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Software Solutions > Interviews > Open Sesame: Internet Can Be Magic Wand For SMEs >

Open Sesame: Internet Can Be Magic Wand For SMEs


Madanmohan Rao interviews Jack Ma, founder and CEO, AliBaba.com


Alibaba.com, an online B2B trade exchange launched from China last year, is widely regarded as one of the best SME (small and medium enterprise) e-commerce success stories in Asia. Softbank, Goldman Sachs, Fidelity Capital and Investor AB have invested a combined US$25 million in the company. A former English teacher, 36-year-old Jack Ma has given himself until the age of 40 to develop a sustainable Internet business before he leaves the company and returns to teaching China's aspiring entrepreneurs. Ma has spoken at conferences around the world, including the World Economic Forum and the Industry Standard Global Internet Summit, and will be speaking at India Internet World in Delhi in September.


Q: What was the founding vision behind Alibaba.com?


Our founding vision was to create a marketplace where SMEs can find trade opportunities, promote their products, and carry out transactions online. We wanted to create a place just for SMEs, because we felt so many of the B2B websites are focused on the big players. From the day we started, our goal has always been to become one of the top 10 websites in the world, not just one of the top 10 websites in China.


Q: How has your organisation grown since founding?


We started Alibaba.com in an apartment in Hangzhou, China just 18 months ago. When we started we had only 18 people in an apartment and operated in only one country! We now have over 300,000 members from more than 200 countries and regions. We've got just over 200 employees with offices in Beijing, Shanghai, Hangzhou, Hong Kong, Seoul, Silicon Valley and London.


Our customer base is growing at a rate of about 1,500 members per day, so we're still growing quite quickly. We are also expanding beyond English and Chinese content, and are developing local versions of the site in Japanese, Korean and several European languages. We recently featured on the cover of Forbes magazine in "Best of the Web: B2B" category.


Q: What are the key three trends you notice in the way SMEs have been approaching the Internet?


1) So far SMEs have been using the Internet mostly for information flow - i.e, for finding buyers or sellers of products they trade in. Because so many of our members are from developing countries, they are just beginning to get online -- and information flow is the first step for them. We've been receiving over 2,000 trade leads per day, with an average of 4 responses for each trade lead, so I think this is the first stage of Internet use for SMEs.


2) SMEs are beginning to take full advantage of the Internet to promote their businesses. We're finding that a number of our members are approaching us with greater needs to deepen their online presence. Because of this we plan to offer them tools for promoting themselves online, such as an online website builder as part of the Alibaba.com community. This will help them do more than simply find trade opportunities -- they will actually be able to build a very professional online storefront.


3) The next trend will be transactions. As members become more comfortable using the Internet and learn to trust the Internet they will begin to conduct transactions online. I think we can expect this to become a reality towards the end of 2001.


Q: What are some of the success routes for SMEs to harness the Web (as opposed to the Big Guys)?


SMEs can now use the web to find the best possible partners with the best possible products and the best possible prices. It used to be that only the big players had the resources to travel to expensive trade shows and advertise in expensive trade publications. But now the Internet helps buyers and sellers find each other around the globe, so the cost of entry is much lower. This helps the SMEs and takes away many of the advantages the Big Guys had.


Q: What are the top three misconceptions you notice in the way SMEs are approaching e-commerce?


1) Many SMEs incorrectly assume that you have to be a technology master to take full advantage of the Internet. That's not true. It's our job to take technology and make it user friendly for businesses. We recently hired John Wu, chief architect of Yahoo!'s search engine, to be our CTO. He's helping develop the behind-the-scenes technology that SMEs can use to their advantage. So SMEs shouldn't worry about being tech masters --let us worry about that. We make it easy for the SMEs to use the Internet.


2) Some SMEs still believe the Internet cannot be trusted for payments and transactions. This is not really true. For example, in China, we're developing a very secure system for members to conduct payments to their partners online, through a partnership with a leading bank, the Industrial and Commercial Bank of China (which accounts for half of the annual total settlement volume of the entire banking system of China and is aggressively developing and promoting B2B payment solutions). The payment is secure but, as is always the case in business, people should still conduct due diligence to make sure that they are working with an established and credible partner.


3) SMEs know there are riches to be found on the Internet but don't know how to unlock the door to treasure. That's why Alibaba.com is focused on helping SMEs to say "open sesame" to trade opportunities!


Q: What are the best success stories you have come across of SMEs in Asia harnessing the Net?


Every day we receive letters from members telling us about success stories. Bakeries in Iran, textile exporters in China, piston makers in India, willow weaving outsourcers in New York, traders in Argentina, and candlemakers in Malaysia have sent us feedback thanking us for successful leads generated from our site.


One recent story I find very rewarding is of a Korean company that was running out of funds and needed investment. They were on the verge of shutting their doors until they posted a message on Alibaba.com. They were able to find the funds they needed and a partner in China. They were so happy that Alibaba.com helped their business survive that they invited us to attend their announcement in Beijing so that we could discuss how Alibaba.com helped them survive and thrive.


Q: What new e-business issues arise for SMEs via broadband and wireless content?


On the wireless front, we are already providing trade leads to wireless mobile phone users in Hong Kong through our partnership with Cable and Wireless HK Telecom. Wireless is a part of the culture in Asia and will be an important part of Alibaba.com's future. Wherever the Internet goes, Alibaba will go.


Broadband is really going to put a new set of tools into the hands of SMEs. Imagine the possibilities -- video-based factory tours, 3-D product sampling, and so on. So for the SMEs costs are going to keep going down, and we're going to focus on providing the latest tools for them.


Q: If you could go back in time and start everything again from scratch, what would you do differently the second time around?


It's been a great adventure so far. Believe it or not there's nothing I would change!


Q: How do you view online SME markets across Asia? Where does India fit in your plans in this regard?


India has emerged as our second largest membership base outside of China. The response from our Indian members has been absolutely amazing. Members in India are not just using our site for international trade. Our Indian members are even using Alibaba.com to find opportunities within India. A buyer in Bombay may use our site to locate a supplier in Calcutta. So our development in India is similar to our development in China.


Q: Any parting comments or thoughts for Internet marketers in India?


Learn from the mistakes of other Internet companies outside of Asia and spend marketing dollars wisely. If you look at the collapse of Boo.com it is clear that some companies think the way to succeed is to spend money as quickly as possible. We always say we are Alibaba not AliBooBoo. We've learned how to grow through guerilla marketing techniques and most of our growth is viral. I think Indian companies will succeed if they do the same!




The writer can be reached at madan@techsparks.com


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