April 15, 2014, 1:56 PM

Chinese e-commerce giant Alibaba builds its B2B business

Alibaba.com connects brands and retailers with factories in China and elsewhere. U.S. buyers have grown to 7 million from 2 million three years ago.

Lead Photo

Jack Ma

Alibaba Group Holding Ltd. is best known for operating two giant online shopping portals that account for most of the online purchases by consumers in China. But the company got its start in business-to-business e-commerce, and that part of its operation is also growing rapidly.

Alibaba founder Jack Ma got his start in e-commerce in 1999 when he created an online yellow pages-like service in his apartment that allowed companies around the world source goods from factories in China. That e-commerce site, Alibaba.com, has become a major wholesale e-commerce platform.

Alibaba.com primarily provided leads to manufacturers, but now buyers can place and pay for orders on the web site. Cross-border buyers place more than 10,000 orders daily worth $30 million on Alibaba.com, the company says.

And the Alibaba.com B2B platform is becoming increasingly popular. In the past three years, U.S. buyers have increased to 7 million from 2 million and buyers from the U.K. have increased from 360,000 to 1.6 million. To date, more than 10 million international buyers have sourced merchandise via Alibaba.com, the company says.

While Alibaba.com serves international buyers, Alibaba Group also has built a site, 1688.com, specifically designed for business buyers inside China.

1688.com acts primarily as way to source goods for Chinese small merchants, especially the 7 million store owners who sell products through Taobao.com, the larger of Alibaba’s two consumer-facing online marketplaces. Thanks to the booming domestic e-retailing market, 1688.com grew its daily transactions from about 30 million yuan ($4.8 million) in 2012 to more than 300 million yuan ($48.4 million) in 2013.

Alibaba provides transaction data and predictive analytic services to increase the number and quality of sales leads for suppliers. Suppliers can examine statistical trends to seek opportunities. For example, Alibaba tracks popular songs and predicts which artist’s merchandise might sell well online.

Alibaba is No. 1 in Internet Retailer's Asia 500, which ranks companies by their annual web sales.

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