In the ancient Arab story, a young man, Ali Baba, discovered the 40 thieves’ secret treasure trove after shouting the words “Open, sesame”, and thus became rich. Today, Alibaba.com is an e-commerce company that has created a number of millionaires around the world from global trade. With its booming domestic economy and huge number of small and medium enterprises (SMEs), India is an important market for Alibaba.com and we want to help hundreds of thousands of Indian companies become millionaires too.
We can do this by helping Indian suppliers find new customers, in India and abroad, and expand their business. Procurement officers worldwide are now looking online to find potential trading partners. Virtual marketplaces are growing in prominence because of their comparative advantages over traditional channels, including cost effectiveness, ease-of-use, and large communities of qualified buyers and suppliers. They have also significantly shortened the time needed to find new products and qualified suppliers, which makes them very attractive to buyers, big and small.
Research shows that the discovery phase—when buyers search for sellers—is the most time-consuming and costly phase of the sourcing cycle. Online marketplaces can reduce the time required for the discovery phase significantly by providing information on products and suppliers from around the world 24 hours a day, seven days a week, 365 days a year. Aberdeen Group pointed out in a 2006 study that while supplier sourcing generally takes a company three-four months using traditional channels, over half of Alibaba.com’s members spend just two-four weeks on an average to complete the process. One of our members once told me: “What used to take weeks and months to source, now literally takes minutes and hours through the Internet.”
In addition to supplier matching, some online marketplaces also offer offline services to Indian suppliers, including educational seminars, private sourcing events and trade show appearances. Many international buyers are also leveraging on the convenience of the Internet to set up physical meetings at trade shows with suppliers they have met online.
India already has one great advantage in global trade: language. While India is a diverse country, with 23 official languages and more than 1,000 dialects, English is the official business language that makes international expansion easier for Indian SMEs.
Last year, Alibaba.com launched a dedicated India channel on our marketplace, which provides a direct link between international buyers and suppliers in India. It highlights all the latest hot products from India, such as textiles, home furniture, industrial machinery and auto parts. Currently, we have more than 400,000 members from India, and more than 20,000 new companies are signing up each month.
With more big corporate buyers looking at India as one of the next major manufacturing hubs after China, now is the time for Indian suppliers to proactively market their products beyond India. The easiest and cheapest way to do this is through online marketplaces. But being found by an international buyer is only the first step. Indian SMEs must rise to a new level to meet the stringent requirements of the global marketplace.
International buyers demand high-quality products at competitive prices, speed to market, compliance with industry standards and technology capability. From a country level, India must also improve its infrastructure and showcase its wide range of products and services to attract more serious buyers.
I have no doubt that Indian SMEs will seize the opportunities before them. We look forward to working with our local members to support their expansion and watching them prosper.
David Wei is chief executive officer of Alibaba.com. This is the second of an exclusive five-part series he is writing for Mint. Respond to this column at firstname.lastname@example.org