A lot has been written about the fact that the fight in Indian e-commerce space is about the struggle between Amazon & Alibaba to capture the market eventually. Many pundits predict that eventually Flipkart & SnapDeal will run out of funding steam and that Alibaba will eventually enter the Indian market by funding one of them.
Today I am gonna highlight something which Alibaba is doing and has the potential to be a game-changer down the line. In my home since the last one and half year, I have been noticing a steady stream of parcels being delivered by a regular postman and all these posts are originating from Hong Kong , MainLand China , Singapore & Malaysia.
All these parcels have been ordered with values ranging from Rs 60 (Yes ! less than 1$) to Rs 650(10 $) and have taken a minimum of delivery time of 30 days !! (some even longer). Despite this wife keeps ordering stuff from this website and has ordered 75 items in the last 1.5 years making it the most used e-commerce platform at my home beating Amazon Prime!(my favorite lagging behind by just 10 orders).
AliExpress - Alibaba's International E-commerce offering
All these products are ordered on a website by name AliExpress.com which is Alibaba's international E-commerce company allowing Chinese businesses to sell abroad. Alibaba is providing the businesses access to international markets that they normally cannot access. AliExpress allows the businesses to set up stores on its platform and then accept ordered which are then shipped via Chinese Post (Low-Cost option) , DHL/FedEx and AliExpress shipping. The interesting thing is that the shipping has extremely long shipping lead times (30 days is the regular time for Shipping to India) , though did notice that shipping to the US,UK & Europe happens within 14 days (based on reviews). Thus the customers are willing to pay up in advance and wait for 30+ days to receive the products. The main reason for this is that the products are very cheap and are of extremely high quality and AliExpress is extremely supportive in handling disputes. Given this people are willing to wait after ordering !.
AliExpress - One of Top Shopping App in India?
Though AliExpress has a long wait time after order , Indians seems to be lapping up the app like there is no tomorrow. The AliExpress app is among the top 10 apps in the shopping category. In fact, on August 5th it briefly made it to the second spot among shopping apps beating even Flipkart. In general, if one were to check the top 100 free apps on Google Play store today we can see that AliExpress is at the 43rd place while Amazon and Flipkart are at 26 & 27 respectively. AliExpress is almost at the same rank as SnapDeal ( at 40) without having to spend crores of rupees in running full-page newspaper ads and TV ads ! This high rating in the app is because many housewives spend a lot of time browsing & ordering for interesting stuff and then begin to wait for the delivery after 30 days !. Till date out of the 70 orders which are placed from my home we have received 45 orders and in the rest of the cases the money was refunded after 15 days because the seller did not ship the products after the order was placed. Till date we have not lost money on any orders and this is the reason why AliExpress is among the top shopping apps in India!
AliExpress Business Model ?
Given all this, I began to wonder what the business model of AliExpress is because most of the offerings don't make economic sense at all. AliExpress has many products which it ships via AliExpress standard shipping but it seems like the shipping is subsidized as most products are sub-500 Rs. With little understanding and experience of having to send parcels to international destinations, I know that for a product worth Rs 500 the shipping to any international location itself will not be less than 200 Rs ! Given this one wonders how AliExpres allows shipping of products worth Rs 60 (1$) to any country. Strongly believe that Alibaba is subsidizing these in order to get insights into international markets.
AliExpress - Trojan horse in Indian E-commerce?
The reason why AliExpress is a trojan horse in India is because of the vast traction it has managed to get in India over the last couple of years. Should AliBaba decide to launch a full-fledged E-commerce offering it can simply leverage the brand equity of AliExpress by launching an Indian version of AliExpress.in !It already has access to a vast number of customers on its app in India and it can use this to create an Indian E-commerce website in no time!
So when do we see an Alibaba brand E-commerce site in India ? My guess is pretty soon as there was news back in July that they are starting a team in India !
Originally published on https://www.linkedin.com/pulse/alibabas-trojan-horse-indian-e-commerce-avinash-mb