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Sites target weakest links in Alibaba's armor

Updated: 2014-09-09 07:02
By Gao Yuan (China Daily)

Small companies like haixuan.com hope to beat the online giant in the race for marketplace dominance

As Alibaba Group Holding Ltd, China's largest e-commerce company, prepares for what promises to be a record-breaking initial public offering in New York, a small online shopping website based in Beijing is hoping to become the giant's Achilles' heel.

"Overseas online shopping is most likely the last sector that no one is able to claim dominance in - even Alibaba," said Shaun Xu, vice-president of haixuan.com, a site that sells imported goods to Chinese shoppers.

The website sells fashion and luxury goods made by more than 1,000 brands from countries including the United Kingdom, Italy, the United States and Japan.

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Besides Gucci, Burberry, Chanel, Yves Saint Laurent and other world-famous fashion brands, the site also sells such niche products as French porcelain and prime beef from Uruguay.

"The made-in-China items sold in the online marketplace are well-developed, but cross-border e-commerce remains in its infancy. This small sector is presenting us with huge opportunities," Xu said.

Exports contributed nearly 90 percent of the 2.7 trillion yuan ($439.74 billion) turnover in Chinese cross-border e-commerce last year, with imports accounting for 300 billion yuan of the transaction volume, according to industry consultancy Analysys International.

Tian Zheng, vice-president of Analysys International's business solutions unit, said a lack of market dominance has enticed smaller local players such as haixuan.com to enter the fray.

"Total turnover is set to be pushed up as more newcomers join the game," Tian said. "The top players should develop their own specialties early on in order to expand in the ever-growing market."

Precision marketing is one specialty haixuan.com aims to build.

IZP Technologies Co Ltd, the parent company of haixuan.com, is an Internet data analytics firm that helps advertisers predict customer behavior.

The website is using IZP's analytical power to predict customer demand, but it's too soon to tell what that might be.

"Although the technology has been proven in its efficiency by IZP's previous clients, we are still collecting customer data for haixuan.com because the site just launched this month," said Xu.

The No 1 priority for Xu and his team is to expand site traffic and awareness among the roughly 300 million Chinese online shoppers. The company eventually hopes to secure one of the top three spots in the country's overseas online shopping market, according to Xu.

But it will have to fend off some tough rivals before it can reach that goal.

For example, US online retailer Amazon.com Inc is opening a cross-border e-commerce platform in the China (Shanghai) Pilot Free Trade Zone. Construction of logistics and warehouse facilities serving shoppers on the Chinese mainland is now underway.

The US company has clear advantages in many aspects, including management and resource handling, according to Analysys International's Tian.

"But the coming of Amazon does not mean the end of local players. It will take time for Amazon to get used to Chinese buyers' shopping habits," he said. "Chinese shoppers are used to services such as next-day delivery, and Amazon is still learning that."

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