Alibaba B2B e-commerce market report

The spring of B2B has come. This is something everyone deeply felt at the end of 2015 and the beginning of 2016. As a huge and complex market, few institutions have conducted in-depth and detailed analysis of B2B e-commerce. So what is the entire B2B market like? How has B2B e-commerce developed to today?

Alibaba has the largest database of B2B transactions in China. Today, it released a detailed report on the B2B market for the first time. By analyzing and sorting out these data, we can see the development of B2B in recent years.

1. The sluggish external demand market poses challenges to China's exports

1) The US economy is showing signs of recovery, but domestic consumption remains sluggish. Imports in the first two quarters of 2015 were US$1.1 trillion, down 3% year-on-year; over the past five years, the growth rate of US imports has fallen from 19.4% to 3.4%.

2) The economies of Russia and Brazil are in serious decline. In the first five months of 2015, the total trade volume between China and Brazil was US$28.1 billion, down 19.5% year-on-year, and the decline continued to widen compared with 2014; from January to November 2015, the total trade volume between China and Russia was US$61.3 billion, down 29.3% year-on-year.

2. Manufacturing costs continue to rise, and China's export advantage weakens

China's economic downward pressure remains relatively large, labor costs are rising, and the export advantage of Chinese manufacturing is weakening.

1) Labor costs continue to rise. According to data from the Ministry of Human Resources and Social Security, 28 regions raised their minimum wage standards in 2015, far more than the 19 regions in 2014, with an average increase of 14%. Among them, Shenzhen has the highest monthly minimum wage standard in the country (2,030 yuan), and Beijing has the highest hourly minimum wage standard (18.7 yuan).

2) Difficulties in transformation and upgrading of export enterprises. A research report by Boston Consulting Group shows that China’s manufacturing cost advantage over the United States has dropped from 14% to less than 5% in the past decade (2004-2014).

In the context of China's economic downward pressure, sluggish external demand and weak exports, it is of great significance to study the development and transformation of China's B2B industry. The following will show the new changes and trend judgments of the B2B market by foreign trade and domestic trade B2B respectively.

3. The number of buyers in the B2B market is far greater than the number of suppliers

More than one million small and medium-sized enterprise sellers have served hundreds of millions of small and medium-sized enterprise buyers around the world through Alibaba. By the end of 2015, the number of domestic suppliers on Alibaba's B2B domestic and foreign trade platforms had reached one million, while there were 10 million domestic buyers and 100 million overseas buyers. The number of buyers far exceeds the number of suppliers, and the B2B market has huge development potential.

Overseas buyers are all over the world, and the main overseas buyers are from Europe, North America, Central and South America. In 2015, the markets with the strongest foreign demand were the United States, the United Kingdom and India, and the hottest incremental markets were Russia, Brazil, Spain, France, Ukraine and other countries, while the fastest growing overseas markets appeared in Europe, Central and South America and the Middle East.
a) The foreign demand markets with the largest enquiries are: the United States, the United Kingdom, India, Canada, Russia, Australia, Germany, Austria, Malaysia, and Brazil. The number of enquiries from the United States far exceeds that of other countries, and the United States is still China's largest export destination.

b) Russia, Brazil, Spain, France, Ukraine and other countries were the hottest incremental markets in 2015.

c) The fastest growing overseas markets are in Europe, Central and South America, and the Middle East. The growth in Europe mainly comes from Russia, and the growth in Central and South America mainly comes from Brazil. The number of buyers in the Middle East has increased by 50% compared with last year, and the growth rate has exceeded that of Asia and North America; among them, the growth rate of Turkey, Palestine, Israel and other countries has exceeded 60%.

1 Sports, fitness and entertainment industries become overseas business opportunities

There is a large overseas demand for products such as machinery, consumer electronics, clothing, automobiles and motorcycles, and the sports, fitness and entertainment industries have become overseas business opportunities.

In 2015, the number of inquiries from all over the world for sports and entertainment products surged, up more than 40% from 2014. The United States is the country with the most developed sports and fitness market in the world, driving the number of related inquiries from North America on the Alibaba platform to more than double from 2014; the growth of inquiries in the Middle East for sports, fitness and entertainment also exceeded expectations, increasing by more than 30%.

2 Global economic fluctuations triggered the fourth industrial transfer

Global economic fluctuations have triggered the fourth industrial transfer, which mainly occurs in the manufacturing sector: the United States has become the country with the lowest manufacturing costs among developed economies, and the relocation of manufacturing has increased the purchasing demand of local American companies; the "Belt and Road" strategy will drive the purchasing demand of countries along the route and bring new business opportunities for China's exports.

a) The research results released by Boston Consulting Group in August 2014 show that the relative manufacturing costs of major economies have undergone surprising changes in the past decade. These dynamic changes will prompt companies to re-evaluate their manufacturing locations, leading to a huge shift in the global economy. Among them, the United States has significantly improved its manufacturing cost optimization and has become the country with the lowest manufacturing costs among developed economies. A large number of American companies are moving their manufacturing back to the country, and this change involves a wide range of industries from electronics, computer equipment, transportation machinery, oil processing, clothing to food.

b) Judging from the inquiry data of Alibaba International Station, the growth rate of inquiries from manufacturing-related industries in North America also exceeds that of other continents, and is mainly driven by the US market. This shows that the relocation of manufacturing has indeed increased the purchasing demand of local US companies. This trend will become more and more obvious in the future and deserves the attention of domestic export companies.

c) The number of inquiries from Asian and European manufacturing industries on Alibaba is still large, but they mainly come from emerging markets such as Southeast Asia, Central Asia, and Central and Eastern Europe, such as Belgium, Indonesia, Uzbekistan, the Czech Republic, and Romania. It is particularly noteworthy that Indonesia, Uzbekistan, the Czech Republic, and Romania are all countries along the “Belt and Road” initiative, which will bring new business opportunities for Chinese exports.

3. Wireless access continues to grow

With the deep penetration of mobile Internet around the world, more and more overseas buyers are initiating inquiries on the Alibaba platform through mobile devices, and nearly 40% of buyers use mobile terminals to publish purchasing needs.

4 One-stop export service is popular

In order to better provide transaction security and financial, logistics, customs clearance and industry-specific services, Alibaba launched One-stop comprehensive foreign trade services. Currently, One-stop has served 60,000 small and medium-sized foreign trade export companies.

B2B domestic trade wholesale is in full swing, the number and frequency of transactions are increasing, mobile purchases will become a trend, and buyers will have higher requirements for comprehensive services across the entire value chain. China is facing the transformation and upgrading of social consumption, and the demand for mid-to-high-end products is increasing. Finding more good sources of goods is an urgent problem to be solved in B2B domestic trade.

1. Domestic trade volume continues to increase

Since 2015, half of domestic small and medium-sized enterprise buyers have completed their first purchase on the day of registration, and the demand is very strong. These buyers have increasingly prominent demands for high-frequency purchases, rich sources of goods, quality materials, and mobile transactions, and have put forward higher requirements for the production capacity, supply chain service capabilities, and e-commerce service capabilities of suppliers/distributors/factories.

2 Domestic enterprises are increasingly purchasing online

In 2015, domestic small and medium-sized enterprise buyers purchased more frequently, especially since the second half of last year, when buyers purchased almost once a week. The proportion of buyers who purchased only once a month showed a shrinking trend, while the proportion of buyers who purchased more than five times a month continued to increase.

3 Mobile purchases become a new trend

More and more purchasing activities are taking place through wireless terminals, and buyers who place orders wirelessly are more active at night (after 6 pm) - these buyers may purchase at any time and anywhere, which places higher demands on the service capabilities of suppliers.

4. The number of buyers trading goods and sellers increased

Taking the consumer goods industry as an example, the average number of sellers traded by each buyer increased by more than 1.5 times (167%) compared to last year, and the average number of goods purchased by each buyer also increased by 1.8 times (188%) compared to last year.

5. Mid- to high-end products are becoming more and more popular

With the upgrading of China's resident consumption structure, consumers' pursuit of quality materials has also begun to be reflected in the B2B market. Taking kitchenware as an example, the sales proportion of mid- to high-end priced products is increasing.

6. Huge potential for suppliers in the Midwest

In 2015, the number of suppliers in the central and western provinces increased significantly, and the number of TrustPass members in Guizhou, Tibet, Jilin, Gansu, Yunnan, Guangxi, Shaanxi, Chongqing, Hebei and Sichuan grew faster than in other provinces.

7 The fastest growing industries are as follows

1) Consumer goods: The number of suppliers in the jewelry, spices, ceramics and other sub-sectors is growing rapidly and is worth paying attention to.

2) Industrial products: The number of suppliers in the integrated circuit, connector, switching power supply and other sub-industries has grown fastest

3) Agricultural products: The number of suppliers of tools, grains, meat, aquatic products, fruit trees, etc. is growing rapidly, and the supply is very rich (compared to 2014, the agricultural products sector is relatively single, mainly suppliers of various grain crop seeds)

8 Current situation of import wholesale market

1688 Import has connected with 150 countries and regions, greatly enriching the supply of domestic wholesalers.

1) According to the data, the three most popular importing countries in the domestic market are South Korea, Japan and France. The most popular categories are mainly concentrated in snacks and drinks, beauty care, and household products.

2) For the vast majority of foodies in China, they not only want to eat cheaply but also want to eat healthily. Japanese enzymes, Canadian American ginseng and vitamins, and various fruit juices from Cyprus are also very popular.

3 Imported goods have also brought a more fashionable lifestyle to the domestic market. Japanese and Korean household products, environmentally friendly products, mother and baby products, French aromatherapy essential oils, and European pet food and products are improving the quality of life of domestic consumers.