Alipay, China’s largest e-payments provider, is expanding beyond its core transactions-settlement business by providing Western merchants a direct online sales channel to Chinese consumers.
Named ePass, the channel combines Alipay’s cross-border foreign currency settlement service with overseas delivery solutions from China Smart Logistics Network (known in the PRC as Cainiao), while offering retailers access to e-marketing options from Chinese online ad network Alimama.
Through ePass, U.S. and European merchants are able to give Chinese consumers who are comfortable with shopping online in English a way to purchase goods directly from retailers’ existing, stand-alone e-commerce websites in their home markets, said Jingming Li, president and chief architect for Alipay U.S.
Consumers are able to pay in RMB through Alipay and have products shipped across borders directly to their homes via Cainiao’s network of delivery companies, Li said. Transactions can be completed by purchasers using the popular Alipay Wallet mobile shopping app.
“We are trying to make it easy for Western merchants to reach Chinese consumers without going into China,” Li said, noting that with ePass, retailers don’t need to set up warehouses or hire staff in the PRC.
Alipay is essentially acting as a bridge, making it easier for Western merchants to leverage the ecosystem of Alibaba Group, China’s largest e-commerce company, Li said.
Alipay is an Alibaba Group affiliate, and Alibaba Group owns 48% of China Smart Logistics, a consortium consisting of major Chinese logistics providers with warehouses and shipping facilities in China and the U.S. To raise brand awareness among Chinese consumers, ePass merchants also have access to Alimama, an online advertising network that includes Alibaba Group’s vast B2C and C2C shopping websites Tmall.com and Taobao Marketplace, and shopping search engine eTao.
By using ePass, merchants “can easily use our infrastructure to tap into the China market,” he said. With China Smart Logistics, “they don’t have to worry about international shipping, they can just ship to a freight forwarder in their home country, making it just as easy to sell to China as it is to sell in their core market.”
Chinese consumers in search of Western brands and products are increasingly shopping internationally over the Internet. This cross-border e-commerce “is already a $40 billion business,” Li said.
Many consumers are using online purchasing agents to buy products for them from English language websites and ship to consumers’ doorsteps. But using this system, Chinese buyers don’t know when they will receive the goods they have paid for, Li said. By purchasing overseas with Alipay Wallet, consumers receive shipping information including estimates of when their orders will arrive. “We bring in that certainty,” he said.
Alipay, which has been quietly experimenting with cross-border shopping for a year, is hardly alone in trying to open up online sales channels between Western merchants and Chinese consumers.
Major e-commerce players, including Tmall.com and Tmall Global, are offering various combinations of payment, shipping and shopping solutions aimed at solving some of the complexities and costs involved in cross-border e-commerce.
A key difference is that Alipay’s ePass does not require merchants to join a Chinese marketplace or translate their existing online shops into Chinese. According to a recent Alibaba Group survey of Chinese online shoppers, nearly 80% of respondents who said they had purchased products cross-border used international websites in a language other than Chinese.
“I don’t think we are competing with Tmall or Tmall Global,” Li said. “Tmall Global is bringing actual products into China for Chinese consumers. We are about bringing the Western [online] shopping experience into China.”
He added that offering a cross-border solution “is a very natural evolution” of Alipay’s existing international payments-settlement business.
The cost of ePass to merchants depends upon what services they use, Li said. Alipay typically receives a percentage of total transaction volumes. “If [merchants] want to receive more services” such as shipping, “the percentage would be higher,” he said.