Alibaba Group is a little bit of everything — or a lot of everything — for the consumer, especially in China, but increasingly in the rest of the world.
In addition to e-commerce, the company has growing claims in retail, logistics, online payments, social media, consumer finance, movies and more. The result last year was a 56 percent gain in net revenues, to $23 billion, as merchants used its platforms to sell $547 billion in goods and services to 454 million buyers.
While founder Jack Ma is seen as one of China’s leading entrepreneurs and visionaries, it is president Michael Evans who is responsible for bringing the Chinese company’s expansive vision of the web and the future of shopping to the world.
In a recent interview with WWD in New York — where he and Ma were meeting with global leaders during the United Nations’ general assembly — Evans exuded the diplomatic poise and calm connect-the-dots insight of someone used to operating at the top of the corporate ladder. Evans came to Alibaba in 2015 from Goldman Sachs, where he was vice chairman. He also brought the resolve and work ethic of an Olympic gold medalist, having taken the podium with the Canadian rowing team at the Los Angeles Summer Games in 1984.
That experience and temperament have served him well, as Alibaba has continued its march around the world, courted Western brands and squared off with Kering on counterfeits.
Here, Evans weighs in on where Alibaba is and where it’s headed.
WWD: Where do fashion and America fit in the Alibaba spectrum?
Michael Evans: It fits into our cross-border business. And really what we’re trying to do there is provide an opportunity for the Chinese consumer on our platform to have that American — but also that European and that South Korean and that Australian and that New Zealand and that Japanese — fashion experience.
There’s a fascination with foreign brands, partially because there haven’t been as many domestic brands that have been developed, but also because a lot of the coolest stuff in fashion and apparel is being produced in markets outside of China. And we now have an ability to move those products quickly to a Chinese consumer and they’re able to buy them online and have them delivered relatively quickly. So this is a way to also express themselves, and individualism in China is also another very important thing. The average age of 80 percent of the people on the platform is less than 38 years old and close to 40 percent are less than 29 years old. So this is a relatively young consumer base who are obviously interested in fashion and apparel. And it’s not just women, also men.
WWD: You just formed a partnership with New York Fashion Week and IMG. What is China Day?
M.E.: It’s very much like Brand Day. Brand Day is where we’ll allow an individual brand to have the whole day where they become the principal focus on our platform. China Day is like that as well. We draw focus and attention to the things that are most important for a single day. It could be a company, it could be a country. That’s what it’s all about. It’s taking our platform and saying, on this particular day it’s all about this and it’s very, very popular.
Brand Day was an idea that [executive chairman] Jack [Ma] and [chief executive officer] Daniel [Zhang] came up with. It’s about the brand thinking about, “If I had a day to present myself and to be the center of attention on your platform, what would I do? Would I promote products? Would I introduce new products? Would I do a marketing blitz to attract new customers? Would I focus on existing customers? How would I structure a day where I was the center of attention?” Different people do different things. It’s very, very popular. When you think about it, if you can stand in the middle of all of that traffic for a day, that’s fantastic.
WWD: Part of your mission is to bring more Western brands to China, but these brands have been talking about going to China for 10, 15 years. What don’t they know about e-commerce in China?
M.E.: It depends on the brand. Some of them are quite sophisticated. Then there are brands that actually have no operations and those are the brands that typically go onto Tmall Global, and they put their products into a bonded warehouse and then as people buy their products online, we ship those products out of the bonded warehouse to them. They need a lot of help because they don’t really understand the China consumer market. They don’t have operations there that allow them to think about how to develop their customer base over a longer period of time.
WWD: How willing are they to listen to you and let you help them with curation? Your data is able to say to them, no, don’t put a size 16 in China.
M.E.: We can do that; our data is useful. If you’re talking to a fast-fashion company that’s not on the platform, then they’ll typically say, “Give me some examples.” They’re not asking for other brand data, because we won’t give them that, but, “Give me some examples: Is it women’s fast fashion or is it men’s fast fashion that sells the most? Where do children’s fashions rank?”
That’s interesting to them, but most of them already have a pretty good idea of what they would like to do. So most of their questions are more technical about, “How do we get our flagship store set up?” If it’s going to be in Chinese what does it look like, because it’s not going to be H&M or Zara, it’s going to Chinese characters and, “How do we know that reflects our brand?”
We’re not about selling product per se. We’re about developing brands and developing their customer base, because we give our brands all of the data, unlike Amazon that doesn’t give any brand any data. So the promotion of brand is a long-term objective that we and the brands share. Very few brands come to us and say, “We need to sell $150 million of our product.” Most of them come and say, “How do we develop our brand? How do we increase our customer base? And how should we interpret the data on our customers in terms of what it means for our strategy and our product curation?”
WWD: Alibaba has ventured into the brick-and-mortar side, with a mall and some retail…
M.E.: [Department store] Intime, Hema [supermarkets], things like that.
WWD: Right. What has the digital giant Alibaba learned being involved in bricks-and-mortar? How’s that informing your business and the global growth strategy?
M.E.: It’s not so much about what we’ve learned from brick-and-mortar. Most of us and the vast majority of people who live in China understand brick-and-mortar, it’s where we all go, a part of our day.
What we’ve figured out is that consumers are never going to buy everything off-line or buy everything online. If you really want to have the full data picture of what a consumer’s doing, you need to understand what they’re doing off-line and online because that data gives you a much richer texture of what the consumer preferences are.
WWD: How much of the data you collect online is translated into the off-line experience?
M.E: If you’re only off-line or you’re only online you have a very incomplete picture of your consumer from a data perspective. I’ll give you an example. Some brands, like Estée Lauder, they have lots of off-line stores, but they’re exclusively on our platform. [The Estée Lauder Cos. Inc.’s president and ceo] Fabrizio Freda has decided that he wants to have a relatively small number of products online. Why? The answer’s very simple: He wants to drive traffic off-line because he believes that a part of his brand development and customer experience is to actually allow the people to be in the stores and feel the brand. We as Alibaba don’t care if they buy the product online or buy it off-line. Why? Because we’re not interested in the sales side of it, we’re interested in the brand development.
We’re very happy for people to come online and search and look and have an experience and then go off-line to buy the products because we’re going to track the data either way, we’re tracking what they’re searching for what they’re looking for, how much they’re spending. They’re going to use their Alipay app to buy in the off-line stores. We can see what they’re buying.
WWD: What’s the state of play now with the counterfeit issue and how should brands be thinking about coming to the China market? Do you have a handle on the issue?
M.E.: I think we’ve got a lot more than a handle on the issues. The time, the attention, the financial and, more importantly, the human and technology resources that are being put to bear on this are huge. Why? Because we have 1.9 billion products on our platform. The technology in terms of image recognition and the sophistication around that type of technology and other types of technologies that we’re using to root these products out are in constant 24/7 surveillance of the entire platform and delistings are taking place all the time”
WWD: Any big lessons from going back and forth with Kering?
M.E.: Kering is a great example; high-profile lawsuit, [intellectual property right] infringement, all these other things. We went to work to address two things: What is the real issue? And are we dealing with it? We’ve resolved that lawsuit, but much more importantly, in resolving that lawsuit we’ve entered into a strategic partnership on IPR with them.
If you’re working directly with these brands and you’re listening carefully to what their concerns are and you’re targeting the area of the platforms that they’re most concerned about, we can do a lot.
WWD: How are you moving the Alibaba machine out to the rest of the world?
M.E.: Our consumer relationship focus is where five of seven billion people in the world live, which is India and Southeast Asia, Asia, Russia and all those countries, which are either in or entering into the middle class, who want to buy products that are not manufactured or easily available in their own countries and who share many of the same aspirations of the emerging Chinese consumer.
That’s our consumer goal. It’s not so much the focus of providing the opportunity within the country for the consumer, because there are lots of local e-commerce that can do that. It’s facilitating the cross-border opportunities.
The merchant side: Most of the best products in the world are still produced in North America, Europe, South Korea, Japan, Australia and New Zealand. It could be digital products, it could be food products, it could be brands, fashion apparel. All those things. And so those products are in very high demand in consumer markets, that don’t have access to them.
If you take a step back and say, “What are we really doing here?” Global buy, global sell. These are the first two headlines of our globalization strategy.
WWD: As you take this global approach there are a handful of other tech giants — Google, Facebook, Amazon — that are of a similar scale and have similar ambitions. Who are you competing with?
M.E.: In pieces of our business, we would compete with all of them. Are we in the e-commerce business in similar ways to Amazon? Sure, in various parts of the world, we bump into them. India would be one. They are in China — not particularly big. We’re not in the U.S. They’ve just entered Southeast Asia. In social, we bump into Facebook, a big part of our platform is social. While we’re not competing against them directly, the social experience we’re creating is not dissimilar to the social experience that they’re creating, except ours is more tangibly built around our e-commerce business. When you go to Google, Google is search with intent; we’re certainly all about search with intent.
It’s a very big world in terms of the consumer population that is looking to take advantage of what these platforms offer and there aren’t too many people who are trying to do it globally. So there’s a lot of room for growth.
WWD: So the potential for butting heads is still a long way away?
M.E.: There’s a lot of the world that’s still not developed and still not well served, Latin America, Africa, large parts of Asia. Most of these businesses are in their infancy where 70 percent of the world’s population lives. There’s a lot of running space.