The Setup
Yup…that isn’t the great Michael Jackson, the global King of Pop, in the video below. Who is that dashingly decorated dance machine in the video below? No other than the man with the plan Jack Ma, the former CEO and Founder of Alibaba. In Sept 2014 Jack and his posse took Alibaba and moon walked their way onto the New York Stock Exchange. The international markets and investment bankers fainted from sheer joy and excitement in a once in a $25B lifetime offering that valued the company at a whopping $231B, easily giving the company at the time highest IPO in world history. One could have easily mistaken the adoration that financial institutions and WallStreet Bros had for Jack Ma to a Justin Bieber super fan.
Imagine if you took a Vegas magic show, mixed with a Broadway musical, a splash of MadMax, and a dash of “Learning to Dance Volume 1” you get this masterpiece. I promise you this: it will either be one of the best 6 minutes of your day or the most confusing.
Just saying that it’s entirely understandable and rational how Jack Ma in his own mind could have thought it was appropriate to dress up like MJ at an exuberant, probably $1M plus, company function while crotch thrusting himself across the stage in front of thousands of employees while lip syncing. I would like to see more CEOs take a similar initiative here 😹. As a side tangent, one of my dreams involves being invited to a popular tech conference as a keynote speaker just so I can re-enact this legendary stage performance.
Alibaba has one heck of an impressive history. In 1999 Jack Ma, then an english teacher, and 17 of his friends started the company. The idea was simple and elegant, to provide Chinese manufacturers and SMBs with an e-commerce platform to export their goods and services, taking advantage of newly minted world trade laws and to simplify global trade. And of course, such a revolutionary idea needs a catchy, memorable globally recognized and culturally sensitive name right?
All jokes aside, Alibaba is a powerhouse. Right off the bat the company received a $25M investment from Softbank’s Masayoshi Son and Goldman Sachs. By the third year of operations the company had already achieved profitability. Like all good tech giants, Alibaba quickly expanded their services beyond international import and export to include domestic B2B commerce, marketplaces, payments, cloud computing, delivery services, and a crap ton more. For fiscal 2021 the company reported record revenues of $717B and is arguably one of the 6 most valuable brands in the world.
What’s my beef about?
Most of my great game changing ideas (part sarcasm) fit under one of these 3 buckets: broke, stoked or provoked. In this case I was stoked after getting off a call with an entrepreneur who informed me that their company is destined to become a unicorn 🦄. After I heard the unicorn declaration I couldn’t stop thinking to myself wouldn’t it be cool/funny if every-time an entrepreneur or a VC said Unicorn I could give them a souvenir, like a hat. So I got to work and came up with a new mascot named Geemo (long form of GMO), a single child (uni) corn cob (corn). The idea would be a company gets a Geemo hat and as if it actually graduates to become a billion dollar company (🦄) the get an actual unicorn hat, think of it like a badge of honour or a right of passage.
The brilliant ideas didn’t stop there 🎳. Then I thought of a litany of common catch phrases and buzz words that VCs and entrepreneurs utter in 90% of the conversations I have with them (feel free to add to the list in the comments down below). How cool would a fall line of hype-beast merch be for these?
To source a manufacturer for this kitschy idea I went to where you’d expect: Zazzle, 4imprint, CustomInk, Printful, etc. I quickly realized that the price tag for a cheeky gag on a 100 unit run wasn’t funny at all….i’m not that kinda VC that can shell out $40 a hat. I did more research and discovered some newer platforms for creatives to get goods to their audience and discovered solutions like Fourth Wall (pretty neat, but not ideal if you are looking to minimize costs, also a limited in catalog), and Cala (which my VC firm Real Ventures is an investor in) an incredible platform for serious independent fashion brands/influencers to run their entire design house from ideation, to design to custom cut and sew to finding suppliers and streamlining logistics, far too powerful for what I need, but incredible nevertheless.
My next big bet was finding an overseas manufacturer and so I figured I’d give Alibaba a shot. My search results for “hat” was promising and I was filled with youthful hope and optimism 🤞.
That hope was quickly crushed after sending inquiry after inquiry for quotes on various quantities/colours/size combos. It was almost as if Alibaba designed this incredible gateway to hell 🔥. The outside of the gate shows a promise land of unlimited creative expression 🪄 and opportunity 🌈, but once you step inside Jack Ma’s mind you’re met with mostly confusion 🧟♂️ and fear 😱. Let me give you an example.
Let me give you an example of where the nightmare of ordering from Alibaba begins. In the image above you’ll see a series of prices based on minimum order quantities (MOQs). They seem relatively reasonable for the quality of the hoodie. The prices seem accessible. However, the moment you hit the Contact Supplier Button your nightmare begins. Immediately you’re prompted to describe your request to the seller. The first question the seller asks is how many of these sweaters do you want to purchase and in my case I say 100 units. Almost always, the suppliers says we only accept a minimum order of 200, 300, 400, 500 pieces etc. ANGER, ANGER, ANGER 🤖. Why would you put the minimum order quantity from 2-199 then 😡!! It gets better, to play along and ultimately determine where this is going I say sure, okay i’ll take 200.
After the supplier has some sense of relief that the customer hits their minimum order threshold all forms of proper communication get thrown out of WINDOW 🪟💥. I then ask if I can have an assortment based on a certain mix of sizes and colors and then a drunk ballet of back and forth stupidity ensues. Mind you each message you send to a supplier can take in some cases hours or a day to get a response, in-spite of Alibaba having a feature to filter suppliers based on response times, ratings, trade assurances, and more. And for some strange 👽 reason, even after specifically indicating the exact item you are inquiring about the supplier deems it appropriate to start upselling their catalog of SKUs before you have even resolved the primary purchase order request.
Sample is okay for testing?…What does that even mean! I apparently need to give the seller my whats app number for a response to a reasonably simple question? ANGER, ANGER, ANGER 🤖!!!!
It’s quite possible i’m a huge idiot or an alternative theory could be that the world’s second largest e-commerce site after Amazon is so broken and archaic from a user experience that buyers are just behaviourally trained to eat poo 💩 because they have few to no better options. I don’t have time for this game of Clue! Literally as I am writing this my 2.5 year old is screaming at my “DA-DA COME WIPE MY BUTT. 🧻” Can’t you see Alibaba I have more important things to do than play guess what the supplier means.
I’m already a couple hours into this, I refuse to give up on my uni🌽 hat idea, and I still need to :
Get a sample
Negotiate price
Finalize design specs
Determine production timelines
Determine international shipping and duties fees
Understand payment requirements
If I had a really large order I would want to hire an inspection company
I am 💯 certain that someone reading this is going to say...“Sam it’s not that hard, I figured out how to buy and customize product off of Alibaba myself and a squirrel can too!” You’re probably right, but if you are that person you would be missing the point. Specifically the ease of use and operability of Alibaba for the first time buyer! From the time you know what you want to buy to the time you have successfully negotiated a price, customized the design, get the samples, receive the goods in the condition and unit economics you expected them, received the all go from customs it feels like you need a PHD 👩🏽🎓 in solving mysteries. And of course those that have unlocked the puzzle can be entitled to say Na-Na-Na Boo-Boo 🤪.
In case you’re wondering I did do some research and scoured Youtube explainer videos on “how to use Alibaba.” The videos anticipated the same frustrations and had tips and tricks to overcome them. I thought wow, a $700B company needs users and youtubers to properly explain how not to screw yourself on this platform..interesting
After negotiating the costs and better understanding the suppliers process I was ready to get a shipping quote. Boy oh boy did I nearly fall off my seat 🪑. If anyone is a first time user of Alibaba beware ⚠️ of the loaded costs and markups on international shipping. Again as an Alibaba virgin I went to the internet for answers. I found Reddit post after post of users complaining of the same exorbitant shipping fees and the occasional recommendations for ways to significantly reduce the costs. Long story short I am convinced most of these Amazon Third Party Sellers that make a living off of finding a niche and sourcing from Alibaba figure out ways to get the bottom barrel costs on freight and have no interest in sharing them with the world unless you sign up for their course 🙈. Enough is enough let’s change the Alibaba Game.
The Hit Idea
At the end of the day 💵 talks. The lost time, energy and effort from trying to procure customizable items from Alibaba must be a common experienced felt by a silent many. All said and done, Alibaba is a lot like a box of chocolates 💝 you just never know what you gonna get. Even with Alibaba’s various assurances and protections for buyers the buyer is essentially playing an educated guessing game of which supplier to source from and then ending the purchase with hope and prayer 🙏🏽 that everything works out in the end, i.e the product shows up in good condition as described without defects for the fully loaded price modeled.
What if there was a streamlined user friendly interface, with advanced conversational AI chat support and advanced features that made business sense for the buyers. And what if this interface cut all the BS, reduced the inquiry ping-pong 🏓 by 50%+ and gave buyers confidence that they couldn’t have made a better supplier selection on price, quality and convenience on their first purchase with them!
I believe to achieve this you need to look at the problem from both the buyer’s and supplier’s perspectives. Suppliers simply don’t want to waste their time providing endless customer service for buyers that aren’t a fit or serious about making a purchase now. And buyers don’t want to play Russian Roulette with suppliers and end up with shocking Bill of Materials (BOM), landed costs (all costs including shipping and tax to land at your warehouse/doorsteps) that leave them with too little of a profit margin. The best suppliers don’t have a demand problem and so finding ways to improve and dare I say automate new buyer selection and onboarding would be an instant hit for them that would reduce costs on customer experience and customer onboarding on their end, while being able to still service new customers. The value created from smarter pre-qualification parameters and new self serve tools for buyers is worth something and I believe that there is a potential monetization play there, i.e suppliers would be willing to pay a fee or premium for pre-qualified buyers. And buyers would potentially be willing to pay a small % on their transaction.
I envision building or integrating an API for shipping, customs and settlements behind the scenes to give extremely accurate quotes and then using customer feedback loops and customer data to perfect it.
The other area I see massive room for improvement is actually creating product detail pages for suppliers that give the buyer more creative control and confidence in selection and design criteria without having to engage in senseless chit chat. Millions of potential combinations of size, colours, and customization permutations might seem likes it’s impossible to achieve this daunting task of creating a more streamlined self-serve buyer experience, but come on we just shot Jeff Bezos 🪐 into space…you really think we can’t solve this? As adoptions hits scale I also see the opportunity to build a creative marketplace of designers and product experts to customize products on the spot for the buyers on the platform.
While there are a plethora of buyer services in China that act as a middle-women/man/person to connect buyers with the right factory and provide inspection and assurance on product quality, in a perfect world this shouldn’t be necessary. Instead, focusing on curating the top 10 suppliers per category and ensuring the catalogue depth, quality and price scope meets as many buyers’ criteria would be far smarter from my perspective. Doing so allows you to build deep relationships and trust with these suppliers that ultimately translate to a better better customer experience and higher customer life time value.
Today a buyer on Alibaba can’t easily select various size/colour combos and quantities for those size and colour combos and then get instant quotes and that makes no sense. I have invested in a number of advanced AI companies that have taken complex and dirty data sets, cleaned them and then standardized them to create value in new ways. I believe the same can be done for the product catalogs of these suppliers.
Finally, imagine how many Fulfilled by Amazon and Third Party sellers depend on Alibaba for running their business. What if this platform integrated into the various accounting software and data and analytic tools used by these entrepreneurs to make smarter business decisions. I could go on forever here, but I hit my recommended article length limit so i’ll stop for now 🥹.
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