products are not good quality is still out there.”
While a few of the initial AliExpress vendors have Japanese or European connections, most offer products that are entirely designed and manufactured in China. Their brands—among them AKseries, DeereMarchi, Dilong, Etonian Kidd, Justmatch, Mbox, rip, and VANCL—may not be familiar in the West. But their products have already been tested by millions in the Chinese marketplace,Liu says.
For example, Mbox became a successful online retailer through Taobao Mall, the B2C retail website of Taobao. (Taobao, Alibaba.com and AliExpress are all owned by Hangzhou-based Alibaba Group.) After launching a website in 2002 to sell fashion accessories embellished with Swarovski crystals, Mbox joined Taobao in 2005. Mbox CEO Shi Xin says the company hopes to “leverage the strong global network of Alibaba.com and AliExpress to bring our brand to the U.S., where we are confident that our distinctive design aesthetic will resonate as strongly with local women as it does with women here in China.”
Liu says that the number of AliExpress Premier vendors, now around 30, will grow. “We’re at stage one. I expect over time we will have hundreds of companies, not just from China but from other countries as well.” Companies currently selling through AliExpress are targeting wholesalers rather than a mass consumer market.
AliExpress, which marked its one-year anniversary last week, has been working to overcome some initial obstacles, such as high shipping charges associated with delivering small-lot orders from China to the U.S. Logistics facilities in Hangzhou and Shanghai were opened in January that allow small businesses to consolidate orders into larger shipments, reducing cross-Pacific shipping charges. The service includes order verification and shipment tracking. On April 26th, Alibaba.com and Zhejiang Post and Logistics Courier Co. signed a cooperation agreement to provide AliExpress users with worldwide express logistics services. AliExpress is also working in partnership with UPS.
Liu declined to discuss AliExpress’s profitability, saying only that the platform is “not fully monetized yet.”
“From an overall growth perspective, we couldn’t be happier,” he adds. In the first year of operation, the number of AliExpress employees has increased from 20 to 200, and more than 9.5 million products are listed on the site. “We can’t say we have solved all the problems,” says Liu, “but we are making very good progress.”
