Another Game in Town: Alibaba Enters the U.S. Market, Episode 2
Alibaba is aggressively pursuing business in the U.S. market, with services designed to help B2B sellers drive sales to domestic and global customers on their e-commerce platform. In this podcast, John Caplan, President of North America B2B and Globalization for the Alibaba Group, explains Alibaba's offering, platform capabilities, fees, and potential contribution to a distributors' e-commerce, omnichannel, and growth objectives. Alibaba's offering is fundamentally different than Amazon Business, which may be the most significant benefit of all for distribution. When it comes to virtual marketplaces, distributors now have a choice. As the COVID-19 crisis locks in customer preferences for online buying, every distributor should take notice.
Featuring: Mark Dancer, Author of NAW’s Innovate to Dominate: The 12th Edition in the Facing the Forces of Change Series; Richard Blatcher, Director of Industry Marketing and Business Intelligence at PROS; and John Caplan, President of North America B2B and Globalization for the Alibaba Group.
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For more information on Alibaba and their build ups, visit https://www.alibaba.com/buildup. To learn more about this podcast series and the book, visit www.naw.com/I2D or www.pros.com/NAW.
« Episode 1: An Introduction to the Innovate to Dominate Podcast Series
- Alibaba offers a different way of doing business. Sellers own the customer relationship, pay a membership fee (no commission on sales) and can use tools to help business collaborate with their customers. Distributors need to understand the difference. Given the COVID-19 crisis, a fresh look is probably required, especially if a distributor’s plans include multiple online routes to market (otherwise known as omnichannel)
- John Kaplan is an accomplished business leader and entrepreneur in US and global markets. He brings perspectives that distributors will relate to as they evaluate Alibaba, a business that is not familiar.
- Owning the customer has many implications. One is that Alibaba is perfectly happy functioning as a way for distributors to find new customers and convert them to the distributor’s own e-commerce or human sales channels.
- Alibaba’s platform enabled custom and negotiated pricing by customer. They offer CRM tools. This opens the opportunity for distributors to work with customers to overcome the COVID-19 crisis in a collaborative way, making changes according to each customer’s needs as they evolve over time.
- Alibaba can enable global sales for distributors, but also offering a new online platform for businesses to buy from other business within the United States. In this way, Alibaba is a player if supply chains are restructured to shift supply chains to sourcing closer to home.
In this Episode:
[01:49] – About Alibaba
[04:20] – About the B2B market
[05:55] – Understanding your business, market, and customers
[11:02] – Building trust in a virtual world
[14:44] – How to do business on the Alibaba.com platform
[17:10] – Engaging with customers as part of your transformation journey
[20:40] – Data, AI, and analytics
[27:41] – The omnichannel experience
[30:50] – Why the next 10 years will only be harder
[32:33] – eCommerce: How to convert well
[38:45] – Where to refocus your efforts
Richard Blatcher: Welcome everybody. I’m proud to be here in Washington, DC at the NAW Executive Summit. And, I’m really delighted to be here with Mark Dancer, an NAW Institute Fellow, and John Caplan of the Alibaba Group. So welcome to both of you. This interview is an episode in our ongoing podcast series, which looks at Innovate to Dominate: The 12th Edition in the Facing the Forces of Change Book Series, which Mark has authored. And, we’re very proud at PROS to sponsor this new initiative. So, John, maybe you could introduce yourself and tell the folks a little bit more about your role and about Alibaba. ...
John Caplan [1:49]: Sure. So, it's great to be here and thank you for welcoming me. I'm John Caplan, from alibaba.com. alibaba.com is the original business of Alibaba group. So Alibaba group, uh, has multiple business lines, but the alibaba.com business is the, uh, is the team that I'm on. And what we are is a global platform to help businesses do business with one another. We're really the world's largest B2B marketplace, but unlike, uh, I think how people generally think of marketplaces, our business is, is aligned to the interests of sellers, distributors, manufacturers globally. Um, so we, uh, provide the ability for someone who wants to sell their goods to customers, uh, to own the customer relationship big, a significant, uh, part of our platform to pay a membership fee. So we don't charge a commission on people's sales. Um, and we have tools and services that make it easy for two businesses to collaborate with one another, whether they're, you know, you're in Detroit and your customers, you know, in Chicago or you're in Detroit and your customers are in Berlin or Dubai or any place around the world.
Richard Blatcher: Now, one of the things that I found fascinating is you've got about 10 million buyers globally and there's a very large percentage based here in the U S right. So maybe you could dig into some of the data there.
John Caplan: Yeah. So, what's interesting about Alibaba.com is that every day, there are, as you said, of people on the platform, and there are hundreds of thousands of inquiries made every day. And what that means is business buyers, people who are procuring either raw materials for their manufacturer and they're looking for some goods for resale or good goods that they use for their businesses operations come to Alibaba to come to find, to discover the source of that supply. And sometimes they want supply that's very close, that can be delivered tomorrow or within three days. Sometimes their priority is to find supply that comes with a suite of services. It's people who can provide after sale support. Sometimes they're looking for is: I don't need it quickly, I just need the lowest price. And so, by having a global, supply base, what we've been able to do is really help the world business buyers do well. And your question about the US, the U S is our largest market for buyers on the platform and it is seven times larger than the next largest market.
Richard Blatcher [4:20]: Right. And I found another fascinating fact that you have talked about before is that the B2B market is six times, it's nearest other kind of B2C market.
John Caplan: Yeah, it is a fun, it is a remarkable statistic. The global B2B e-commerce market is 23 point $9 trillion. That is six times larger than the B2C market. Right? So, when you think about what that means for a business owner who is trying to grow, the best market to be in, is businesses doing businesses with one another just because of the amount of demand that's there?
Richard Blatcher: Absolutely. And one of the things that we found, it's come through with the research that Mark in the NAW, you've done. It's come through with a lot of the research that we've done that we've done in PROS is you are part of that opportunity and that disruption. I use both of those words intentionally. And one of the biggest issues that we find and benefits that we find that the new digital buyer is demanding is that strong, frictionless omnichannel buying experience. They want that customer experience. And it's really interesting. Again, something that you mentioned during your presentation earlier today, here at the summit was the philosophy that Alibaba has. So, you've got customer first, employee second, investors third. And I think the fact that you're part of that disruptor, you're also, I would say a facilitator, maybe you just talk more about how important that customer experiences in this, this new age.
John Caplan [5:55]: And I think, I think the first thing is we are an ally to manufacturers and distributors here in the United States as they try to transform their business for the next 20 years. And I think if you, if you sort of dig into Innovate to Dominate, this book, and think about what the key message is, it's about understanding your business, understanding your market and ultimately understanding your customers. Because if you listen to the needs of your customer, then you can transform yourself to provide value. So Alibaba.com is one way a distributor in the US can grow their business, get more customers. Because the way our system works, you own the customer relationship. We have great CRM tools, you can use our tools to deepen your relationship. And since it's your customer you can pick up the phone and call them or send your sales guys to go see them. We encourage that in the alibaba.com platform. We really are trying to help, and we've built a system and a platform to help distributors grow and grow profitably.
Richard Blatcher: And I think many of our audience, which are manufacturers and distributors for this, for this series probably don't realize the assets that they have in the data that they have in the business. That, and you've talked a lot about enabling them to gain those insights, to then be able to personalize, to tailor that product, offer, service, whatever it will be, and then engage.
John Caplan: Mark earlier today asked a really important question, I thought it was very insightful because the question was what are the strengths and assets of a manufacturer and how, what should they be? How should they be thinking about them? And I think if you're a manufacturer or distributor, your number one asset is your customer relationship and you should never give that up. And it's your salespeople critical relationship, your IP, and so what we've found is that our tools and the robustness of the data that we, that we share with the manufacturers and distributors on our platform actually help them more effectively serve their customers. For example, which of your customers are engaging in which of your products online and how? Well that insight can really transform how our sales organization thinks about what products they promote and how they do, you know, on the Alibaba.com platform. All of the pricing is a negotiated. And so you can have a different relationship with each of your customers. So if you're a manufacturer or distributor, someone wants to buy a hundred forklifts, you might charge them X. Someone wants to buy a thousand forklifts or 10,000 forklifts, you might charge them why? And the platform enables you to do that.
Richard Blatcher: Exactly. And I think, uh, and, and Matt, you know, we, we've talked a lot about in the webcast and in the research and in the book about this innovation about how data is a fundamental foundation, but it's not just the data, it's the insights that it gives you to enable you to grow. And I love your example, John, that you mentioned of linking a spa to an avocado. Now, yes, a lot of companies don't know what they don't know. So, you know, what does that mean in the sense of a manufacturer: they're looking for new opportunities. They don't even know the subject disruption where competition comes from, but they may not also know where the opportunity comes from.
John Caplan: Yeah, so it's a funny example. We opened the alibaba.com platform for manufacturers and distributors on July 23rd of 2019. So, it's in recent time folks are joining us. One of the early adopters joined the platform and they are in the ag and food space and have been selling to supermarkets for a hundred years, right? Like that was their business. And they got an inquiry from a spa that wanted to buy 12 container loads of avocados and it was a legitimate customer. They completed the transaction and the CEO of the business, the seller on our platform, I was chatting with him and he said, you know, I never knew that, that this was a market for us to penetrate. I never would have found it had I not gone on Alibaba.com and now this is an area for us to develop. Do I think that they're going to pivot their whole company and sell avocados to spas? I doubt it, but I do think the insight is really important, which is if you get leads and do nothing, you know, shame on you frankly. But if you engage them, you might sell 12 container loads of avocados to a spa in Arizona.
Richard Blatcher: Well, and the other opportunity that you just didn't think about. Correct. You didn't have that insight.
John Caplan: Yeah. I think that's what part of what Mark's book does. Which is being honest with yourself about what your business is and going through the steps required to bring innovation into your organization. I think that is to think of innovation as a process you go through to it doesn't happen overnight. It's actually steps you take and a way of thinking that helps you transform your business.
Mark Dancer [11:02]: One of the things, I think it's listening to you talk and listen to your answers and the discussion we had back and forth that's very interesting to me is that the conversation to me sounds a lot like conversations that existed between good relationships between distributors and manufacturers. You know there the idea was that they both brought something together to the table, but they were different business models that collaborated and they collaborated because the customer, the end customer would benefit from that collaboration and a lot of your discussions seems like that it's going to be a collaboration, right? So each party brings things to the table that are different. Most obvious thing is of course the platform that you have and the ability to reach customers and serve them directly. Some of the fundamental questions that distributors are asking though about doing business in the new age and innovating. One of the things that comes up a lot is, and I wonder if you have insights for distributors on this, if more and more business goes virtual, how do we think about building the relationship of trust and loyalty, which are different but very related things with customers. And I wonder if you have some insights for that, for distribution.
John Caplan: My thoughts that popped into my mind along the way. I mean one is that at Alibaba, one of the core values of Alibaba, is trust makes everything simple. And I believe that in my soul that when I go along and work with trusting partners, work together, serve customers, great things happen. For sure. I do think there is an interesting, uh, dynamic, where if you're providing value for our customer, the virtual world doesn't replace the analog world. It complements the analog world. And I think that going online doesn't replace your offline engagement. I was chatting with a fellow who sells actually forklifts and he loses $1 million a year selling his forklifts, but he makes it way up in margin on services and aftermarket and parts. And so I think he's recognized, a great entrepreneur, and I was chatting with him at dinner last night and he said, the insight was if I thought of myself only as a warehouse with goods to get delivered to customers, I would have been out of business. When I recognize that I have the goods and an expertise and how people use their goods, I could provide a suite of services so that they could make sure that their forklifts run well, and they do all the things they need to do. And then when someone needs parts for those forklifts, I’m able to provide those services. And you know, the auto dealers in the United States are much the example, right? I think most auto dealerships in the US you know, maybe break even on the cars and make money on the aftermarket and the service. And I think the distribution landscape here in the US if it embraces a digital, helps me get more demand and extend my reach, Even if just here in the U S potentially globally, and then I bring my relationships and capability to that demand, then I can grow my business. You know, we at alibaba.com we couldn't serve as a forklift. We got, there's no one on our team that knows how to serve as a forklift. We have no intention of building the capability to service workloads, but that fell on his 200 employees, and can do a heck of a job doing that. And so, him driving distribution on our platform and engaging those customers in the real world, the physical world is really good for him.
Mark Dancer [14:44]: How do distributors that are interested in selling more and more in the virtual space and providing value added, maybe human delivered local services, how does that get executed through Alibaba?
John Caplan: So, um, the most important decision we've made about as it relates to that is if you, any customer, you engage on our platform, you own the relationship. So, you can cross market your services directly to your customer base. You have their names, their email address. Our tool is fantastic for messaging and engaging them. So what we've seen some of the folks sell on our platform. They actually bring their, their a physical world customer book, put it on to use alibaba.com just for the CRM capability. Because it actually works so well and they can then use it to track all the behavior that folks have.
Mark Dancer: Is the customer interface with Alibaba who's buying a distributors product through your platform? Is that a buy box customer experience? Is it something else is as a customizable?
John Caplan: Yeah, that's, thank you for asking. It's a good question. Um, 90 plus percent of the goods sold on the alibaba.com platform are customizable and customized can be negotiated around order, quantity, volume, ship speed, or it can be, I want a blue blazer made of this fabric manufacturer to me, just this spec. So, there's, um, the vast majority of our platform is really a connection and engagement system between demand and supply. And so I think sometimes there's a misperception of alibaba.com because people may think, Oh, I see pictures of products and descriptions, I should think about it the way when I go to J crew.com to buy a tie. And I like see the tie and I think, okay, I don't, I don't email J Crew to negotiate the price or the delivery or the fabric. I either decide to order it or not order it. alibaba.com is not that. It's actually a relationship builder that distributors and manufacturers can use to grow their business.
Richard Blatcher: And that's a key point because it's part of that whole experience and it's not an and/or. And you’ve conducted some research recently to about 5,000 buyers in the SME space? And that was one thing that came out with how those buyers wanted to engage. And it was a multiple set of channels. And number one was email, if I remember rightly, but there was still inside, outside sales, there was digital, there was, um, EDI systems. So there was still a lot of those. It wasn't an either/or.
John Caplan [17:10]: Yeah. I think that, I think this is part of the book; that sort of comes when you read the book comes through, we did this research with 5,000 us, business owners, anybody, people who CEOs who buy or sell goods, right? They are 60 plus percent of them are confident about the US economy. That's a great thing. They are increasingly digitizing, although they're new to digital and there and they want to go global. They either want to source goods globally where they want to sell their goods globally, but specifically as it relates to how the, uh, the buyer and the seller are earning or engaging. There is not a one size fits all. You need to be great at email and reply to the email and not get caught in spam filters and you need to go to the right trade shows and have the right booth. And you need to have a strategy on a platform like alibaba.com which enables you to get more leads to uh, discover, new ways to engage with customers should be part of your transformation journey.
Richard Blatcher: And, and I think, what's key to that is the consistency throughout those multiple touch points, right? Cause it's not a linear, in fact, I mean we conduct research similar to you on an annual basis. And our last research was, was in the fall of last year to about a thousand buyers of distribution, industrial distribution products. And they are, it almost mirrored a lot of the information that you have that you also came up with, but they all said that they increasingly want to include and expand buying digitally as well as being able to negotiate as well as well as being able to discuss. They need consistency, they need an optimized price, which again, is consistent. And it's based on willingness to pay. It's not just based on the cost of class, which is not a good model. And it's also based dynamically, not, not statically. So taking into account all of those demands that the buyer has now, Alibaba is a strong part of that process… and they're prepared to pay more if you're offering that tailored engagement throughout the multiple touchpoints that they have, they've told us they're prepared to pay more because they want that personalization.
John Caplan: I'm old fashioned perhaps, but if you can sell more and have good, healthy margin, your business is going to grow. Keep an eye on your costs. And your point about consistency is really important one. Every time you touch a customer, are you helping that customer grow their business? Right? If it, rather than looking in on it yourself, if you're thinking about their needs and your customer's needs, and, and in every one of those touch points thinking, what service do I need to offer? Is there a service that my customer's customer wants that if I provided that, it'll end up creating the loyalty that I'm trying to create. I think that's the right way to go.
Mark Dancer [20:14]: Distributors want to create more and more services for their customers built around data. They also know that the value chain, the supply chain that they operate within that's going to run on data. So there's a big question about how they can leverage data analytics, artificial intelligence to better serve their customers and to run their business more efficiently and more effectively. Does working with Alibaba, do you offer tools or expertise around data and analytics?
John Caplan: Yeah, so the, the anybody who uses alibaba.com to sell it gets access to a really robust amount of data about their store, their products, their customers. And what's useful about that is I think it's a good starter package of things, of looking at data as it relates for a distributor selling, frankly, because it's enterprise quality, but simply communicated. And you can log in and look at it and I think that's a real value. The second is if you're a buyer on alibaba.com and you're looking to find someone, we do a really good job of trying to match you to uh, our search algorithm. You think of us like a search engine. The search algorithm is pretty effective. So if you're, what you're looking for is well described. We do a good job of matching you to the person who has that. And so using data to match buyers and sellers sort of core to the alibaba.com platform.
John Caplan: That's a really interesting point. So if I'm a distributor and I, I value Alibaba because it gives me reach and a world-class, e-commerce platform that I can play on and I want to attract business. But if that's not my core value proposition is that I'm, I'm in the virtual space, I offer services, I have a collection of products, I mean your community, I have expertise in your industry. They need to communicate that on Alibaba so that those customers find me through your search engine.
John Caplan: Correct, one of the, one of the most valuable pages in the alibaba.com experience for a seller distributor for example, is what we see as customers look at the product capability. It's really description of capability and then you know where they click the overview of the business and they look at the photos and the description and how long they've been in business, what awards they've won, what services they offer, and that is an indication, I think that globally buyers want a relationship with the seller. They don't want a commoditized experience. They actually want the value that a manufacturer or distributor can offer. What I would encourage folks who join our platform is communicate it. Yeah, right? I tell him all the time, the more you share about your capability, the better you will do. And just last thought on that. It is not, digital is not a get rich quick scheme for a distributor, right? It isn't loaded my products out and go sit on the boat in Fort Lauderdale and do nothing. Right? It is a, a virtual trade show with lots more data and tools that enable, if you're responsive to your customers, potential customers, and have provide good service, your business will grow.
Mark Dancer: To follow up questions on that. If a distributor is on Alibaba and trying to, they know who they want to attract, right? And they're putting the content on Alibaba to do that. Uh, two questions. One is that like search engine optimization with the same sort of rules you would do to end up at the top of a Google search pay
John Caplan: it is precisely like that.
Mark Dancer: And then the second question is they know which customers find their way to them. Do they know who doesn't? Do they know how to get better over time and attracting the customers they want?
John Caplan: Yes. Well we've tried to make simple, which is, you know, some of this is complex and we try to make it as simple as possible to try to indicate where the opportunities are. So there's a feature in our platform where you can see what requests, um, what RFQ is, are coming in every day. So if you're a T tie distributor and you want to see who around the world is, is looking for Ty inventory, you can see you go on the platform right now and that's transparent. You can see 10,000 people in the last 24 hours have these requests and you can choose which you respond to, which you don't want to respond to. And what we've found about that is the person who's looking at that information, that opportunity, uh, begins to see, begins to learn the rhythm of the request. Just like a good salesperson does when they're driving their territory, they know what time, what, what customers to go see at what time, how to answer them. The rhythm of the, uh, the RFQ is that come in digitally has the same experience. And so you can see, Oh, I don't, customers would want, you know, two containers of avocados. I'm going to respond to those. Somebody who only wants a pallet of avocados, that's not for me because I thought my business model.
Mark Dancer: Another, another challenge for distributors as they're becoming modern businesses and innovate. And that goes to the topic we're talking about, which is how they learn either from a data perspective or from other businesses. One of the challenges distributors have within their industry associations is that they're all experts on distribution, but they also compete against each other. And I'm wondering what they value learning from companies that know and have done what they aspire to do. Right? So it's not data analysis. It's can I talk to a company who can learn something from, does that sort of learning opportunity happen either informally or formally?
John Caplan: So there's a few, there's a few answers to that question. The first is we host events we call a buildup events around the United States. Um, really that are, uh, how to source, how to sell on our platform. And we invite partners and associations to come. Technology companies come to really just have a, uh, a conversation around innovation. And those have been, I think, very useful. Another thing that we've done, and this is again, my personal perspective on this, the distribution market size is $6 trillion, so I actually would be less concerned about holding close my insights. I'd be focused about how much of the market am I penetrating in a $6 trillion market. If you're $100 million distributor, you've got a lot of opportunity for growth. So learning about ways to think about how to penetrate the market, either from folks that you think are your competitors. You know what? It's a $6 trillion market. There's enough opportunity in a room for lots of people to be successful.
Richard Blatcher: And It's a more informed market than ever before. I mean, your 10 million buyers, when they engage with the distributors or one of your sellers, they're more informed than they've ever been.
John Caplan: So, a way to think about it is that global e-com in B2B is 23 point $9 trillion. Alibaba.com is the largest, B2B, uh, e-commerce marketplace. You know, pretty substantial. And we're very humble about our penetration of that market. We have a long way to go to help all the world's businesses do business with one another. Really, you know, the long-term dream is can we create an operating system that makes the entrepreneurs who run distribution companies and manufacturing businesses around the globe have the tools and technology that enables them to serve their customers.
Mark Dancer [27:41]: I'm also very interested in how Alibaba can help distributors sell here in the United States, in the markets they already serve. And as the, as the customers of distributors have more virtual options, one of the things that they are trying to communicate with customers is what is the value of me as a local business? So if a distributor were to bring you on, here's how I would phrase that question to you. And they would be part of the way they go to the market and then they were standing in front of their customers and saying, we're a local business and you can buy from us on our phone, our sales if we can call on you or you can buy from us through Alibaba. How would the distributor, how would you recommend the distributor communicate the value for an existing customer to buy through that distributor?
John Caplan: I don't think of it as an either or. I think it was sort of a relay race. I'm going to see you on Saturday at little league. So I'm going to build a relationship with you on Monday. You're going to be searching my catalog digitally and you're going and I, and you're going to message me in the alibaba.com with a, with a question. I'm going to reply, you're going to place an order on Tuesday. I'm going to call up my sales guy going to come visit you on Thursday when the, when the goods arrive and I'll see you on Saturday again at little league. So I don't think of it as one channel competes with the other channel. I actually think of it as a system for helping your customers achieve what they want. And I think you referenced earlier, the research, buyers want email and they want relationships with the salesperson and they want services and, and they want to be able to look on their phone at, you know, at 11:00 PM when you're worried cause the floor manager calls and says, Oh no, we're out of something.
But you call your distributor and you can't get them, and you feel weird about calling your sales email@example.com app as a buyer and see what's available from your, from your distributors you do business with. It is true. You could also see distributors around the globe, right? Like it's a, and just like they could go on Google and search, just find other folks, right? If you're a distributor and or manufacturer and you're opting out of what is a critical step in the relationship chain, you are making it your job harder.
Richard Blatcher: And you both talked about loyalty, right? And yeah, increasing lack of loyalty. But loyalty comes from that differentiation of a good service, good experience, the right price and the convenience. You know, that's something that you've talked a lot about John. So I think that that does roll into, that's important with that consistency that you both talk about, that enables the buyer to engage across those multiple channels consistently while making sure you differentiate yourselves because they're not only informed by us, but they have hundreds more choices than they've ever had before. Of course, how do you build a, maintain that loyalty? That's, that's key.
John Caplan [30:50]: But the next 10 years are going to be hard, not easy. So like anybody who thinks, Oh, this is a cake, you know, they're wrong, right? The next 10 years are going to be harder than the last 10 years have been for manufacturer or distributor around the world. The opportunity is greater. And if you, if, uh, a, an entrepreneur sort of thinks about that and says, I'm going to take a customer first approach, I'm going to go meet my customers and ask them, how can I help you more? What are the things you need? What are, like you and I both described doing research, um, as a critical part of how we were, uh, understanding the market, the best research is getting in the car and going to see your top customers and asking them, watching how they work, looking at the inefficiencies in their warehouse, in their supply chain, in their procurement process.
If you sort of think and ask all of your customers the same 25 questions and then go back and have an honest conversation with someone you trust about what you heard, I think that's when you realize, Oh, things are changing. But there's a lot of opportunity here
Mark Dancer: I think that's a really good point. I think that if you think about loyalty and the measures for it as things like repeat purchases or perhaps paying a higher price because you value the services that I, I do, those things are valid. They've been around forever, but they're lagging indicators, right? In the modern age, you need to think about what are the things that you can do in measure on the, on the beginning side that build that loyalty.
John Caplan: Yeah, It's interesting. I was thinking as you were talking that in a $6 trillion market, if price was the only factor people could likely be would be switching a lot more where they, where they buy from.
Mark Dancer [32:33]: I want to go back to a question you answered a few minutes ago and you explain, which I absolutely agree with that distributors need to have multiple ways to let customers buy from them the way they want to buy from them at that exact moment and that can be calling somebody could be somebody's going to come and see me. It could be a virtual purchase and it just surround the customer, give them all those options. If a distributor is thinking about bringing Alibaba into their mix, sometimes they call that omnichannel serving customers. Does that mean that a distributor would be less likely to need their own website for each transaction or are they integrated some way they have, you know, in an app or on their website with your website, do you become more of the digital interface?
John Caplan: This is a great question and an important one. Um, every business should have a website, right? And an eCommerce site. Every business should have, every business should have it. A website, whether it should be e-commerce enabled is an open question. We can talk about that. What we've seen, and this is in the last six months, business opens, sets up their alibaba.com a storefront and they have their own eCommerce website. They get 500 leads on the alibaba.com website. 60% of them are not relevant for whatever they want - Pallets instead of containers, what have you. And then they convert out of the 40% and I was, I was talking to the entrepreneur runs the business Florida based food exporting company. And what he said he had instructed his team to do was stop sending his Facebook and Google advertising to his own website because on alibaba.com we've spent 20 years perfecting the conversion funnel. So, if you think about digital, there's two things you need to think about online selling:
What are, where am I getting my customers from and what does it cost to get them? And once I drive them to our website, how good am I converting them? There was no platform on the planet as good at converting, try turning interest into, into dollars. Then alibaba.com for B2B. So I would, I certainly think every U S uh, entrepreneur needs to have a great website that describes their unique value prop. It can even be commerce enabled, but over time I suspect folks will want to send the traffic to the place that converts the best. And remember on alibaba.com when someone buys from you, you own the customer. They're not an alibaba.com customer. They're, you know, distributor X, Y or Z is customer and the CRM is built into the platform. So that capability means if you're spending $10 or $1,000 or $100,000 on Google and Facebook driving traffic to your website and you're saying to your marketing guy, we spent a hundred grand over the last quarter.
I didn't see, we didn't get any orders. It made me, we're buying traffic ineffectively. Or it may be the place you're sending them is lousy. It doesn't convert well.
Mark Dancer: And so can, can distributors enable, um, repeat purchases, e-procurement, or there's a certain number of circumstances where the customers will want to key in to do a search and key in an order. But sometimes those orders are more automated, particularly for buying the same thing over time from the same distributor.
John Caplan: Yeah. So, so alibaba.com are, our foundational history was as a discovery engine to help drive new demand to manufacturers and distributors. So we're more purpose-built as a more of a marketing solution than a retention solution. Although lots of people do use the platform to provision repeat orders. It wasn't designed and built today for that capability. It’s at the top of, you know, in terms of, you know, the expression, eat your own dog food as an entrepreneur. So when I eat my own dog food, I go talk to our customers, ask us them what they, what they want. One of the requests is simplifying the repeat purchase, flow for their customers and we're working hard on that.
Richard Blatcher: Well, I love, I love how you call it, it's a demand generation mechanism for distributor or manufacturers. So you're going to be part or start of that relationship.
John Caplan: Yeah. What feeds your family and sends your kids to college is more art orders at good margin and keeping your costs contained once a critical need for distribution too.
Mark Dancer: I think in a research format over the years, many times over 20 years, I've asked distributors what percentage of their business comes from new accounts exactly. Or within your existing contacts. Sales you haven't had before. And it's always small. Traditionally it's three to 5% if that of their business. And if we're going to compete more organically, if we're going to compete more on the value we offer, where we're differentiated from other players, that growth acquisition engine is a new territory for distributors.
John Caplan: This is an interesting point because the war in 2020, there's room for trade shows and there's room for physical catalogs and there's room. But the world is, you know, a digital world we live in today and customer acquisition will really be a digital activity I think over time.
Richard Blatcher: One last question for you. We'll jump. Um, one thing that we often talk about when Mark and I are talking to experts and distributors and manufacturers, um, across the globe is, and you talked about it in your, your, um, presentation earlier today, um, making sure you keep things simple and we ask the question, okay, well where do you start? And you're mentioning artificial intelligence, you're mentioning these different platforms and marketplaces and you were very passionate in how you talk about, kind of, don't try and boil the ocean and do too much in every part of the business. But what, what sort of recommendation advice would you give to our listeners and our, our audience on way you would recommend they would start or actually I would suspect a lot of the audience, John, are already on some form of passive way should they refocus their efforts because they're probably not being successful as they would like. So where would you refocus your efforts?
John Caplan [38:45]: I think, I'm going to paraphrase what Alex said, which was, um, you have a small team of people with a very small budget and very short amount of time and I challenge them to, to sprint or hack at new solutions and do it less as a, um, a growth strategy frankly and more as learning initiative and say, Hey, we're going to try something and set up and we're going try it because we want to learn. So, join alibaba.com to sell as a way to learn. And the first 90 days you're probably not going to sell her much and you're going to learn how to use the tool and you're going to figure out, wow, what do I do when someone asks for a quote and they're from Detroit and I'm in Fort Lauderdale or they're from Turkey and I'm from Fort Lauderdale. How do I handle that? And if I respond in eight hours, what's my conversion rate like versus in eight days? And I can tell you our data shows if you respond in eight hours, you're going to sell a whole up more than if you respond in eight days. Um, and that's one way to, to sort of dip your toe in the water in a low risk. Um, but I think likely a lot of learning.
Richard Blatcher: Well John, thank you so much. I will make sure I go to Alibaba soon and sort some ties cause I don't think I got the memo for today. I'm very embarrassed.
Mark Dancer: You’re going to have to buy a pallet of ties.
Richard Blatcher: That's okay. And we really appreciate your time. And of course for the listeners and the viewers, we'll share your contact details. And then if people want to come to one of your buildups, I think that'd be a great way for them to engage with you and also learn from not only you, but your customers, their peers, and how they can, you know, really judicially transformed. So we really appreciate your time. Thanks again.