Voice of the Industry

Seizing the marketplace opportunity: B2B ecommerce cross-border expansion

Wednesday 3 March 2021 10:36 CET | Editor: Alex Guzu | Voice of the industry

John Caplan from Alibaba.com details the benefits that B2B marketplaces bring to merchants when it comes to mitigating the complexities of cross-border trade

Online marketplaces that allow cross-border trade are enormous drivers of economic growth. For years, B2C platforms have been the centre of attention, with many not recognising the incredible growth underway in the B2B segment. This is indeed a huge miss: B2B ecommerce represents a USD 23.9 trillion market globally, according to the US International Trade Commission – six times that of the B2C ecommerce.

What began primarily as a listing directory of Chinese manufacturers, for Alibaba.com, has transformed – in just the past three years – into an end-to-end trading platform for small- and medium-sized businesses (SMBs) in more than 190 countries and regions, which will have facilitated tens of billions in gross merchandise volume (GMV) in 2020.

The current pandemic, for all of its serious challenges, is only accelerating the digitisation of B2B SMBs. In fact, it has spurred more positive changes in the last few months than over the last two decades – a truly remarkable turn of events. Analogue businesses are now digitising to keep up with higher online demand and cashing in on the promise of ecommerce as a great way to find new customers and suppliers and boost sales, which will only continue to grow in the post-COVID-19 era.

While these companies are digitising, they are globalising – rapidly. According to the latest Alibaba.com US B2B SMB Survey of 5,000 companies, cross-border business is increasing in importance for US B2B companies, making up an average of 25% of their business – a significant uptick from 17% since the last survey in December 2019.

And ecommerce is making that more accessible than ever before. In fact, respondents cited key benefits of cross-border ecommerce as helping them access international markets (24%) and built-in translation services, helping them communicate with trading partners in different languages (16%).

Cross-border trade is fundamentally complex, especially for wholesale trade. Businesses encounter language barriers, complicated logistics across various touchpoints, foreign exchange considerations, and potential licensing and compliance requirements of both countries. Cross-border trade is also subject to multiple legal jurisdictions, it is considered riskier than buying and selling domestic, and any losses can directly impact the bottom line – which raises the issue of trust: what is the recourse if an international counterparty doesn’t fulfil their end of the deal?

That’s where B2B marketplaces come in. Established B2B marketplaces provide significant value in that they have the resources, services, and protocols in place to help companies minimise or outright overcome these trade barriers and complexities – especially SMBs, which may not have the expertise, experience, or staff to navigate each hurdle. One of the more straightforward advantages that the digital services marketplaces provide is that they offer real-time translation functionality to ensure effective communication across languages.

Another one is that they build in reviews to ensure a marketplace where all businesses are represented accurately and can address any feedback to improve their goods and services. Critically, online marketplaces use their role as intermediary to offer dispute resolution to foster trust across all parties.

In this context, companies such as Alibaba.com offer services that can help de-risk global trade, such as a digital freight service, so that companies can compare, book, manage, and track ocean and air freight in real-time and seamlessly arrange bulk shipments, as well as escrow and online payment, in order for buyers and sellers to transact with peace of mind. And because SMBs lack access to the same financing options they have for domestic trade, a supply chain financing product called Alibaba.com Payment Terms was introduced, which provides 60-day payment terms on invoice to help with the cash crunch that comes from the longer lead and transit times involved in global trade.

Finding the right online global commerce strategy that meets the particular needs of a business is key to its long-term transformation and growth. And doing so is more pressing than ever. This unprecedented moment of global uncertainty required businesses to pivot and expand – and many are embracing the opportunities in greater global demand and access that are afforded by B2B ecommerce marketplaces, which will drive cross-border expansion even further in the future.

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2020–2021, which assesses the change of pace that occurred in 2020 and provides a comprehensive overview of the major trends driving growth in this space, being the ultimate source of information for players interested in selling across borders.

About John Caplan

John Caplan is the President of North America & Europe at Alibaba.com, one of the world’s largest B2B and wholesale online marketplaces, doing business globally, processing billions of dollars of transactions, serving millions of businesses, and making it easy for small businesses anywhere to do business everywhere. Over 20 years of experience as a Founder, CEO, and President/CMO have given him a unique perspective on transformational innovation and results for businesses big and small.

About Alibaba.com

The first business unit of Alibaba Group, Alibaba.com is a leading platform for global B2B ecommerce that aims to make it easy to do business anywhere. Launched in 1999, Alibaba.com is engaged in services covering all aspects of commerce, including providing businesses with tools that help reach a global audience for their products and helping buyers discover products, find suppliers, and place orders online efficiently. It serves millions of buyers and suppliers from over 200 countries and regions around the world.

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Keywords: Alibaba, John Caplan, cross-border ecommerce, B2B ecommerce, merchants, marketplace
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce