Alibaba will provide the listed SMEs with regular training to strengthen their performance in the global online marketplace
Alibaba.com, a leading platform for global business-to-business (B2B) trade, launched a landmark initiative ‘Project Sprout Up’ to help Bangladesh businesses go online and go global on 18 august 2020, says a press release. According to Alibaba, the roll-out of the project will aid current and potential Alibaba.com users in Bangladesh.
Bangladeshi small and medium enterprises (SMEs) – the hardest hit businesses in the pandemic – will be provided assistance to go online and explore opportunities in the international wholesale market with ease. Alibaba will provide Bangladeshi businesses with concessional onboarding facilities, free business development support, mentoring, and training to become online global suppliers. Bangladeshi e-commerce platform Daraz, the local subsidiary of Alibaba, is facilitating the programme named Sprout Up.
“We welcome the Alibaba move as it invites our small and medium firms to the vast world of online buyers. SMEs need it the most as they lack marketing and know-how, if compared to large traditional exporters,” said Muhammad Abdul Wahed Tomal, general secretary of e-Commerce Association of Bangladesh.
In a press release, Daraz said that Alibaba will provide special discounts to Bangladeshi SMEs for onboarding as supplier members before October.
Alibaba will list professional third-party partners to help newly joined suppliers create an online store from the ground up, develop product listings and conduct keyword advertising. The package would be a complementary service.
Along with support with advanced online marketing tools, Alibaba will provide the listed SMEs with regular training covering buyer behaviour, negotiations, customer support and marketing to strengthen their performance in the global online marketplace.
The SME sector with its low resilience has been hit the hardest during the shutdown and needs market support alongside financial backing, said Dr Monzur Hossain, senior research fellow at the Bangladesh Institute of Development Studies (BIDS).
“Sprout Up is apparently a private commercial initiative so far. Such projects might have a better impact if taken in collaboration with locally effective official entities like the SME Foundation, the Ministry of Commerce and others.”
The researcher estimates that the pandemic has affected around 13 lakh micro, small and medium enterprises (MSMEs) in Bangladesh, leaving them with over Tk90,000 crore in losses during the two-month shutdown alone. Of those, around 55,000 MSMEs employing around 50 lakh people are in manufacturing business.
Small businesses are struggling to recover, while two-thirds of them are unlikely to avail the government announced stimulus loans from the Tk20,000 crore package.
“SMEs as an unstructured sector are not receiving their share from the stimulus loan package mainly because of distribution modalities. Marketing, of course, is a problem for them. If the new initiative can list a large number of SMEs and create a market for them, this would be good news,” said Ali Zaman, president of SME Owners Association.
Opportunities and challenges online
As of last year, e-commerce was contributing to less than two percent of the total retail sales in Bangladesh with an approximate annual turnover of Tk8,000 crore.
This year, the pandemic and the growing popularity of e-commerce might help double the figure and contribution, according to Tomal.
But e-commerce in wholesale or supply is virtually nothing compared to offline turnover, be it in the local market or export.
“The problems that dog local e-commerce growth are also barriers to cross-border online sale. For international trade, the added problems are lack of policy, absence of paperless trade processing, unfavourable transaction mode, and absence of refund and return facilities on top of high logistic costs and an underdeveloped supply chain ecosystem,” Tomal said.
Currently, 40,000 Bangladeshi products, mainly textile, apparel and leather, are up online on Alibaba for global sales, the company said. It is estimated that at least 15,000 Bangladeshi businesses are already online as global suppliers on platforms like Alibaba, TradeKey, and Tedfo Bangladesh.
No industry association, including apparel and leather goods, has data on their members with online presence. Firms make such attempts randomly.
Tomal said, “There are endless opportunities online, and removing the barriers soon is our main task.”
Alibaba.com hosts more than 20 million active buyers from over 190 countries and regions, with an average of 300,000 inquiries made daily for goods ranging from raw materials to finished products in more than 30 major categories. Over 40,000 products from Bangladesh-based businesses are currently listed on the Alibaba.com platform, including items from key local industries such as apparel and textiles as well as leather products such as luggage and bags.
“This year more and more businesses are looking for sustainable business models and we believe that ecommerce can provide that opportunity and enable more SMEs move from recovery to tangible, sustained growth. Bangladesh is already recognized in terms of apparel and textile exports and can further accelerate their businesses through global B2B trade,” said Mr Zhang Kuo, General Manager of Alibaba.com.
“Unlike retailers who have adopted e-commerce more instinctively in the past few years, most B2B businesses are still to understand the potential of this space,” he added.
The project ‘Project Sprout Up’ is part of Alibaba Group’s ongoing Spring Thunder initiative, which launched in April to help small and medium-sized enterprises stay afloat during the coronavirus outbreak. The project rolled out its first phase of support earlier this month in Singapore, Korea, Italy, Russia, Indonesia and Vietnam. Zhang Kuo, general manager of Alibaba.com, said the project is designed to help SMEs hit by ongoing disruptions caused by the novel coronavirus. As offline business operations continue to be impacted, Zhang said it has become essential for B2B companies to consider using e-commerce to gain international customers, increase production and diversify income streams. According to Alibaba.com, Project Sprout Up provides support by shortening onboarding time on the e-commerce platform, creating new business leads and offering more training to B2B companies. Alibaba.com said it would also lower the barriers of entry – for example, through reduced membership fees – so that global SMEs are able to quickly and easily set up shop and start building their e-commerce presence. In Singapore, for instance, SMEs can go through Alibaba.com’s local channel partner to apply for a one-time 70% subsidy on a solution package that offers the platform’s paid annual membership and accompanying services such as set-up support and consultation. “The climate of uncertainty will continue for some time as Covid-19 continues to disrupt economies worldwide. It is important for SMEs to take action now and develop different channels to strengthen their resilience to disruptions in demand,” said Lee Yee Fung, director of ICM and digitization of Enterprise Singapore, the government agency working with Alibaba.com’s local channel partner to fund the solution package. “SMEs should capitalize on the various support initiatives to develop new customers and markets through cross-border trade and e-commerce during this crucial recovery phase.” As part of Project Sprout Up, Alibaba.com is also offering an array of AI-backed digital tools for sellers to unlock global business opportunities. For newly registered users, the platform will allocate more marketing and promotional resources to help increase exposure. Supplier members at all stages of growth can further target and advertise to new customers using Alibaba.com’s smart keyword advertising tool. Furthermore, the platform will use AI algorithms to accurately match suppliers with inquiries to help businesses rapidly expand their customer base. To help merchants stay prepared for shifting trends in global trade, Alibaba.com is working with its local channel partners to provide free seller support across different international markets. These include hands-on assistance to help business owners set up their accounts and product listings; webinars to facilitate knowledge-sharing among the local seller community; as well as expert talks on online buyer behavior, business negotiations and marketing. “In these uncertain times, we hope to help more SMEs move from recovery to tangible, sustained growth by looking at other pockets of demand elsewhere in the world,” said Zhang.