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Alibaba to take on Amazon as it eyes global expansion

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The Chinese e-commerce behemoth is Alibaba is tweaking the business model of its e-commerce business AliExpress, which enables Chinese merchants to sell their products in over 150 countries, to enable small and medium-sized sellers initially from Russia, Turkey, Italy, and Japan to sell their products globally through AliExpress network. The move will enable Alibaba to step up competition with Amazon globally even as the home growth slows down.

Local to global — as AliExpress has called it “is intimately connected to Alibaba’s broader globalisation strategy,” Trudy Dai, President at Alibaba’s wholesale marketplaces division told the Financial Times, adding that the company eyes expansion of the initiative to other countries after gaining experience in the first four markets.

A “good foundation” of sellers in the four countries had (already) registered (on AliExpress) to sell their products, Financial Times cited a company executive.

However, director at financial advisory firm Haitong Billy Leung sees the move by Alibaba trying “to expand globally because they are trying to offset declining growth in China itself,” said Leung, as Alibaba is at a juncture where they require significant growth “from AliExpress and Lazada and other international business.”

Nonetheless, Alibaba’s competition with Amazon hasn’t evolved into a global contest as the e-commerce market’s penetration rate globally remain low, especially in the developing countries, said Leung.

At least in the domestic market, Amazon conceded defeat to Alibaba last month when it announced its exit from the e-commerce market in China by shutting its marketplace and seller services.

“Amazon in China is very small and it is not growing there as well. So it doesn’t make sense for Amazon to operate in a market where almost 80 per cent share is held between Alibaba, JD and there are other players like Pinduoduo,” Satish Meena, senior forecast analyst at Forrester told Financial Express.

Alibaba’s founder Jack Ma recently sparked debate over work-life balance when he talked about 12-hour work days and six days a week for the young population to have financial success.

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