Alibaba.com, the business-to-business platform of the Chinese e-commerce giant Alibaba Group Holding (NASDAQ:BABA), said Thursday it has added dropshipping and other transport and logistics services for its U.S.-based small to midsize customers that increasingly rely on digital tools to grow their global sales.
Under the dropshipping concept, an online merchant holds no inventory and usually depends on suppliers or third-parties to ship products directly to the end user. The shipping component thus bypasses the merchant. Dropshipping, which is not new, allows smaller companies and startups to minimize inventory carrying costs and to test new products without assuming undue inventory risk.
Alibaba.com has established a dropshipping center where customers can access more than 7,000 suppliers and over 1 million items available at wholesale prices, said John Caplan, Alibaba.com’s president of North America and Europe.
Alibaba.com also has rolled out a time-definite delivery service that gives customers access to more than 19 million items that are ready to ship over predesignated trade lanes. The Alibaba unit will immediately reimburse a merchant $100 for each shipment that fails to meet the on-time requirements, it said.
In addition, the unit has unveiled a broader logistics service where it will provide end-to-end shipping and customs clearance for customers that may want one-stop support as opposed to merchants that may want deliveries but have their own partners for other services relating to the goods movement, Caplan told FreightWaves.
The new tools initially will be deployed on the Asia-to-U.S. market but will eventually expand to the U.S. domestic and U.S.-Asian export markets, said Caplan. Alibaba.com operates worldwide connecting e-commerce buyers and sellers. It owns no physical assets and relies on a global network of partners to provide the physical distribution. It makes money by charging an annual fee of about $2,000 for establishing and managing virtual storefronts, as well as fees for keyword advertising services. It does not charge commissions on individual transactions.
Formed in 1999 as a B2B provider, Alibaba.com expanded in 2019 to provide e-commerce solutions to the underserved and largely ignored U.S. SMB market. The business took off during the COVID-19 pandemic as traditional B2B channels shut down, companies pivoted quickly and often with little visibility to e-commerce, and more U.S. workers opted for entrepreneurial work.
Citing data from the National Bureau of Economic Research, Alibaba.com said that over 600,000 more U.S. businesses were formed in 2020 than in 2019 and that one-third of the new companies were not tied to a physical store.
Global B2B has for years taken a back seat to the business-to-consumer segment, even though B2B is a $23.9 trillion market in and of itself.