If you’re a U.S. retailer, Alibaba, the Chinese e-Commerce giant, wants to work with you.
The opportunities in China’s e-Commerce market may come as a surprise: research from eMarketer predicts that a quarter of the Chinese population will be shopping directly on foreign-based web sites, or via third party web sites, by 2020. Additionally, total revenue will jump to $1.1 trillion by 2020, according to Forrester.
In an exclusive Q&A, Retail TouchPoints sat down with Lee McCabe, VP of North America for Alibaba, during the ChannelAdvisor Catalyst 2017 event in Nashville, Tenn., to learn more about his role at Alibaba, the perceptions U.S. retailers may have about the retail giant and the benefits of U.S. businesses expanding to China.
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RTP: What are the key retail strategies and initiatives Alibaba currently is focusing on?
McCabe: Aside from globalization and helping U.S. businesses, we’re working on three interesting things: convergence, context and contact.
Convergence is how we envision online and offline working together — bridging the functionality and efficiency of online with the effectiveness of offline. We think we can do a much better job there.
Regarding context: We’re a data company, using data to create a smarter business for other businesses to leverage. So, if you’re working with Alibaba, you not only can target people very well, but we can help you sell a product to the right people. For example, we signed a deal with Mattel. We turned the business model on its head because not only are we helping Mattel target the right people in China for their current products, we’re also helping them with product development because we have this great view of China e-Commerce and what’s happening. We’re in the best position to advise Mattel on what their next product should be, especially in baby and mother categories.
And the third one, contact, is about how to make it fun again for shoppers. We think it’s much more than a transaction — it’s the experience. Part of that is Singles Day, which is just incredible — $17.8 billion last year. Plus, 82% of those sales were bought on a mobile device, which I still find staggering. It shows the importance of mobile and smartphones in China.
Additionally, on Singles Day, we unveiled a virtual reality app. We created a Macy’s store in virtual reality so someone can walk around a Macy’s store, pick up items and buy them. We created an augmented reality app like Pokémon Go, where you can chase the Tmall cat around and win prizes and vouchers. A few months before the day, we launched a Tmall fashion show in Shanghai, invited top designers and broadcast the show all over China. People could also view it on their mobile devices. The big difference was you could buy everything you saw immediately. So if you saw a model with a Calvin Klein shirt on, you could press a button and buy that shirt straight away.
RTP: What are some common misperceptions that North American retailers might have about Alibaba?
McCabe: I think there are misperceptions about Alibaba and China. I think a lot of companies entered China when it briefly opened its doors in the 1980s and ‘90s and they got burned because they had a very short-term focus. They didn’t invest enough in the local market and they didn’t understand the local market. Doing business in China is very different from doing business in the U.S. or anywhere else in the world. But now I think big companies are going back in, and strongly. If you look at Nike, more than 25% of their profit now comes from China; 80% of Buick’s international sales are in China; Starbucks is expanding aggressively in China. And for Apple, it’s now the second largest market worldwide. It overtook Europe two years ago. So companies are now understanding how to work with China and going back in there.
I think the common misperception is that it’s hard. It’s a massive opportunity. In terms of the market, if you’re in e-Commerce, you have to have China in your strategy because, by 2019, something like 29% of global online shoppers will come from China. Because the Chinese consumer spends a lot more, 55% of global e-Commerce sales will happen in China. So if you’re in retail, you can’t ignore it. And we represent the easier opportunity to get in and connect with the consumer.
RTP: What are your top goals as VP of North America at Alibaba?
McCabe: The strategy for the U.S. is to help U.S. companies, because we have massive demand in China right now for American products and brands, and it’s growing every day. We can’t sign companies up quickly enough. My job is to create a large team in the U.S., serving U.S. businesses and helping them sell into China on our platforms.
RTP: How has the role of mobile in retail evolved over the past year? Do you think retailers are fully capitalizing on its potential?
McCabe: Mobile is still playing a big part [in retail], and it hasn’t been tapped as much yet. In China, 82% of e-Commerce is on a mobile device, which is incredible. The U.S. has a long way to go to catch up on mobile. We all carry our smartphones when we’re in stores, so there have to be smarter ways of leveraging the phone in stores to give consumers the best of both worlds. I think that will still be an innovation priority for a long time. You can ask me this question in three years and I’ll probably still say mobile has a long way to go.
RTP: Can you share some information about your background and how you ended up at Alibaba?
McCabe: The constant in my background is e-Commerce. I began in London with eBay in 2002 and since then, it’s been an interesting path. I moved to Australia and worked for a few startups along the way. I worked for Expedia, running Asia Pacific. Then Expedia moved me to Seattle. I then joined Facebook to run strategy for a few of their major verticals. I was approached by Alibaba about a year ago now to discuss running North America and I jumped at the chance.
RTP: Who have been your business mentors over the years?
McCabe: I’ve been lucky enough to work in a lot of great companies with great leaders and managers — across Expedia, eBay, Facebook, and now Alibaba. Those companies have had awesome leadership and I learned a lot from watching leaders such as Jack Ma (Founder of Alibaba), Mark Zuckerberg (Founder of Facebook), Meg Whitman (former President and CEO of eBay) and Dara Khosrowshahi (CEO of Expedia).
RTP: Do you have any advice to share for upcoming retail entrepreneurs or executives?
McCabe: I would say to make sure you think about cross-border. It gets easier every day with a number of marketplaces. You should be leveraging every marketplace at your disposal. And China is now a reality and an easy one to leverage. Play globally or think about playing globally as quickly as possible.
