Alibaba Seeks to Open a Path Into the European Market

    Jing Daily
      Published   in Finance

    China’s e-commerce giants are making gradual progress in established markets like Europe#

    , expanding westward via targeted deals and consumer-led marketing that could threaten the dominance of


    and local players. While


    is better known in Europe for the low-priced items offered on the


    marketplace (rather than the official brand storefronts found on


    and its Luxury Pavillion in China, or the full-featured e-commerce livestreaming opportunities available on

    Taobao Live#

    ), the company is making a concerted effort to establish a permanent foothold in the market.

    Since 2018, Alibaba has been growing its base in Liège, Belgium’s third-largest city, and the Covid-19 pandemic fueled greater efforts in the regions. According to The Guardian, Alibaba’s logistics subsidiary


    is building a 355,000-square-foot cargo facility in southeast Belgium as part of a $361 million investment, and Alibaba previously partnered with Chinese state-owned enterprise ZIH to establish a 5,600-mile rail link between Liège and Zhengzhou in central China.

    Alibaba’s choice of Belgium as a hub for its European expansion got its start on a personal note, with the country’s king actively courting Jack Ma. The Belgium connection fits with the company’s plan to both tap consumers in wealthier countries and provide, as The Guardian put it, “a whole new array of services not offered by Alibaba’s U.S. rival.”

    The move also aids in the creation of a two-way street to give AliExpress merchants greater (and quicker) access to European consumers while encouraging more European merchants to take advantage of Alibaba platforms to reach and sell to Chinese consumers.

    Yet for all of the potential, challenges remain — including protests from locals concerned over increased air pollution, road congestion, and overnight air traffic. For Alibaba, market access is one part of the equation, but the other, and more important part is drawing market share from the likes of Amazon.

    In addition to building a Belgian logistics hub, Alibaba is using Spain as a sort of testbed to compete with its American rival and make its AliExpress marketplace a household name in Europe. The company launched a localized version of AliExpress in 2019, and amped up its promotion of the platform last year greater with a major plan to get tens of thousands of Spanish retailers on board. However, the platform still remains best known in Spain as a place to scour for low-priced items, indicating Alibaba faces an uphill battle if it wants AliExpress to go upmarket in Spain.

    More broadly, Alibaba has its work cut out for it throughout Europe when it comes to changing perceptions of the platform and competing with Amazon. At the moment, according to Ecommerce Europe, AliExpress accounts for just 2% to 5% of Europe’s e-commerce traffic. Considering AliExpress is the best-known Alibaba platform among European consumers, this indicates either that Alibaba’s commitment to the market can only go up from here, or that it could end up being a very expensive PR campaign that steals only a bit of symbolic market share from its rivals.

    That said, if Alibaba manages to import some of the innovative technologies and features from its platforms in China to AliExpress or another localized platform in Europe, it may have a fighting chance. For example, e-commerce livestreaming is one potential route that is still in its infancy in Europe. Last May, the company incorporated social commerce via “AliExpress Connect” with support in Italian, Spanish, Russian, and Turkish, giving Chinese sellers on the marketplace a new way to work with international influencers to promote their products.

    The platform also opened the feature up to Western retailers. France’s


    experimented with the format to promote its


    brand via AliExpress Connect, while




    , and


    also gave it a spin. But if Amazon and other platforms start to roll out similar features that could fend off the competition from Alibaba for at least the next few years. If so, the road ahead for Alibaba in Europe could get a lot rockier (and more expensive).

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