According to Wikipedia, Ali Baba opens the mouth of a treasure cave using the magical phrase “open sesame” in the story of “Ali Baba and the Forty Thieves”.
In similar ways, our Alibaba has been making incredible progress in opening a multitude of modern treasure caves…
Caves such as…
Single’s Day. Just a few days ago, Alibaba announced >$38 billion of GMV for their Single’s Day shopping festival (note that the RMB has weakened over the past year, which further obscures the incredible growth in riches they continue to find in this Single’s Day cave). In a single 24 hour period, Alibaba sold more merchandise than Black Friday, Cyber Monday, and Prime Day combined despite the sum of these three events spanning multiple days. What they have accomplished is already unparalleled, but still only the future can do it justice because only our future selves can understand how much bigger this (and BABA’s e-commerce ecosystem) can be. China e-commerce is still only 20-25% of retail. But BABA is not a retailer. BABA encompasses an entire economy and the runway remains underestimated.
Source: Alizila / Alibaba
While the media talks about Single’s Day as if it is a recent phenomenon, Alibaba started pushing the event a decade ago. Like Amazon and Apple, Alibaba is one of those businesses that invest behind long-term visions that small people like you and me can only hope to recognize years down the line.
Caves such as…
Cainiao / Global Logistics. As I’ve highlighted before, Cainiao may one day link global supply chains together into a single network that would be traversable globally within 72 hours. If you think Amazon logistics is an overwhelming advantage in the US, consider the power of having a similar (even if slightly slower) network on a global scale. The mouth of this cave is just opening. What treasures will lie within? It will be expensive, but that can be more than paid for with the $10-15 billion IPO Alibaba is currently conducting in Hong Kong. And it would significantly neutralize one of Amazon’s greatest advantages.
For example, JD had a huge logistics advantage over BABA just 3 years ago. JD still does but Cainiao has materially closed the gap. Enough so that JD has become somewhat irrelevant and no longer has thought leadership in any dimension. It is now mostly just a really good retailer.
Caves such as…
Social e-commerce and potentially US e-commerce. As I’ve also discussed before, Alibaba has a chance to break into the US market because they understand the social aspects of commerce far better than Amazon (which has a very utilitarian approach).
What will this look like?
It might look like Taylor Swift headlining a sales festival:
Source: Forbes
It might look like Kim Kardashian live streaming on Alibaba’s platform to sell products directly to consumers:
Source: Alizila /Alibaba
And this is a grand strategy because not only does it attack e-commerce in a way that Amazon does not understand, it is a beautiful ladder strategy. First you use the Chinese consumers (the demand side) to attract global influencers that want to sell to the world’s largest market. Leverage the demand side to aggregate supply. Once the global influencers base has been aggregated, then it can be laddered to aggregate demand outside of China.
Caves such as…
Payments. I’ll let your imagination do the work here. But there is a similar laddering strategy here that is already extending Alipay’s reach to many countries.
Truly open sesame.
Disclosures: I own shares in BABA. I have no intention to trade in the shares within the next 48 hours.