Full of Eastern promise?…

China’s e-commerce giant has launched in the UK with a media campaign encompassing TV, outdoor and online. Providing a platform for buyers and suppliers around the world to do business online, Alibaba.com now has more than 42 million members registered across 240 countries.

“Our initial targets in the UK are ‘buyers’ – the small businesses which are looking for goods or services that they will sell to their customers,” says Linda Kozlowski, director of international corporate affairs, Alibaba.com. “As we grow this market, we can then look towards more growth in our supplier base here.”

At the end of August, ads ran on TV and they were were reinforced by outdoor and online. The creative featured entrepreneurs with the strapline, “Whatever your business, get Alibaba.com working for you.” London taxis were liveried in the company’s corporate orange, with the message, “Let Alibaba drive your business.” But as the campaign wraps up, what are the chances of the global site taking off on UK soil?

Appealing to SMEs and entrepreneurs

“Alibaba.com is already used by some of the biggest names in UK retail so we don’t need to convert the likes of Tesco and Argos,” says Graham Hawkey-Smith, head of strategy at Truly London, which worked with Alibaba.com on the campaign. “The challenge is to persuade SMEs – often those who attend trade shows around the world – to focus their search for trusted suppliers though the site.

“We are also trying to help budding entrepreneurs to take the next step that changes their business idea into reality,” he adds. “This audience is a more significant barrier. Can we convince people that they can leave their day job and invest time in their business ideas?”

“Having grown up transacting over the internet, they have the confidence to buy and sell online and can therefore exploit emerging technologies and new channels
to take their business to the next level,” he says.

With an army of redundant professionals eagerly looking for work, Alibaba’s UK launch timing could be seen as fortuitous – given that a number of these individuals will be ‘freelancing’, and will opt to work for themselves. Many will have more time on their hands and, presumably, some ideas for setting up a business.

There is also no doubt that travel budgets have been slashed across the board, which may lead to an increase in the number of cross-border transactions being carried out online. Whatever the impact of the economic downturn, the figures reveal that, as of June 30 this year, there were 450,000 registered users in the UK, with 2,300 new members per week in the first half of 2009.

“SMEs generally go to trade shows, which means flying to various countries,” explains Hawkey-Smith. “But it costs you nothing to find suppliers, quiz them, ask about the cost per unit or import duty. It costs nothing to explore.”

“The UK is our third-largest overseas market after the US and India,” adds Maggie Choo, general manager of the European business. “In the UK alone, we have had a 55 per cent increase in user numbers in the last year.”

The need to build credibility

“I’d be interested if I were a small business owner,” says John Birnsteel, strategy director, Imagination. “The site provides an entrée for small companies into factories and manufacturers in Asia.”

Birnsteel is well aware of Alibaba, having helped the brand a couple of years ago with an IPO in Asia. “They have a huge presence in Hong Kong,” he says. “But here they need to communicate an understanding of what they do.”

He harbours some reservations about the launch campaign. “Marketing on taxis and so on is great for building awareness. But the marketing is a bit cryptic. Perhaps more will be revealed in a second stage?”

“If you weren’t aware of the brand’s credibility in Asia, you might think the Easyjet style orange colouring is a bit ‘cutesy,'” he adds. “And the middle-eastern name, too, may raise questions. The brand needs to demonstrate its professionalism.”

Birnsteel also suggests that making the website as polished as possible, and bringing local people together, out of the virtual environment, say by organising, ‘First Tuesday’ style get-togethers, could help to generate awareness, understanding and trust.

“Often these people are working from their living rooms. They tend to be quite isolated. This could make the online environment more meaningful,” he explains. He also suggests the brand focus on case studies of people who have been doing well, to demonstrate success stories.

That said, he believes that the site does truly present a ‘wonderful’ opportunity to SMEs or budding entrepreneurs: “There are many displaced people at the moment, who may have had a bad break with the economy, and they are looking to do something.”

Security concerns

But here, a word of warning. “Sites like these can become a haven for fraudsters to advertise their scams,” says Suraj Sharma, CEO of Emarket.com, an online exchange for the FMCG industry. However, he believes that a shift towards e-procurement has ‘a certain inevitability’ given the drive for cost/time efficiencies and scalability, and within in an environment of increasing broadband penetration, reduced travel budgets and growing concerns about the environment.

Mike Brooks, product development manager at the Chartered Institute of Purchasing & Supply, agrees that security could be an issue. “The buyer needs to be confident that payment is secure and delivery assured,” he warns.

Yet with revenues growing 39 per cent last year, to $440 million dollars, Alibaba.com is growing strong. The company is not short of ambition. The question is, is the UK?

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