AliExpress builds its e-commerce kingdom outside China

China Plus Published: 2018-06-20 10:52:08
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[Photo: from IC]

[Photo: from IC]

AliExpress was established in 2010. It is a subsidiary company of the Alibaba Group, serving more than 100 million suppliers and buyers worldwide. Two years after it was founded, AliExpress started expanding its business to other countries. To date, customers from Russia, America, Spain, Britain, Brazil, Germany, France and Canada can all access AliExpress and use its services.

Shen Difan is general manager of AliExpress. He says the company is aiming to build a cross-region, cross-border e-commerce giant.

"We believe that in the next ten years, AliExpress's service will be able to cover any continent in the world. It will allow customers worldwide to buy products from any country."

AliExpress’s website and phone application in Poland [Photo: from IC]

AliExpress’s website and phone application in Poland [Photo: from IC]

Russia was the first foreign country in which AliExpress decided to develop its business. Liu Wei is director of the Russian branch. He says any ambitious project like this one certainly requires time, effort and strategy if it's going to hit AliExpress's targets.

"When our company was developing in its initial stages, we mainly focused on promoting Chinese products to overseas markets. In 2012, we had a new task, which was how to provide products to customers in any country in the world,” Liu Wei says, “To achieve this, we needed to have commodities from lots of countries, so we started building ties with overseas retailers. This step was time-consuming. Then, we worked out which country had the highest possibility and greatest potential. Russia was an ideal option, since it already had a relatively large scale of cross-border trade."

At first, Liu Wei's team encountered several seemingly impossible challenges. Many of the company's competitors had already written off Russia as unsuitable for developing an e-commerce industry. Liu Wei remembers that the shortage of customer base and poor logistics systems were the most pressing problems to solve.

"In the first year, we only had a few thousand orders a day. So in March the following year, we decided to launch a sales promotion. In that period, we received about 170,000 orders a day. This huge amount of orders in one day was an unbelievable phenomenon in Russia, and its logistics could not handle so many parcels. They all piled up and waited in long queues to be delivered."

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow was available since 2016. [Photo: from IC]

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow has been available since 2016. [Photo: from IC]

Consequently, it could take three months for Russian customers to receive international parcels, three times longer than it should have done. Liu Wei, his team members found themselves having to answer customers' queries all day about how long they would have to wait. Fortunately, most of them realized the problem did not lie with AliExpress, but with the poor standard of logistics in Russia.

"Many Russian customers sent emails to Vladimir Putin and complained about the Russian logistics system. They said in the email that they were disappointed in this service."

To address the issue and improve efficiency, the Russian government appointed a new CEO of Russia Post. AliExpress seized the opportunity and worked with Russian customs to accelerate the customs clearance process and with Russia Post to speed up delivery.

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow was available since 2016. [Photo: from IC]

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow has been available since 2016. [Photo: from IC]

As a result, waiting times were successfully cut in 2013 thanks to AliExpress. If customers ordered commodities from China, they could expect to receive parcels in around three weeks, compared with the previous 3 months. Liu Wei says Russian consumers were happy with this waiting time, even though a Chinese customer would still have found this unacceptable.

"The Russian e-commerce business in 2013 was seven or eight years behind the Chinese online shopping industry. Russian buyers were relieved that they were finally able to buy things from outside the country, so they were willing to wait for a month. Now we have managed to speed up this process even more."

There were other problems. It wasn't yet a Russian habit to buy much online and only a few customers did so at first. Retailers didn't know how to promote their online businesses, because no one realized the online trade world really existed yet. This didn't put AliExpress off. On the contrary, the company saw it as an opportunity – Russia was after all an untouched market so it had numerous possibilities. Liu Wei recalls how they reacted to the situation.

"We made a huge effort to cultivate the Russian market. We started by attracting local customers' attention. They began to notice that they could buy products online and it was convenient. Then they started trying online shopping,” Liu Wei says, “Then retailers learned how to manage and operate their online business. Later, we started building infrastructure, like logistics and mobile payments. Gradually, AliExpress in Russia became as competitive as its Chinese equivalent--T-mall."

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow has been available since 2016. [Photo: from IC]

The first AliExpress’s customer experience center at Leningradsky railway station in Moscow has been available since 2016. [Photo: from IC]

It's now been six years since AliExpress first entered the Russian market in 2012, and customers in 33 Russian cities can now get products within three days if the product is delivered in the same city as the buyer. Customers in Moscow can get products the very next day.

Innovation and transformation are the primary reasons that have driven AliExpress towards today's success. They haven't repeated any other company's business or operation model, which means their employees are required to remain innovative and be ready to react quickly to challenges. Liu Wei says this has triggered high staff mobility.

"We had a new female employee, and she wasn't very comfortable with her work load. She had work experience in Europe, and she found work at AliExpress was very intense, and she resigned after one week. Now, when I interview employees, I ask them if they want a stable and easy job. If so, AliExpress is certainly not the right place for them."

Liu Wei believes what eventually keeps Russian employees in the company, making contributions, is faith and confidence. The e-commerce industry boosts the local economy and its thriving.

"We hope that our business value can stimulate the country to develop its infrastructure construction and the economy. Russian employees agree to this value, so they are motivated to work hard, because in fact, they are devoting themselves to their country."

There are now 35 million regular Russian online buyers. Of them, the younger generation makes a large proportion of the purchases, and they often choose AliExpress to buy their products.

AliExpress pop-up shop opened in Madrid on November 9, 2017. [Photo: from IC]

AliExpress pop-up shop opened in Madrid, capital of Spain, on November 9, 2017. [Photo: from IC]

As well as Russia, AliExpress is vigorously developing its overseas markets in Spain, Brazil, the United States, Britain, Germany, France and Canada. Goan Luca is an Italian web designer from AliExpress, and he explains the strategy for the company in targeting overseas markets.

"Alibaba is growing more and more not only in China but also in the globe. Our biggest markets are Russia so far, Spain, and in general, these developing economies like Brazil. I would say very young people in developing markets, because they are more courageous to use commerce compare to traditional consumers and they are very price-sensitive. So if they see something nice and simple with the good price, they will buy it. The US and Europe are more traditional, more retail-focus, people will not trust websites so easily."

General Manager Shen Difan says AliExpress has indeed achieved great success in Russia, but in fact, the journey has only just begun. In the future, it will expand its business to other countries and regions in the world and let more customers enjoy a high standard of e-commerce service and convenience.

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