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From traditional retail to e-commerce business

From traditional retail to e-commerce business
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First Published: Thu, Aug 14 2008. 12 42 AM IST

Updated: Thu, Aug 14 2008. 08 56 AM IST
Before I joined Alibaba.com in 2006, I was president of B&Q China. B&Q is one of the world’s largest home improvement retail chains. At the time, many people asked me why the head of a traditional, brick-and-mortar business would choose to join a new and emerging Internet company. What made somebody who used to doubt the power of the Internet to do business turn to the e-commerce industry?
I first came to see the power of the Internet in 2003, when I was running B&Q’s global sourcing operations in Asia. We had 2,000 buyers in China and they were using Alibaba.com for sourcing because of its simplicity, extensive geographic reach and large variety of suppliers available.
In the past I did not believe that e-commerce could create value for buyers or suppliers until I saw that under my very nose global sourcing was moving online and traditional channels were becoming outdated.
I realized that if big corporate buyers could use the Internet to reduce costs and improve supplier quality, then businesses of any size could benefit from it.
I saw that even a multinational retailer such as B&Q, which has sourcing offices all over the world, no longer had an advantage over small companies in the face of e-commerce platforms.
In the past, multinational companies could buy high-quality products at the cheapest price due to their rich resources, large order volume, and global networks—but small and medium enterprises (SMEs) were not as fortunate.
SMEs could not afford to set up sourcing offices overseas or attend expensive international trade fairs to get the best deals. Today, the emergence of virtual marketplaces has removed the barriers of geography, time zones, and even language to make global trade accessible to everyone.
One day I went online and found that 100 ceramic toilets were being sold by a supplier in China at a unit price 10 times cheaper than what my global sourcing team paid when it ordered 10,000 pieces!
Due to the small quantity available, we did not order those cheap ceramic toilets, but they were taken within hours by another company—a small local British retailer. I could easily imagine that same small retailer wooing customers by saying that its products were cheaper than B&Q’s. That would not have been possible without e-commerce.
Before the digital age, it was almost impossible for an SME to order a small volume of goods from the other side of the world, let alone buy those goods at low prices.
Now, in addition to sourcing, a small business can engage in a full range of commercial activities including export, domestic wholsesale and retail at the same time, by leveraging on both business-to-business (B2B) and consumer-to-consumer (C2C) e-commerce platforms.
Small businesses in India are doing just that, and thriving. Ansif Asharaf, chief executive of Paradise Group, is one such entrepreneur. He started out as a photographer sourcing printer cartridges on the Internet and then branched out into the rubber industry. Today, he is one of the major traders of natural rubber and chemicals in India and beyond. He imports low-cost, high-quality rubber and chemical products from China, sells them domestically in India and has just started exporting products across Asia.
Without e-commerce, it would have been too expensive for a small company such as Ansif’s to engage in global sourcing, export, domestic wholesale and retail, but he is doing it all with a small team based in Kochi. While at first I doubted the power of e-commerce, over the years I’ve become a true believer. Despite limited resources, SMEs can make use of the one-stop sourcing and marketing services offered by e-commerce platforms to save money, time and human resources. Moreover, they can also speed up the business cycle and compete with other companies—even larger and more established ones—on a level playing field.
E-commerce and the Internet can be a powerful weapon for SMEs in India. Not only can Indian businesses benefit greatly from e-commerce, they can also take a leadership role and take global trade to the next level.
David Wei is chief executive officer of Alibaba.com.
This is the third of an exclusive five-part series he is writing for Mint.
Respond to this column at feedback@livemint.com.
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First Published: Thu, Aug 14 2008. 12 42 AM IST