Alibaba sees cloud computing and online payment driving Singles’ Day international expansion

Alibaba president Michael Evans also says in an interview that the company plans to connect its international operations into a single platform

PUBLISHED : Sunday, 12 November, 2017, 4:18pm
UPDATED : Sunday, 12 November, 2017, 10:40pm

After basking in the glow of another record-setting Singles’ Day shopping extravaganza, China’s e-commerce powerhouse Alibaba Group Holding is banking on the rapid expansion of its cloud computing subsidiary and online payments platform to ratchet up international sales for the world’s largest e-commerce event.

“We are very much relying on Alibaba Cloud to be a key service provider and enabler in the markets where Alibaba is targeting to grow,” Alibaba president Michael Evans told the South China Morning Post in an interview. “That is very much in the same way Alipay has expanded hand in hand with our e-commerce business.”

The strategy reflects how much Singles’ Day, held each November 11, has become a barometer for the progress of Hangzhou-based Alibaba in e-commerce, marketing, logistics and payments, as well as in building the online infrastructure that supports those businesses.

The event this year chalked up a record US$25.3 billion in transactions in the 24-hour period.

Evans, who is responsible for Alibaba’s international growth strategy, said there were 60,000 international brands among the 140,000 total brands that took part in the event, up from 10,000 international brands last year.

“The huge increase showed the importance of Chinese consumers to these international companies,” he said.

However that still made Singles’ Day a predominantly mainland Chinese endeavour that did not include sales generated by Alibaba’s recent investments, Southeast Asian e-commerce company Lazada Group and Indian online shopping provider Paytm E-commerce.

Sales at AliExpress, the international retail platform of Alibaba that operates in about 200 countries, did contribute to this year’s Singles’ Day. For the future, Evans said Alibaba had an ambitious plan to connect all three operations into a single platform to offer more products to a wider audience.

That meant getting the international e-commerce expansion of Alibaba, which owns the Post, in lockstep with the global initiatives of Alibaba Cloud and Alipay, he added.

Founded in 2009, Alibaba Cloud is now the biggest provider of public cloud computing services in mainland China and third largest worldwide. With more than one million paying customers, Alibaba Cloud posted a 99 per cent year-on-year increase in revenue to 2.97 billion yuan (US$447 million) in the quarter ended September 30.

Cloud computing enables companies to buy, sell, lease or distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are managed inside data centres.

“This business has quickly achieved scale and expanded globally,” said Evans, who joined Alibaba in 2014 after working for 20 years at investment bank Goldman Sachs.

At present, Alibaba Cloud has an international network of 15 data centres, including facilities in Hong Kong, Singapore, Australia, Dubai, Malaysia, Singapore and the United States.

Alipay, the third-party payments platform run by Alibaba affiliate Ant Financial Services Group, has more than 520 million users and controls more than half of China’s US$5.5 trillion market for mobile payments.

Launched in 2004, Alipay has evolved from a digital wallet used to make e-commerce payments to a lifestyle enabler that is used to hail a taxi, book a hotel, buy cinema tickets or pay utility bills directly from within the app, according to Ant Financial. More than 10 million brick-and-mortar merchants in mainland China now accept Alipay.

Last year, Alipay started working with US electronic payment transactions specialist Verifone, which equipped selected retailers across North America and Europe with a mobile point-of-sale system that accepts Alipay app payments at their stores.

Parent Ant Financial merged in April with Lazada payments platform helloPay, which was rebranded as Alipay in Singapore, Malaysia, Thailand and the Philippines.

Alibaba smashes Singles’ Day record as online shopping festival goes global

Paul Haswell, a partner at international law firm Pinsent Masons, said that merger was “another step in Alipay’s resolve to become a truly global brand … and take on the likes of Visa, PayPal or Apple Pay around the world”.

Alipay’s in-store payment service now covers more than 30 countries and supports 27 currencies.

Evans said there was plenty of room to grow for AliExpress and Lazada, in which Alibaba has invested US$2 billion.

Alibaba’s revenue from its international e-commerce retail business grew 115 per cent year on year to 2.88 billion yuan (US$434 million) in the quarter to September.

“We expect more than 50 per cent annual average revenue growth from Alibaba’s international retail commerce efforts over the next five years,” said RJ Hottovy, a consumer strategist at Morningstar, in a recent report.

In March this year, Alibaba invested US$177 million in Paytm E-Commerce to expand its operations in India, the world’s sixth-largest economy.

Evans indicated that Alibaba’s international expansion has so far been on the fast track with AliExpress now operating in markets including Russia, Spain, the Netherlands, Brazil and the US.

“We were in Russia a couple of weeks ago, and a client said to [Alibaba executive chairman] Jack [Ma Yun], ‘Oh, you’re the founder of AliExpress’ … It showed how many of our international customers don’t know Alibaba, except for AliExpress,” he said.