US rides China's e-commerce wave

By Chang Jun & Linda Deng | | Updated: 2017-04-29 00:17

US rides China's e-commerce wave

A San Jose, California-based company is selling to China's vast middle class, the fastest growing in the world, through Alibaba, and doing what Jack Ma, the chairman and founder of the ecommerce giant, wants to duplicate in order to create 1 million jobs in the US over five years, report Chang Jun in San Francisco and Linda Deng in Seattle.

American small- and medium-sized businesses — such as retailers of cosmetics, apparel, maternal and baby products, and health supplements and even farmers — are cashing in on the huge purchasing power of China's vast and fast-growing middle class through e-commerce while creating jobs for Americans.

A prime example is 100% Pure, a San Jose, California-based company with a 15,000-square-foot complex from which Chinese consumers can buy organic cosmetics and other beauty products directly through, e-commerce giant Alibaba's business-to-consumer (B2C) platform.

Ric Kostick, founder and CEO of 100% Pure, said that when he and his two business partners started their business, they were concerned that the hefty service fee they had to pay to brokers and middlemen for packaging and ingredients would impede their company's growth.

Then, in that same year, "I found a packaging store through browsing Alibaba and couldn't wait to share that with my partners," recalled Kostick, "Why wouldn't we just go to this website and contact suppliers directly?"

They became adept at using Alibaba's search mechanism and rating system to find reputable suppliers worldwide without wasting time traveling or vetting vendors. "We can spend our time and money more wisely on developing our products and, ultimately, benefit our customers," said Kostick.

On June 20-21, Alibaba Group Holding Ltd will host a conference in Detroit to teach US businesses what Kostick has learned: How to sell to the company's 443 million customers in China on the world's biggest e-commerce site.

Ma's promise

It's a move by Alibaba chairman and founder Jack Ma to fulfill a promise he made to US President-elect Donald Trump: Get 1 million small- and medium-sized US businesses enrolled on his Alibaba online platforms to sell their products to China's growing middle class and create 1 million jobs in the US.

With 12 retail stores in the US and about 150 employees, 100% Pure is a $20-million wholesale business that sells about 600 different products worldwide.

Kostick said the next target market is China, where the company has a subsidiary in the city of Tianjin, about a one-hour drive from Beijing. He has hired a Chinese general manager to lead a 10-member team to launch sales through Tmall.

"We will ship from Portland (Oregon)," said Kostick, adding that the company initially will only offer top-selling products to Chinese consumers.

To continue to use Tmall's marketing channels and to take advantage of sale opportunities like 11.11 Single's Day shopping, 100% Pure will be competing against local and international competitors, but Kostick said his company will succeed. "We did our solid market research, and noticed that China is surpassing Japan to become the second-largest spender in the cosmetics and beauty products sector," he said.

Stadium Goods, a retailer and marketplace in New York City founded in 2015, specializes in collectible sneakers and also has connected with Alibaba.

It started when a Chinese shopper walked into its Manhattan bricks-and-mortar store and paid $10,000 in cash for about 50 pairs of Nike Air Jordans to resell to basketball enthusiasts in China.

That purchase, together with several similar transactions made by visiting Chinese shoppers, gave co-founders John McPheters and Jed Stiller of Stadium Goods a clue as to just how strong the Chinese market might be.

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