Alibaba shakes up online shopping market for Canadian producers

A massive surge in Canadian lobster sales is just one more sign China-based e-commerce giant, Alibaba, is shaking up the online shopping world.

Alibaba founder, Jack Ma, told Stephen Harper during his recent trip to China that customers bought 20,000 Canadian lobsters through his online empire last year. Ma — who appears set on world e-commerce domination  — predicted better results to come.

• 'Singles Day' nets Alibaba sales bonanza above $9 billion in 1 day
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And he got them. One company alone estimates it sold more than 90,000 Nova Scotia lobster this past Tuesday on Alibaba’s colossal upscale shopping mall site, Tmall. Tuesday was China’s deep annual discount day.

“I am thrilled,” says Marc Surette about the remarkable volume.

“As we watch the internet grow and we watch online shopping grow, there really is no imaginable limit to what this could mean,“ adds Surette, who works for ZF Max International, a Canadian-based operation with a parent company in China. ZF Max employs up to 60 Nova Scotians and runs a lobster plant near Halifax.

There really is no imaginable limit to what this could mean- Marc Surette, ZF Max International Inc.

The Chinese weren’t just clicking on Canadian lobster last Tuesday. On that day, sales through Alibaba’s websites exceeded $9.3 billion (US).

Alibaba’s people power

Alibaba is China’s largest online commerce company where consumers connect with products and companies connect with suppliers. When you tally up the sales, it’s already bigger than Amazon and eBay combined.  And it owes much of its success to China’s ballooning middle class, where a growing number of people can spend more on things they need and on stuff they truly don’t need.

“There a huge amount of demand from China,” Ma told the Canadian prime minister and fellow audience members in Hangzhou, China, where Alibaba is headquartered. He added that 120 million people are shopping on his sites every day.

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Ma’s North American invasion is already in full flight. The company has just sold its first shares in New York, raising a cool $25 billion.

“We can help Canadian small businesses to sell their products to China,” he informed Harper at their meeting. Canadian companies are already cropping up on Alibaba, peddling everything from maple syrup to clothing.

Roots Canada sells sweats on the site. The popular clothing company's foray on Alibaba is “a preliminary test to help determine whether we decide to develop this further,” states spokesman Robert Sarner.

The fraudsters are in on it, too

At first glance, Canada Goose also appears in on the game. But the company says Alibaba is not an authorized retailer. That means if you buy through the site, the “Canada Goose” jacket that arrives by mail will probably be a fake.

Ma has vowed to crack down on vendors peddling knock-offs.

“It’s buyer beware. It is buying blind,” warns Roger Gingerich. The fashion broker is not a fan of the e-commerce behemoth. Using Alibaba, companies with big orders can directly solicit Chinese manufacturers  — bypassing the extra cost of a middleman like him.

“The only reason Alibaba is in business is because everyone wants it cheaper. Every year, we’ve got to be cheaper,” laments Gingerich. But he says there’s sometimes a higher price to pay because not all online dealers can be trusted.

The broker says he knows Canadian companies who have hired manufacturers through Alibaba and got burned: “I know of a million-dollar deal that went south. It was for headgear.”

He explains that the order “came in entirely wrong. It was paid for upfront. There was no getting the money back. And a number of people were fired over it, including the CEO.”

Gingerich gives another example where a company received a large shipment of  garments that were sized extra small instead of extra large.  

He likens the site to a dating service where, when you finally see the goods, you’re sometimes disappointed.

Trust the biggest hurdle

Marketing expert Manish Kacker says ensuring all players are content is a challenge faced by every e-commerce site. He points out that Alibaba has some safeguards in place, such as a forum to provide feedback.

The McMaster University professor adds that Jack Ma’s plan for massive growth may hinge on the trust factor: “To a large extent, going forward, their success will depend on how well they can set up safeguards and ensure that buyers and sellers who use their platform are satisfied.”

Lobster supplier ZF Max is certainly satisfied. Surette says the Maritime lobster industry has struggled in recent years. But, with Alibaba, he says “it’s allowing us to reach the Chinese market in a new way and for Atlantic Canadian lobsters that’s reaching close to 1.4 billion people.”