Smaller businesses and companies in the United States would now be allowed to use the Alibaba.com e-commerce platform, the Chinese e-commerce giant Alibaba Group Holdings Ltd has announced.

Analysts view this measure by Alibaba to be an effort by it to bite into the business-to-business e-commerce market and to ward off fierce rivalry from other e-commerce platforms such as that of Amazon.com Inc.

Earlier, Alibaba only allowed US based companies and businesses to purchase from its platform.

Out of the total number of buyers on the Alibaba platform, about one third of them are based in the US while most of the sellers – 95 per cent, are from China. This move by Alibaba would help American companies and small businesses to penetrate some of the growing fastest e-commerce markets such as India, Brazil and Canada. Further, it would also allow the smaller US businesses to offer their products to other US customers and businesses.

Alibaba has been encountering not so good growth in its e-commerce business and analysts view this by the company move as a means to address its weakening core business. The e-commerce business of the Chinese giant is also further threatened by the ongoing acrimonious trade war between the US and China while smaller startups such as the recently listed Pinduoduo Inc as well as the established players like Amazon.com are also putting up a tough competition for it.

Analysts also opined that this move by Alibaba could also be useful for it to woo a lot of local US businesses on to its platform and make it their e-commerce platform of choice because it would be opening up the entire global market for small- and medium-sized American businesses. It should be noted that Alibaba itself does not sell inventory of its own. The company has also stressed on its intention of creating a loyal band of manufacturers, wholesalers and distributors for its e-commerce platform.

An English-language website for its Tmall Global marketplace aimed at merchants was launched by the company last month. According to analysts, this move by the company is to increase the number of international brands that would be available on its platform from te current figure of about 20,000 to 40,000 within the next three years.

In contrast to the business model of Alibaba, its main rival Amazon.com not only sells products form its own inventory but also allow products of third parties to be sold on its platform. The company gives the option of third party vendors to either store their products at Amazon’s warehouses or ship them directly to the customers.

According to the U.S. International Trade Commission, the value of the business-to-business e-commerce market (B2B) is about $23.9 trillion. On the other hand, the value of the business-to-consumer e-commerce market is about $3.8 trillion globally.

“You get to compete and act like a multinational company in a way you’ve never had the tools or technology to be able to do so,” John Caplan, head of North America B2B at Alibaba Group, told Reuters.

Caplan said that the strategy of the company of globalizing supply is being implemented for the first time and it the US market has been chosen for it.

(Adapted from USNews.com)

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