Competition is a fact of life for any business. While it can be frustrating and worrying, competition spurs innovation, improvements and can generate market hype. Personally, over the years I have come to relish competition, and just as well because B2B ecommerce has plenty of it!
Whenever people ask me about my business, they inevitably ask the difference between DHgate.com and the supplier listing site, Alibaba. Alibaba spent USD$30 mil on international advertising this year, so it is not surprising that they are making a name for themselves. In truth, until recently Alibaba were not strictly speaking a direct competitor; while their primary service involves providing information listings akin to Yellow Pages, they do not actually host transactions as DHgate does; also, the bulk of their users are domestic, whereas 100% of our buyers come from outside of China. Our business models also differ greatly, with ours a pay-per-performance model, allowing users completely free access and generating revenue only when an order is successfully completed. Alibaba generates revenue by charging memberships fees and paid keyword advertising.
DHgate was the first business to streamline the cross-border trade process in an ecommerce platform, combining the collective buying power of SME buyers to leverage significant cost savings not just to drive down product costs with suppliers, but also with shipping companies, payment providers and other logistics partners. Now, five years on, competition in this space is hotting-up.
More and more newcomers are trying their luck in this market, and even traditional trade companies such as Alibaba are diversifying their offering to include a small-scale version. Far from being concerned about this, I’m actually really excited. This means that the market DHgate created and grew is thriving.
With more companies following our lead, we will see awareness of our function grow – especially if those companies are using big budgets to spread the word! At DHgate, I’ve always let positive word of mouth and referrals lead our marketing approach. We’ve grown with our suppliers and our buyers and we have a deep understanding of their needs and wants and as we introduce huge innovations to exceed our users’ expectations, we are preparing for explosive growth.
We have a 5 year head start on any of the competition, after all.
The Wall Street Journal also had a comment on our competitive advantage this week in the China Real Time Report. See here:
AliExpress. This product has been in beta since last quarter, and allows for transactions online that can be paid for through AliPay, Alibaba Group’s online escrow service. Up until now, Alibaba.com only connected buyers to sellers, but didn’t facilitate transactions online, so this could also mean a major milestone for Alibaba.com. It will be interesting to see whether the company moves toward a transaction-based model, because that model is very different from the current pay-up-front membership fee they charge to customers regardless of how many sales they make. The company already has competitors like DHgate, which allows transactions online, provides keyword search results by popularity and relevance rather than keyword advertising, and does not charge any membership fees.
How have you taken on the competition? What competitive challenges do you face? I’d love to hear your experiences here.