China-based Alibaba opened its business-to-business platform to the U.S. last month in a push to challenge Amazon.
Alibaba believes its U.S. offering represents a value proposition for U.S. business-to-business customers. Alibaba is offering clients a flat membership fee of “a couple of thousand dollars a year,” Alibaba’s head of North America B2B John Caplan says.
Amazon, meanwhile, offers its qualified wholesalers membership for $39.99 a month but also takes up to a 15 percent sales commission.
Alibaba currently has only a fraction of Amazon’s U.S. revenue. Last year, Alibaba reported $56 billion in revenue compared to Amazon’s $233 billion.
But on a profitability basis, Alibaba is faring well against Amazon in the U.S. marketplace, registering $12 billion in net income compared to Amazon’s $10 billion.
As it seeks to expand its U.S. business, Alibaba seems acutely aware of the response of the Trump administration and U.S. policymakers. Alibaba group president Michael Evans says he “spent a lot of time in Washington to make sure they understand what we are trying to do in the U.S., including the launch today, because it involves some form of technology that we want them to be comfortable with.”
Alibaba’s U.S. business-to-business undertaking builds on an effort launched in 2015 to build its sales outside of China. “The company has since made headway but its international e-commerce revenues have remained low, at 9 percent of the company’s totals,” South China Morning Post U.S. correspondent Jodi Xu Klein writes.