Keynote Session: The Rise of Alibaba: How to Expand Your Business Through the Global Marketplace PRESENTED BY: James Hardy EMEA Director Alibaba.com How to Expand Your Business Through the Global Marketplace Today’s presentation • The Alibaba Group. • The China opportunity: size of market. • Different potential "big picture" strategies for entering Chinese market. An overall philosophy. • Tmall.com: How to get onto it, cost of getting on, benefits of being on it. • What Chinese consumers like to buy from European manufacturers - top categories. Alibaba Group’s Mission is… To Make It Easy To Do Business Anywhere Alibaba: The Beginning 1999 Hangzhou, China The Alibaba Eco-System Financing Customer services agents Online retail software designers Taobao Models Software & app developers Online marketing Orange-collar workers Logistics infrastructure Consumer protection program Logistics Partners Buyers Sellers Transaction safety program Feedback & rating system Rules of marketplace TECHNOLOGY DATA Alibaba e-commerce infrastructure TEAM Social network O2O The Alibaba Group China E-Commerce Online retail marketplace Online shopping mall Flash Sale Shopping Search Engine Wholesale Cross-Border E-Commerce Online retail marketplace Online shopping mall Online wholesale marketplace Cloud Computing Mobile Apps Operating System for Mobile & Smart TV Logistics Online Marketing Service Platform China vs The West: The Path to E-Commerce China: The Opportunity • Population: Over four times the US (1.35bn vs 320m) • Explosive growth in China’s upper middle class “By 2020, we project that Chinese e-tailing will match the combined size of today’s US, Japanese, UK, German and French markets reaching $420bn – $650bn in sales.” McKinsey Global Institute, March 2013 Chinese Internet Users & Penetration As a % of Total Population No. of Internet Users (million) 1200 900 34.3% 28.9% 600 384 457 38.3% 513 42.1% 564 49.5% 51.2% 47.5% 45.8% 618 645 675 700 60.0% 50.0% 40.0% 30.0% 20.0% 300 10.0% 0 0.0% 2009 2010 2011 2012 2013 2014E 2015E 2016E Source: CNNIC, January 2014, for actual numbers; Euromonitor, August 2013 for estimated numbers. E-Commerce potential in China China Online Retail GMV & Penetration Online Retail GMV (US$ billion) % of Total Retail Trade 800 10.0% 9.0% 600 7.7% 6.2% 400 200 4.3% 2.1% 42 2.9% 74 10.8% 581 487 395 298 12.0% 10.0% 8.0% 6.0% 4.0% 210 127 2.0% 0 0.0% 2009 2010 2011 Source: iResearch, January 2013 2012 2013 2014E 2015E 2016E China E-Commerce in context November 11 “Double 11” Annual Signature Promotional Shopping Event Every year, history is made on Taobao Marketplace and Tmall… 2013 11.11. 2013: RMB 36.2 billion More than 2x 2013 Cyber Monday (US$2.29 billion) 154 million Packages Generated China: Overview of E-Commerce Strategy THE FUNNEL SEARCH, SOCIAL MEDIA, INFLUENCERS, DISPLAY BRAND SITE OR MICROSITE OR WEIBO BRAND WEBSITE AND/OR TMALL.COM China: Online Strategies for Market Entry (1) Large Brands • Already have brand awareness, so it’s all about traffic and conversion • Focus on conversion channels such as search (Baidu/360 paid search, Baidu/360 organic search) • Brandzone: China: Online Strategies for Market Entry (1) Large Brands (cont) • Leverage organic traction: Baidu Q&A, Baidu answers, Baidu wiki, mentions on social channels, blogs, forums • Use influencers: Peer-to-peer is huge in China. Influencers more important than push advertising in China • Mobile strategy: Responsive site, engagement with existing followers on social platforms, Weibo • Own site hosted inside China and/or Tmall China: Online Strategies for Market Entry (2) Smaller Brands • It’s all about building brand awareness • Weibo: develop a content strategy, hire an intern • Key influencers: majority of smaller brand budget goes here • Drive traffic to Weibo then Tmall.com, OR microsite then Tmall.com China: Online Strategies for Market Entry (3) Tier 2 and 3 city market strategy • About 200 Tier 3 cities • Biddable media can target by province or by city (eg. Baidu PPC, Weibo ads) • Mobile is critical due to poor infrastructure in Tier 2/3. Use liquid/responsive website • Tmall.com aligns well with this strategy at the point of conversion Online Accesses ALL of China’s Cities Source: McKinsey Insights China Database; McKinsey Global Institute Analysis. 2012-13. China: Offline Strategies for Market Entry • Offline: Estate Tmall.com can be used in conjunction with offline Selling on Tmall.com – two entry methods Tmall.com: Summary Chinese Consumer Preferences Chinese Consumer Preferences • Heritage products:  Uggs from Australia;  Shoes from the UK;  Honey from New Zealand;  Cherries from the US • Tell a story…… Which China Strategy is Right for You? • No-one knows an exact strategy for China – no big market has gone almost direct from agrarian to ecommerce • No “one size fits all” solution • You’ve got to be IN the market • Focus on a philosophy which mimics Alibaba’s • Be Fast! (“Embrace Change”) • Little Bets. Test and iterate. THANK YOU !