Alipay is opening a fast lane for Chinese e-commerce consumers wanting to shop in the U.S.
This story first appeared in the October 15, 2014 issue of WWD. Subscribe Today.
The payment arm of Alibaba will today launch Alipay ePass, a suite of products that will help Chinese shoppers buy directly from American Web sites.
Jingming Li, Alipay U.S. president and chief architect, told WWD that ePass offers secure, cross-border transactions through Alipay. The solution can also help with the cumbersome shipping, tax and customs processes, which are currently the biggest hurdle for U.S. brands entering China via the e-commerce ecosystem. EPass also has a marketing arm, which helps participating brands target desired Chinese shoppers locally.
“It will significantly lower the barriers [of cross-border commerce] for both sides and bring certainties into this uncertain industry of cross-border trade,” Li said, referencing a recent study by Alipay that found that almost 80 percent of those who shop cross border already use non-Chinese websites. “That’s the fundamental thing: To make it easy for both sides.”
EPass is a tool with a singular mission: To connect American retailers and brands with Chinese customers, who are increasingly looking to purchase from labels such as Kate Spade, Michael Kors, Tory Burch, Abercrombie & Fitch, J. Crew and Coach.
Hundreds of millions of Chinese consumers use Alipay for e-commerce purchases, potentially opening a huge, designer-label-obsessed market to American stores and fashion houses.
According to iResearch, the number of online shoppers in China jumped 25 percent to 302 million in 2013 — that’s a group of people roughly equivalent to the U.S. population.
Even that estimate might be too small. McKinsey Global Institute put the number of Chinese consumers buying online at 632 million as of June, and projected that the country’s e-commerce market could reach between $420 billion and $650 billion in 2020.
Media investment company GroupM reported that Chinese shoppers spent $33 billion on overseas Web sites last year.
An influx of Chinese consumers could cause American e-commerce sales to skyrocket, especially on Chinese national holidays such as Single’s Day (China’s version of Black Friday). Alibaba reported sales of $5.8 billion for the day last year, which fell on Nov. 11 —more than three times Cyber Monday’s $1.7 billion in sales in November 2013.
This is a massive market for companies to gain entrée to, and in the past year Li has signed brands such as Uber, Gap, Gilt, Asos and AirBnB as Alipay partners. But ePass offers more U.S.-focused brands a way to reach Chinese consumers more seamlessly.
Li — who was in Manhattan to host a 40-person dinner Tuesday night for select retail and fashion chief executive officers from companies such as HSN, Kate Spade, Gilt, Tom Ford, Calypso, Birchbox, Martha Stewart, Toys ‘R’ Us, Rebecca Minkoff and Barnes & Noble — stressed that ePass is not a direct competitor to PayPal or Apple Pay, since the product will not be available to the U.S.-based consumer.
“There is a great synergy between Apple Pay and Alipay. We could work very well together, just like how Apple works with MasterCard,” Li said, quickly adding, “[But] this is about China and the Chinese consumers. That is what we’re focusing on.”
Partners can opt to sign up for all three products at once — ePass payments, logistics and marketing — or any combination of the three. For example, if a merchant chooses to use ePass payment and the logistics component, they can ship the order locally in the U.S. to a freight forwarder. From there, ePass shipping partner China Smart Logistics Network will handle the rest — all the way to the Chinese consumer’s doorstep (shoppers can track orders from their Alipay accounts). For merchants, they can automatically switch to an Alipay-enabled site once they detect a shopper is browsing from a Chinese IP address. Once the order is placed, the total check-out amount will include the delivery fee and customs duties to China. It’s the seller’s choice whether they wish to translate their sites into Chinese.
For merchants, the process is equivalent to selling to a U.S. consumer, said Li, who explained that all sellers will receive payment in U.S. dollars. It will also be a familiar experience for the Chinese consumer, with all import tax and customs information transparent upon purchase.
Gilt has signed on to use the payment portion of the Alipay ePass product, starting Oct. 25. This means that Chinese consumers can complete payments using Alipay, although Gilt is still responsible for shipping and making sure shipments reach the shoppers’ addresses. Currently, the U.S. e-tailer charges a flat shipping fee of $9.95 for all orders over $100 (it does the same for Australia).
Tracey Weber, Gilt’s chief operating officer, said the U.S. e-tailer plans to incorporate ePass’ other functionalities in the near future. China is one of the company’s biggest growth markets, she added. The firm has been hard at work enhancing its online experience from a content localization standpoint, translating parts of the site into Chinese, such as the check-out process.
“Part of the reason we committed to doing this is because we think it will make a big difference in the number of people who come [to our site] and wind up making a purchase from China,” Weber explained.