Have Alibaba got plans for Europe?
They have been Secretly Spreading their Wings
We’ve seen a number of hints recently that Alibaba may be looking to start subtly making their presence known in Europe, but none as definite as rumours that they are looking to buy shares in Zalando.
Zalando is based in Berlin, so that would be a great compliment to Alibaba’s existing activity in Belgium. The planned logistics centre for Alibaba’s logistics subsidiary near Liege airport will make it easier for them to transport products from China to Europe and vice versa. But aside from the obvious, opening up Alibaba to European customers, how else are Alibaba poised to make themselves known in Europe?
Who are Zalando?
Zalando are an E-Commerce company that focus on fashion items, beauty products and shoes. Their head offices are in Berlin, but they actually operate in 15 European countries including the UK. One of the attractions of Zalando is the fact they they cater to a completely different audience to counterparts like Wish.
By carving themselves out into the high end fashion world, they avoid direct competition with marketplaces like Amazon and eBay. Zalando had quite a loss in Q3 2018 (£34m), which means if Alibaba did want to swoop in and buy them they might be able to do so at cut price. Zalando could easily follow the same trajectory as marketplaces like JD.com, expanding from one niche to a global marketplace that sells products from a number of different verticals.
Amazon are the dominant force when it comes to cloud services in Europe, but is this something Alibaba is looking to take on? They recently announced a cloud partnership with a Spanish provider. Although cloud revenue for Alibaba is currently only 7% of their total revenue, this could rise to 15% if their European operations are successful.
Building a Silk Road
No doubt the China-US trade war will have had an effect on many large Chinese companies. Alibaba, although huge, will not be immune to this. This is the reason that many commentators think that Alibaba are going to direct their energies towards Europe in 2019. Alibaba have also themselves alluded to the fact that they can create a digital Silk Road and become the gateway to China. Although Alibaba haven't made moves as bold as ones like acquiring Lazada in South East Asia they have been quietly signing trade agreements with bodies and companies in countries like Spain and Portugal. They recently announced a partnership with El Cortes Ingles in Spain and signed a deal with the Portugal Global Trade & Investment Agency.
Another strategy that Alibaba are putting in place across Europe is acquiring start-ups to add even more strings to their bow. Their recent purchase of Berlin based start-up Data Artisans, a data analysis company. After having been a customer of Data Artisans since 2016, Alibaba decided to invest and give them much needed funding to develop new products like Apache Flink, a new open-source software that can process large data volumes. Alibaba have also recently purchased a share of Turkey’s leading E-Commerce platform, Trendyol. Turkey’s young and tech-savvy population is becoming increibly internet aware and this is set to be a great investment.