E-commerce giant Alibaba.com said Tuesday morning it will launch a four-week virtual program to educate U.S. small-business manufacturers on the benefits of global business-to-business (B2B) e-commerce platforms, the latest step in the Chinese company’s efforts to dominate the U.S. online B2B market aimed at small to midsize producers.
The first-ever program, which is free to qualified manufacturers, starts in mid-November and will be open to businesses nationwide, the unit of Alibaba Group Holdings (NASDAQ:BABA) said in its Tuesday announcement. Labeled the “Digitization Sprint,” the program will teach small businesses the fundamentals of e-commerce, how to develop effective digital strategies and how to properly price their services to a global market, Alibaba.com said.
The global B2B e-commerce market has been estimated at $23.9 trillion, about six times the size of the global business-to-consumer (B2C) market, which captures the lion’s share of attention. About $1.8 trillion in global B2B e-commerce was transacted in 2019, according to a January report from research firm Digital Commerce 360. That figure could jump significantly in 2020 with the coronavirus pandemic accelerating e-commerce demand and more businesses getting comfortable with online transactions.
An Alibaba.com survey of more than 5,000 U.S.-based small to midsize businesses published Tuesday found that 42% reported more online activity during the past six months. In addition, 93% are now conducting some part of their business online, up from 90% in December when the prior survey was held. Alibaba.com defines a small business as one with fewer than 500 employees. About 98.6% of all U.S. manufacturers are classified as small businesses, according to data from SCORE, a mentoring group for small businesses that Alibaba.com cited in its announcement.
Despite its size and potential profitability, the B2B e-commerce market is underserved, with relatively little digital penetration up to now. Even less attention has been paid to smaller businesses looking to expand their digital presence. That is what Alibaba and rival Amazon.com. Inc. (NASDAQ:AMZN), among others, are trying to change.
At stake are billions of dollars of transport and logistics revenues that could be extraordinarily lucrative given the favorable profile of B2B shipping. The typical B2B shipment is heavier than a similar B2C consignment, meaning that provider revenues would be higher. In addition, most B2B transactions involve multiple pieces bound for one destination, creating positive economies of scale for carriers. B2B customers are also not as price-conscious as consumers because they work with corporate budgets and will not be overly concerned with price if deliveries mean keeping a supply chain or assembly line operating.
Alibaba does not control physical transport assets, instead relying on a network of providers to help customers plan and execute the logistics. In June, it struck a deal with international e-freight marketplace Freightos.com to provide the unit’s customers with booking and management of heavier-weighted shipments moving via air and ocean.
The shift to B2B digitization will not abate once the pandemic ends, said John Caplan, president of Alibaba.com’s North American and European divisions. Rather, it will become a permanent fixture as businesses recognize its enduring value. “Digitization is the only bridge to the future,” Caplan said in a question-and-answer session following the announcement.
