Overseas new users increased rapidly on Alibaba.com in 2015, particularly in Europe, America, and the Middle East. Domestic merchants on 1688.com spent much time online and CXT users spent 47 hours on average in receiving their first orders in 2015 according to Alibaba. Alibaba is predicted to keep growth in sales and users in 2016.

China e-commerce market reached 15 trillion yuan (US$2.3 trillion) in 2015 and 69% came from the B2B market. The ratio was four percentage points lower compared with 2014. As one of the leading global and domestic B2B platform, Alibaba delivered a good answer in 2015.

Alibaba.com had 1 million domestic suppliers and 250 thousand overseas suppliers. Among the 110 million buyers, over 100 million were overseas. Europe, North America, Central and North America had most buyers of Alibaba’s global B2B platform.

Alibaba.com which was the leading platform for global trade received most inquiries from America, UK, and India in 2015. America was the most important business partner of Alibaba.com in 2015.

Alibaba.com’ business developed quickly in Russia, US, and Brazil in 2015. The three countries gained most new users in the last year. Broadening e-business market and improving delivery service drove the growth.

New users in Kazakhstan, Ukraine, and Russia increased most quickly in 2015. New users in Europe increased by 104%, the ratio was 63% in Central and South America, 50% in Middle East, 47% in North America, and 36% in Asia. Asia and North America were the engines of Alibaba Global website’s business.

Middle East was a new emerging market of Alibaba.com in 2015. New users in Turkey, Ukraine, and Pakistan increased quickly which were the driving force of Alibaba’s business in the Middle East regions.

More users were used to shop through smartphones and tablets. China m-commerce retail market was predicted to reach US$334.0 billion in 2015. About 40% overseas users purchased on Alibaba.com through mobile devices in 2015.

1688.com, Alibaba’s domestic B2B platform, aimed to help small and medium companies do business in China. China’s small and medium corporate buyers shopped more frequently on 1688.com in 2015.

China online buyers shopped more online instead of offline shops in 2015 and over 20% were newly created demands. The number of goods shoppers bought online increased largely in 2015.

China’s online shoppers tended to pay more attention to quality rather than price and customized or processed products encountered larger demands in 2015. Users were more willing to spend money on middle and high end goods with kitchen wares as example. Price was not the only factor to attract China’s online shoppers and companies should manage to deliver quality products to the market to gain competitiveness.

More 1688.com users finished their initial order through mobile devices in China. Online shopping platforms were and should be devoted to supply better mobile user experience to improve sales.

1688.com promoted CXT service to help small and medium companies have more exposures by utilizing special marketing tools. 54.9% CXT members logged in for over eight hours every day in 2015. The ratio was 18.9 percentage points higher than 2014.

CXT users spent 47 hours on average in receiving their first order in 2015 which was less than half of 2014. New merchants could also have many opportunities on the platform.

China central and western suppliers increased quickly on 1688.com. Tier-2 and below cities and rural regions were strategically important region for 168.com and Alibaba. Alibaba has invested in domestic delivery service in less developed cities and promoted China Spring Festival Shopping Fair to boost B2B business in rural regions.

Alibaba reported revenues of 22,171 million yuan (US$3,488 million) in Q3 2015, 20,245 million yuan (US$3,265 million) in Q2 2015, and 17,425 million yuan (US$2,811 million) in Q1 2105. With exploring overseas market and domestic rural market, Alibaba is predicted to keep promising in 2016.

Also read: China Online Luxury Shoppers Insights in 2015

Alibaba.com, Alibaba’s B2B international platform, has officially transformed into online trade platform, which will change the traditional trade model (online inquiry & offline payment).

Transformed into online trade platform, Alibaba.com can display transaction volume and guarantee value to customers to obtain trust to promote trade.

However, Alibaba.com do not open online trade service to all categories of products. It focuses on clothing, 3C digital accessories and so on, supported by payment methods of MasterCard, Visa, Maestro, Cheque, Western Union. It has also integrated Russian online payment tool WebMoney, Qiwi Wallet and Brazil’s Boleto.

One insider pointed out that Alibaba.com’s transformation is the biggest change within 15 years. For the reason that why Alibaba.com did not apply payment method of its own, the relevant people said, “bank payment is relatively mature in cross-border settlement and it can save cost.”

It is believed that domestic trade platform 1688.com has not realized online trade. With large demand of domestic trade, Alibaba will also integrate online payment for its domestic B2B platform.

Also read: Mobile 35.8% of Total Alibaba China Retail Business GMV in Q3 2014

1688.com, the largest online B2B website under Alibaba Group and sourcing destinations of many Taobao sellers, is opening up to foreign suppliers with the addition of twenty four South Korean brands through Alibaba’s Direct From Overseas Markets program.

1688 started accepting suppliers from outside mainland China since August 2014 when some wholesalers from Taiwan were accepted into the online B2B platform.

The acceptance of Korean suppliers on 1688.com were supported by South Korea’s Ministry of Agriculture and Food and Rural Affairs. Some of the well known brands are Woongjin Foods, brewer HITE-Jinro, and Daesang Corp.

1688.com is a Chinese online B2B website while its sister website Alibaba.com is an English one for global sourcing. According to 1688, a mini-site will be set up for Korean products by the end of this year. And, the next country under Direct From Overseas Markets program is Southeast Asian countries.

China B2B e-commerce market revenue exceeded RMB4.53 billion (US$740 million), an increase of 6.1% from the prior quarter in the same year and by 57.29% from prior year period according to the latest data from Enfodesk.

Check out China online B2B market share in Q2 2014 here.

Also read: China B2B Market Overview in 2013

Alibaba Group is the largest online and mobile commerce company in the world in terms of gross merchandise volume (GMV) in 2013, according to the IDC GMV Report.

They operate their ecosystem as a platform for third parties, and they do not engage in direct sales, compete with their merchants or hold inventory.

Alibaba Group’s Major Businesses

Alibaba Group owns the largest online shopping platform Taobao.com on both PC and mobile. Tmall is a more premium version of Taobao mainly for (international and domestic) brands and retail platforms.

One B2B side, Alibaba runs 1688.com, local wholesale marketplace , and alibaba.com, China’s largest global online wholesale marketplace.

AliExpress is Alibaba’s cross border e-commerce website enabling consumers worldwide to buy direct from Chinese exporters.

Huge Gross Merchandise Volume on Alibaba Marketplaces

Total GMV on Alibaba retail marketpalce reached 270 billion from 255 million active buyers and 8 million active sellers in a twelve-month period ended on 31 March 2014.

There are still huge opportunities in lower-tier cities in China.

Alibaba Group Empire

This charts show key Alibaba marketplaces and services and the core related companies and affiliates.

Alibaba Company Scale and Size

Scale and Size of Alibaba Ecosystem Participants

Alibaba Eco-system

Buyers and sellers are at the heart of Alibaba ecosystem. Buyers and sellers discover, select and transact with each other on Alibaba platform.

Third-party service providers add value to Alibaba platform through service offerings that make it easier for buyers and sellers to do business. The third-party participants in Alibaba ecosystem include a payment services provider, logistics providers, retail operational partners, marketing affiliates, independent software vendors and various professional service providers.

The interactions between buyers and sellers create network effects in that more merchants attract more consumers, and more consumers attract more merchants.

In addition, Alibaba marketplaces are interconnected in that many buyers and sellers on one marketplace also participate in the activities on our other marketplaces, thereby creating a second-order network effect that further strengthens Alibaba ecosystem.

The nationwide infrastructure

The map above illustrates the nationwide infrastructure managed by Alibaba Group’s 14 strategic delivery partners according to data provided by them as of April 2014.

Source: SEC

Alibaba vice president revealed in public that Alibaba B2B platform 1688.com achieved daily transaction of 300 million yuan (USD 49.1 million) after a year’s transition to online wholesale transaction platform.

1688.com used to be an information platform, now it has been upgraded to a transaction platform within three years. In 2013, 1688.com integrated 1688 suppliers information in Taobao search, launched huopin (a wholesale group buy channel), taogongchang (an online manufacturing factories platform offering suppliers information for Taobao sellers ) and taohuoyuan (an online procurement platform specified for Taobao sellers). 1688 grew to the top choice of Taobao sellers for procurement.

In March 2013, 1688 daily transaction was around 30 million yuan (USD 4.91 million). By the end of 2013, it had increased tenfold. With the population of internet, online B2B grew rapidly in 2013. In the future, the challenge of online B2B lies in replacing the security of offline B2B transactions which is what Alibaba plans to solve.

Alibaba has connected its B2B platform 1688.com with its C2C platform Taobao. Last September, Alibaba integrated 1688 accounts with Taobao ones. Now, Alibaba integrated 1688 suppliers and wholesalers information in Taobao search results.

For example, if you search “steel” in Taobao, you can get 4 products displayed in the search results, with company name, location and price.

If you click on the search result, you will get to a new page linking to 1688.

If you search for a company name in Taobao, the company in 1688 will also appear in the results.

Click on the result, you will be linking to the company page in 1688.

1688.com, Alibaba’s domestic B2B platform in China, announced on September 5 2013, that the total amount of online transaction on September 4 2013 broke 4.19 billion yuan (USD 679 million). A new record in global B2B market.

On September 4, 2013, 230,000 sellers on 1688 made 2.52 million transactions, online transaction in single day mounted to 4.19 billion yuan(USD 679 million). Early this year, 1688 registered B2B members hit 100 million, doubled in 500 days. It was astonishing for the whole e-commerce market.

1688 Transition

Since its delist from Hong Kong main board, it was privatized by Alibaba Group. The delist aimed to relief the pressure of transition. Later, 1688 disappeared from public for a while, and focused on turning 1688 from an information platform to an online trading platform. From last year, 1688 targeted at increasing new members, improving member authenticity, increasing buyer traffic and user experience, then promoting online trade.

One month after delist, Alibaba Group adjusted its business structure to seven businesses. Alibaba’s B2B was separated to International Core Business Unit (ICBU) and China Business Unit (CBU), namely 1688. ICBU, CBU, Taobao, eTao, Tmall, Juhuasuan and Aliyuan are the seven businesses in Alibaba Group. Based on the seven businesses, Alibaba was going to build CBBS system, which is the integration of Consumers, Channel Businesses, Manufacturing Businesses, and E-Commerce Service Providers.

In Alibaba’s CBBS strategy, 1688 targets at small business and is connected to Taobao platform. The core businesses of 1688 are wholesale, sourcing and social network for members. Wholesale is mainly for big manufacturers to sell products to Taobao small channel businesses. Sourcing mainly focused on engineering procurement and central purchasing for enterprises. 1688 social network is for letting business members to know each other, and be friends with people in the same industries.

In 2013, the goal of the whole year is to achieve 100 billion yuan (USD 16.2 billion) transaction amount, and to be the number 3 in the online trading platform.

B2B + Taobao

Taobao is far more than an online retailing platform. Online retailing is only an isolated part of e-commerce, Alibaba is going to connect 1688 with Taobao, to form a supply chain of manufacturing businesses, channel business and consumers. E-Commerce service provider will combine them together.

In last September, after the integration of Alibaba accounts with Taobao accounts, 1688 transactions amount had an prominent outbreak. Taobao businesses are extremely familiar with online trading, naturally, they would choose 1688 wholesalers to be their suppliers. What’s more, they are very good at managing trading platform, their feedback for products would help suppliers to improve efficiency.

At present, about 50%-60% of 1688 transactions are from Taobao platform, the rest are from offline buyers which are mainly consisted of three and four tier cities enterprises.

Taobao platform will lead Alibaba to logistics, and 1688 will lead to up stream supply chain, such as materials and sourcing. On one hand, B2B platform has the best manufacturers and suppliers in China. On the other hand,1688’s transition from an information platform to a trading platform will help Alibaba reach downstream supply chain.

Driving Power of 1688’s Transition

Online B2B trading need becomes stronger day by day, enterprises gradually adapted and adopted online transaction. The average daily transaction amount in May was 150 million yuan(USD 24.3 million), now it has grown to 250 million yuan (USD 40.5 million).

Since 2008, foreign trading has been sluggish, however, domestic trading growth remains a fast speed. More and more enterprises were going to invest in B2B. This was driving power of 1688’s growth.

Sourcing cost used to be quite expensive, because the professional sourcing markets are limited to certain regions. Enterprises would purchase a large sum at a time, it led to slow cash flow and inventory risk. 1688 has the online trading advantages, it breaks geographical limitation and allows enterprises to lower sourcing cost.

At present, 500,000 suppliers from 140 sourcing markets have been on 1688. Taobao small businesses could purchase at a relatively small amount each time, they could timely adjust the purchasing amount according to market changes.