Speaking to FoodNavigator-USA ahead of Alibaba.com’s first online trade show (August 18-21) dedicated to US food & beverage, Caplan said the last three years had been transformative for the platform, which charges suppliers* a flat annual membership fee of $2,399 to list their wares on Alibaba.com, but does not charge a commission on transactions.
‘This year the platform will do well north of $20bn of transactions’
He added: “Alibaba.com started 20 years ago as a kind of yellow pages directory for the highest quality factories in China – mainly small and mid-size businesses - to demonstrate their capabilities, and buyers from around the world could go there to make connections… so for years, it was all about qualified leads going to quality suppliers, primarily in China.
“But when my team and I got involved [just over two years ago], we authored a business plan that looked at transforming Alibaba.com from being a directory into an end-to-end transaction platform, so you could not only find the factory, but message the factory, negotiate with the factory, create a contract with the factory, have an escrow service, have integrated logistics, and create an end-to-end platform with a suite of services.”
The second element of the transformation, he said, was about expanding Alibaba.com’s geographical reach beyond China: “We began an initiative to add suppliers from all over the world, from Vietnam to India, to Italy and Germany, and then in July 2019, we opened up the platform to make it available for US small and mid-size businesses so they could sell to someone 8,000 miles away… but also to their neighbor two cities away.”
To put this in context, he said, “When I joined the company a couple of years ago, we did zero dollars in transactional volume, and this year the platform will do well north of $20bn of transactions.”
‘Food & beverage is a high priority development area for the business’
So what kinds of US food & beverage brands might benefit from joining Alibaba, and who are they trying to reach?
Some CPG brands might be trying to attract buyers at domestic retailers such as Walmart, Kroger and Target, he said, while others might be looking to interest buyers in Europe or southeast Asia. US-based CPG manufacturers are also using the platform to connect with ingredients suppliers from China and other countries, he said, noting that around 60% of the buyers on Alibaba.com are based in the US or Europe.
“Food and beverage is a high priority development area for the business. The global food and beverage market is incredibly fragmented and we wanted to welcome food & beverage entrepreneurs and give them access to well north of 8 million business buyers that are on our platform every day in 190 countries.
“Say you’re a hot sauce company in Detroit looking to reach buyers in San Francisco or Toronto, then Alibaba.com is the place to do it.”
To raise their profile on the site, sellers can buy advertising, he said, but Alibaba.com “does not eat into your margins.”
As for the rankings (ie. which suppliers appear on the first page of a search, for example), these are based primarily on buyer feedback and ratings, he said. “If you’re highly responsive, and you have robust product descriptions, compelling video content, the more value you provide for end buyers, and the better you’ll do as a seller.”
To reassure users on the platform, Alibaba.com has a product called Trade Assurance, whereby if a participating buyer purchases 12 container loads of tomato paste, for example, the funds go into escrow. When the goods arrive, the buyer confirms that they are as represented in the agreement, and if so, the funds are then released to the seller, said Caplan.
Online trade show August 18-21
While a lot of US manufacturers procure food ingredients via Alibaba.com, it’s still very early days for the platform when it comes to attracting US food & beverage companies selling CPG brands, he acknowledged (most of the food & beverage CPG brands currently listed are from Asia although there are some familiar brands such as Oreos, Fanta, Gerber and Mtn Dew sold by third parties based in Europe, for example).
However, the new US food & beverage online trade show (August 18-21) is designed to raise awareness of Alibaba.com among US food and beverage brands, and help firms from RXBAR and Split Nutrition to Elmhurst and The Matzo Project connect with buyers at a time when all of the key food trade shows have been canceled thanks to COVID-19, he said.
The event, which will feature one-on-one meetings, ‘speed dating’ and educational presentations, will enable qualified brands to present their wares and “meet high quality buyers one on one, but also build their brand by having a global audience tune in and see their capabilities,” added Caplan.
"The event is going to be livestreamed across all of Alibaba's social media channels, so folks in 190 countries around the world can also tune in and watch."
Asked whether leading US retailers see Alibaba as a place to discover new food & beverage CPG brands, he said: “Increasingly they do. As we digitize more food and beverage products, we attract more of the enterprise buyers from the big retailers.”
So what kinds of CPG brands tend to benefit the most from joining Alibaba.com? The bread and butter of the site is small and medium sized companies, said Caplan, but even some larger brands that may have contacts and distribution networks all over the world may "still have parts of the market that they don't penetrate," he said.
* Sellers go through a verification process when they join, whereby a third party company reviews the proposed seller’s business documents (articles of incorporation/W9 etc) to confirm that a company stakeholder is applying to Alibaba.com, ensure that the supplier is a legitimate business and that the person who is signing the company up has the authority to do so.
- Learn more about Alibaba.com's virtual trade shows HERE.