Alibaba may be the world’s biggest retailer, but so far its efforts outside Asia have been lacklustre. But all that may be about to change. With a European distribution centre poised to open and an army of European influencers signed up, Alibaba is now firmly eyeing the West. Can it succeed?

  • Alibaba’s international marketplace AliExpress aims to cut delivery times and showcase more premium products
  • Part of its strategy involves undercutting Amazon and targeting more Western brands 
  • Livestreaming, which Alibaba excels at with Taobao Live, has taken off globally and could be an important tool

Alibaba has long been heralded as the dominant force in ecommerce in China. In the year to March, the etail titan surpassed $1trn in gross merchandise volume. 

However, the business is still a minnow outside China, with just 7% of its sales coming from international markets – a far cry from co-founder Jack Ma’s target of bringing half its sales from outside China by 2025.

But Alibaba is making moves to redress this, eyeing expansion in the West, and Europe is its big focus. Over the past two years, it has started building a distribution centre in Belgium, opened an AliExpress store in Spain and, just last month, revealed plans to sign up 100,000 content creators to try to grow its international business.

Right now it is holding a livestreaming marathon in France, with influencers carrying out 100 live product showcases in 10 days.

How it will take on Europe

So how does the retailer plan to make this a reality?

Alibaba operates a series of online marketplaces, each with a different geography or customer base. Its most renowned is Tmall, which focuses on bringing Western brands into China. Then there’s Taobao, the Chinese equivalent of eBay, Southeast Asian site Lazada and, finally, AliExpress, its international marketplace.

To date, AliExpress has built a sizeable business in Russia and Eastern European countries such as Poland, but has yet to build up significant traction elsewhere in the West.

“The current perception of AliExpress is that it is a source for cheap Chinese goods and there is a huge lag in terms of shipping times” 

Tiffany Lung, retail analyst

Like Taobao, AliExpress is primarily focused on SMEs selling to individual buyers, but its current form is a far more budget version.

“The current perception of AliExpress’ site is that it is a source for cheap Chinese goods and there is a huge lag in terms of shipping times,” says independent retail analyst Tiffany Lung.

While the success of US platform Wish shows some customers are happy to accept longer delivery times if a product is cheap enough, AliExpress has made steps to tackle this perception.

Last month, Alibaba’s logistics arm Cainiao Network launched a new air route between Hong Kong and Madrid that will cut down delivery times for AliExpress orders made in Spain by 30%.

AliExpress will also open a £90m 220,000 sq m warehouse near Liege Airport in Belgium next year and opened its first store in Madrid last year.

Lung says the aim of all this is to change brands’ and shoppers’ perception of AliExpress in Europe by cutting down delivery times and showcasing more premium products.

“For its next stage, AliExpress will need Western brands to attract visitors from more mature ecommerce markets. Alibaba has a head-start with Tmall”

Joanna Perry, Pattern

“AliExpress is slowly trying to tackle its pitfalls,” she says. “The most important aspect of its Madrid AliExpress store is using it to educate shoppers and rebuild the brand and image of the platform.” 

Ecommerce consultancy Pattern’s global head of marketing Joanna Perry says bringing Western brands onto AliExpress could help it gain traction in Europe.

“At the moment, AliExpress is a platform for Chinese manufacturers and brands to sell to the West,” she says.

“For its next stage of growth, it will need Western brands to attract visitors from more mature ecommerce markets, such as the UK and Germany. Alibaba has a head-start in that it already has relationships with many large Western brands that sell on Tmall.”

Perry says it needs to attract these brands to sell on AliExpress in Europe: “It would seem sensible to start with brands and categories that already sell well on Tmall, though this might require a repositioning of AliExpress to a more premium experience.”

Securing big brands and undercutting Amazon

AliExpress has built some momentum in this area, securing big brands such as El Corte Inglés and Lego to sell on AliExpress in Spain.

However, there have also been reports that it was rebuffed by operators such as Mango, Benetton and Spanish fashion group Tendam due to concerns about the amateur look and feel of AliExpress’ website.

AliExpress website

AliExpress’s website does not currently appeal to luxury brands 

Lung believes that a rebrand and a more Westernised online shopping journey could help AliExpress crack Europe.

She describes its current ecommerce website in Spain as being “sensory overload” for Western shoppers, with lots of text, small pictures and unclear segmentation between product ranges and categories.

She says a “tidier” website layout is needed in order to attract European shoppers.

But consulting firm OC&C’s retail partner Pascal Martin believes a more profound repositioning of AliExpress is required.

“What Alibaba has done with Tmall is demonstrate that it can create an aspirational environment for brands online,” he says.

“A few years ago, so many Western businesses dismissed Tmall but now, particularly with Covid-19, brands that are not on there look stupid.

“The AliExpress site is a little bit messy and not very conducive to a premium brand. If I were a Spanish or French brand, I would not be looking at AliExpress as a very sexy place to be seen, but Alibaba has shown over the years that you would be wrong to bet against it.” 

AliExpress general manager Wang Mingqiang has previously said that foreign brands needed time to understand its platform.

He pointed out that it offers brands the capability to design their own digital storefronts, including a homepage housed with their own imagery and video, but it clearly has some work to do to become a destination for brands in Europe, like Tmall is in China.

In the meantime, AliExpress has focused largely on selling products from SMEs and offers more competitive rates than Amazon to drive sellers to sign up.

“So far, Alibaba has chosen a route that avoids competing directly with Amazon, but there are plenty of big brands – LVMH, Nike – who do not trust Amazon”

Pascal Martin, OC&C

According to Reuters, AliExpress has waived monthly rates in Spain to attract third-party sellers, while commissions for goods sold are set at 5% to 8%. By comparison, sellers must pay €39 per month to sell on Amazon in Spain, plus a commission of up to 15% on items sold.

But Martin believes that if Alibaba wants to build scale in Europe, reframing AliExpress to better resonate with big Western brands and high-spending shoppers would be a good place to focus.

“The breakthrough in Europe will come when it starts a Tmall-type of approach. So far, it has chosen a route that avoids competing directly with Amazon, but there are plenty of big brands – LVMH, Nike – who do not trust Amazon. 

“Amazon is also not as generous about sharing data about consumers with brands as Alibaba is, which is a big no-go for luxury brands.

“What that means is that Amazon has weaknesses; if Alibaba wanted to exploit them, a Tmall-type of environment in Europe would be welcome.”

Acquisition in the offing?

To jump-start this process, Martin suggests that an acquisition, similar to the one Alibaba made with Lazada in Southeast Asia, would be a canny move.

“Alibaba is becoming the dominant ecommerce platform in Southeast Asian countries, but it didn’t start from scratch there; it made acquisitions and then transferred those onto its own technology platforms to drive growth,” says Martin.

“Eventually, Alibaba will be a force to be reckoned with in Europe, but if it is serious about it, it will need to make some acquisitions.”

Martin points to Rakuten’s acquisition of PriceMinister in France as a tactic Alibaba could mimic.

Perry agrees that Alibaba’s Southeast Asia expansion could offer learnings for cracking Europe.

“When Alibaba has tried to leverage relationships with brands to get them to sell on its Southeast Asian marketplace Lazada, for example, it’s helped with listing products in the correct languages and made cross-border fulfilment easy to reduce barriers to them joining the platform,” she says.

“I would expect to see the same approach if it decides to expand AliExpress’s product range to feature Western brands more prominently.”

Livestreaming and Singles’ Day

AliExpress’s goal of recruiting 100,000 more content creators to drive its livestreaming services shows that the brand has lofty ambitions for the international appeal of livestreaming as a means of driving spend.

Alibaba currently offers a range of livestreams across its Taobao Live platform, which sees influencers showcasing products they like, either in partnership with a brand or based on their own preferences. Think QVC meets TikTok, with hundreds of different presenters hawking everything from Estée Lauder’s new serum to budget sunglasses at any given time.

Taobao Live reported a 110% jump in sessions in February compared with the previous year – and Lung believes the brand could emulate this growth in the West.

“Livestreaming really kicked off during quarantine in the West, so that’s a winning point in Alibaba’s formula,” she explains.

“AliExpress has also gained a lot of traction with Gen-Z consumers, who are sharing on TikTok the best and cheapest finds on AliExpress using its image-recognition tool.”

“Livestreaming really kicked off during quarantine in the West, so that’s a winning point in Alibaba’s formula”

Tiffany Lung, retail analyst

Lung says Alibaba could use the army of content creators it is bringing on board in the West to tap into this livestreaming demand. 

Could AliExpress also import the iconic Chinese shopping festival Singles’ Day, pioneered by Alibaba, to Europe to turbocharge demand?

Lung believes that events like Prime Day and Black Friday demonstrate customer appetite for online discounting events, so Alibaba could exploit this with a Singles’ Day European debut.

But Perry believes piggybacking on existing shopping events might be a better strategy.

“It may not choose Singles’ Day, as it’s so close to other events such as Black Friday,” she says. “It could choose to adopt Black Friday as its main event; Alibaba is not afraid to take other people’s ideas and run with them.

“In China, though, 11.11 is its most important event. It has also increased its activity for other Sales events, particularly the 6.18 festival – even though that was its main competitor JD.com’s invention.”      

Alibaba’s initiatives to grow AliExpress’s content creation and cut down its fulfilment times all point to an assault on the European market.

The online giant has demonstrated a formidable ability to create online shopping experiences that resonate with every type of shopper – from time-rich bargain-hunters to affluent big-brand collectors.

In a rapidly transforming market, retailers should watch closely. History has proven that you are more likely to win if you join Alibaba, rather than beat them.