Chinese e-commerce mega site Alibaba is reaching deep into New Zealand.
E-commerce manager for NZ Post Sohail Choudhry said the past few months have been a busy time for his company which has been working with the web giant to give New Zealand businesses better access to trading companies under the Alibaba umbrella - sites which have more than 230 million users every day.
A delegation from Alibaba, which operates sites including Tmall, Taobao and their new branch Tmall global, arrived in the country in the past week to give a series of presentations on how the website could help New Zealand companies to grow their businesses by providing a new platform for them to sell on.
Choudhry says the partnership is a great opportunity for New Zealand, although one he says "did not happen overnight".
Following the months of planning, he hopes the deal will see a number of businesses benefiting in the near future. "We're very excited, and I think the real excitement is that E-commerce is a growing area around the world. It's a growing area for NZ Post and we really want to help New Zealand businesses be successful as a result of this."
Businesses which are already trading through Alibaba sites, say they have seen strong growth in brand awareness and sales. New Zealand Focus, a company set up specifically to showcase some of New Zealand's premier export products in China, has found the site particularly useful for promoting New Zealand companies and building awareness of New Zealand products - according to executive director Marcus Glucina.
In the 10 days since the start of the month, New Zealand Focus has sold 490kg of Anchor milk powder, 25 litres of Kiwi Farm green kiwifruit juice, 18 litres of Stoke beer and 24 Hansells yoghurt makers, all through trading on Alibaba site Tmall.
According to Glucina, Alibaba's sites could provide a bridge for New Zealand companies into the difficult-to-navigate Chinese market space, while minimising the risks.
"There are so many exciting opportunities for New Zealand businesses in this space. Tmall and the Alibaba sites provide a platform to sell your products through but they also give you data on who you're selling to and where your customers are, so you can better target your sales. The companies we represent have been really excited so far with the sales from the site." Glucina said.
Despite this, Glucina noted that it was not enough to simply place products on the website and hope they sold. He said businesses also had to then actively market the products and campaign on the sites. Alibaba marketing managers would help with the marketing by providing data on sales and consumers, but the trading businesses had to manage their sites and promotions.
"Although the key thing is for businesses to understand the market and be able to showcase their products as best as they can, the products won't sell if the time isn't put into managing the products on the site." Glucina said.
NZ Post said the partnership would see their company facilitate businesses trading through Alibaba sites, which includes their main business-to-consumer trading website, Tmall, which has nearly 300 million registered users.
Choudhry said while the opportunities were available to anyone who wanted to use them, the partnership would be most beneficial for small to medium-sized companies wanting to enter the large and complex Chinese market. New Zealand China Trade Association (NZCTA) chairman, Tim
White, added that entering the market through the Tmall global website without having to set up warehouses in China, enabled companies to minimise the potential risks associated with entering a new market.
"Going into China is hugely challenging and for small New Zealand companies it costs a lot of money. There's also huge risk associated with it, so this is quite a good opportunity for New Zealand companies to access the market through that particular channel. It doesn't completely de-risk it, not by any means, but it does reduce the risk somewhat and when you have a local partner like NZ Post as part of that relationship, I think that they can provide some really useful guidance and input."
Choudhry also discussed the growing opportunities for New Zealand companies, coming from the wealthy Chinese sector who were developing a taste for quality goods. Goods that could also be delivered in a period of one to three days.
"NZ is a small marketplace but there are not many countries who offer such quality products because that is the attraction. Chinese consumers are becoming very quality conscious so New Zealand has the advantage in that." Choudhry said.
According to Alibaba delegate Ken Ma in his presentation, a growing product in the Chinese online market was New Zealand seafood. Live Bluff oysters as well as paua, scampi and mussels could be ordered from the website, and delivered to the customer within a 72-hour time frame, and because of the quality and speed of delivery, Ma said customers were willing to pay a premium price.
According to NZCTA, Alibaba provided huge benefits to companies which New Zealand could not provide. The size and global scale of Alibaba, as well as the consumer understanding the company had, was a huge advantage for companies selling through the site, and one which White is encouraging Kiwis to take advantage of.
"Alibaba has so much information. They know what the trends are, they can provide that support, and advice and the guidance. If this model works well, then New Zealand companies should be able to go in there and get a good understanding of where they are targeting and be very precise around that, and that's what they need to do." White said.
In 2013, China's E-commerce market overtook the US E-commerce market, with $287 billion NZ in sales for the year.
• Chinese online retailer Alibaba founded by former teacher Jack Ma in 1999
• Based in Hangzhou, near Shanghai
• Net income of US$3.56 billion, revenue of US$7.95 billion last year
• Has a range websites including Tmall, on which overseas brands such as Nike and Apple have "virtual shopfronts".
• Taobao, another Alibaba website, is largely used by small-scale traders and firms
• Targets consumers in China
• Businesses can have a home warehouse outside China
• Products shipped from overseas
• Payment is in the seller's currency US IPO
• Expected to raise US$15 billion to US$20 billion
• Could value the company at up to US$200 billion
• Will take place on the Nasdaq or New York Stock Exchange this year after an IPO roadshow
NZ firms on Alibaba
• Dairy products including milk powder and yoghurt
• Seafood retailers including PauaCo, Pacific Marine Farms and Talley's
• Wine distributors
• Beef and lamb products