Chinese e-commerce giant Alibaba was originally founded as an online resource for small and mid-sized B2B buyers around the world to access Chinese SMB sellers, (similar to an online Yellow Pages). Over the years, Alibaba has worked to transform its model into a true end-to-end trade platform where buyers and sellers don’t just meet, but can also communicate, transact and access best-in-class trade-related tools and services.
As the platform evolved, Alibaba expanded its reach significantly to connect global B2B buyers to global B2B sellers. In fact, there are now 10 million active buyers in 200 countries and regions. That said, U.S. companies, who today make up 30% of Alibaba’s B2B buyer base, haven’t been able to market their own products on the platform — until only a few months ago.
In July of last year, Alibaba opened up their platform to U.S suppliers to reach their global buyer base. This is potentially great news for home furnishings companies who want to expand their B2B penetration and international presence.
Why did this change occur? Global buyers (including those in the U.S.) have been asking for U.S. suppliers for various reasons, including product quality, short lead times (for North American buyers), and strength in certain product categories where U.S. suppliers generally have a competitive advantage (i.e., food and agriculture, health and medical). Also, in light of recent tariffs, some U.S. buyers are looking for domestic supply as an alternative in certain categories.
This expansion by Alibaba has opened up an opportunity for home furnishings brands to sell to B2B buyers both domestically and internationally. More about this expansion can be read in this Furniture Today article.
The Early Bird Gets the Worm
The benefit of exploring the opportunity at this early stage could place you on the tip of the spear in the home furnishings space. While the platform is growing quickly because of Alibaba’s aggressive expansion strategy, there are fewer than 1,000 total U.S. suppliers, and less than 20 total suppliers in the home, kitchen and garden category. Some quick facts about selling on the platform as a manufacturer:
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You can create beautiful landing pages and advertising campaigns to specific target audiences
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You have the unique ability to set pricing and MOQs (minimum order quantities)
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You can geo-target pretty much anywhere
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Most U.S. suppliers are not yet transactional, meaning the nature of purchases often begin conversational with offline negotiations (remember these are predominantly B2B purchases, so this makes sense)
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Transactional purchases are an option, and a “buy now” button does exist, though not mandatory
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Historically, suppliers were selling 70% custom and 30% in-stock ready to ship, but the newest sellers are moving towards a 50/50 split
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There’s no commission fee (unlike other marketplaces). Just an annual membership fee, regardless of transaction volume, which translates into higher margins for sellers
It’s still early for U.S. sellers, and features are continuously being enhanced, but our view is that there’s a good chance that Alibaba will become a true force in the years to come.
If you have questions about Alibaba or other online channels in the home furnishings space, contact us today for a consultation.
