E-Commerce Keeps U.S. Businesses And Global Consumers Connected Through Turbulent Times – Forbes
Last month, the world marked the arrival of its 8 billionth person, whose odds of being born in the United States were merely 1-in-25. Those demographics are well known to U.S. business executives, who need no reminding that 96% of humanity lives outside the United States. As a result, for many U.S. businesses, winning customers and building a long-term presence in foreign markets have been critical to their success.
Despite current protectionist and geopolitical headwinds, e-commerce platforms continue to demonstrate how distance and other barriers to connecting U.S. producers and global consumers are surmountable. According to the findings in a new study from NDP Analytics, U.S. businesses sold a record $61.4 billion worth of consumer goods to Chinese buyers on Alibaba’s e-commerce platforms in 2021. Those revenues marked an 11% increase from the previous year and a 37% increase over 2019.
E-commerce has transformed the global retail industry. In 2015, e-commerce accounted for a mere 7.4% of global retail sales. In 2020, over two billion people purchased goods or services online and global e-commerce retail sales surpassed $4.2 trillion, accounting for 17.8% of all global retail sales. That share is expected to reach 21% this year and 24.5% by 2025.
Driving this transformation are companies like Alibaba, which has been a leader in enabling these online sales. Alibaba’s “Taobao Marketplace” is one of the world’s largest consumer-to-consumer (C2C) platforms and it “Taobao Global” provides a channel to connect smaller brands to a network of about 60,000 independent online Chinese retailers. Meanwhile, Alibaba’s business-to-consumer (B2C) platforms, “Tmall” and “Tmall Global,” provide online stores for brands and their authorized retailers to sell products directly to Chinese consumers.
U.S. sellers of a wide range of products, from consumer staples to luxury goods, are leveraging Alibaba’s platforms. Alibaba enables U.S. companies to conduct business without incurring the heavy costs of building a physical presence, mastering local business procedures, understanding local consumer nuances, or contending with the full set of new challenges often encountered when selling into foreign markets.
U.S. brands sell their products both directly and indirectly to Chinese customers on Alibaba’s platforms using various business models. Smaller brands tend to prefer working with local retail partners who already operate online stores on Taobao Global. Medium to larger brands are more likely to sell directly to consumers through their own online “flagship” stores on Tmall and Tmall Global, or alternatively, authorize retailers to sell their products in exclusive or specialized stores on those platforms.
Chinese shoppers spend billions of dollars on U.S. products offered on Alibaba’s platforms every year. Of the $61.4 billion of U.S. goods sold in 2021, the three most popular product categories were computers and electronics, apparel and leather products, and personal care and health products, accounting for 51 percent, 16 percent, and 13 percent of sales, respectively.