Comment by ericabiz | Hacker News Reader

Comment by ericabiz | Hacker News Reader

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The guy who wrote this post literally has no idea what he's talking about.

He makes two completely faulty assumptions:

1) Only Chinese people buy from Alibaba.

I co-own a retail store here in the US and we order a lot of stuff from Aliexpress. We are a Gold VIP on Aliexpress ($4,000 in sales every 90 days to maintain this level; we do about $1.5-2K/month average on there.)

If you read the reviews of products on Aliexpress, you'll see reviews in just about every language--English, French, Russian, etc. In fact, very few of the reviews are from Chinese customers. Ali is most definitely a platform (two different platforms, actually, with Aliexpress and Alibaba) for China to sell to the rest of the world. Not necessarily for China to sell to China.

2) They'd need some sort of huge fulfillment centers a la Amazon.

The genius of the Aliexpress business model is that it works like eBay (Alibaba I'd more likely compare to LinkedIn, as it's even less centralized.) Sellers fulfill orders themselves, post tracking numbers, and live chat/message with buyers to complete the loop. Some sellers take Alipay, which is the Paypal to Aliexpress's eBay. Others take Paypal, wire transfers, etc. There is absolutely no gigantic warehouse needed by Alibaba.

All of these assumptions that he guessed so wrong on could have easily been disproven by ordering a few $2 items off Aliexpress and having them shipped to his house to see how the business model works. It's pretty straightforward!

1. Cross border e-commerce from China is a small portion (~10%) of total e-commerce. So most of the commerce is still internal to China.

2. Who do you think directs the logistics and distribution of products. Alibaba has large stakes in logistics providers and directs the operations (Cainiao). There is no UPS/USPS type provider but a bunch of smaller ones who have to be managed by Alibaba. So while they are ramping up actual ownership of fulfillment centers, they are not like eBay where the seller just creates a shipping label drops it off at the UPS office and it shows up at the buyers door without eBay's involvement.

I run a taobao store - the fulfillment companies received lots of funding from Alibaba to startup in the early days, and obviously there is cooperation for example in integration of tracking systems and fraud prevention, but it's wrong to say they are managed by Alibaba. They are independent delivery companies and people use them for any and all kinds of express deliveries.

Didn't know about Cainiao, thanks!

Ad.2 Accodring to [0], thought, Cainiao is only a middleman that connects sellers with delivery companies and/or warehouses. It's a stretch to say that sellers are managed by Cainiao, I believe

[0] http://www.alizila.com/inside-cainiaos-modern-fulfillment-ce...

1) Only Chinese people buy from Alibaba.

The analysis points out that based on the quoted numbers the transaction volume exceeds Visa global peak traffic by about 3x. If a significant fraction of that volume was originating outside of China it would be a household name in major markets.

2) They'd need some sort of huge fulfillment centers a la Amazon.

The point is that even if Alibaba doesn't directly own or operate fulfillment and logistics they still need to be handled by somebody. If those fulfillment and logistic solutions are productive they are going to be capital intensive and would require more investment capital than Amazon and UPS combined. If they aren't productive they are going to be labor intensive and going to require a multiple of staff of those two companies combined.

Personally I think the analysis is well thought out. Assuming that the numbers aren't completely fabricated from whole cloth the only way that I can reconcile the numbers are:

1) Alibaba's logistic is massively localized and peer to peer. That means that almost all packages are moving a few blocks. Basically, packages of take out from the local shop.

2) Alibaba's transaction volume is mostly digital goods such as virtual flowers, music, etc. Not likely based on what goods are listed.

3) Alibaba is a trading platform. Gambling, currency exchange, commodities, etc. In that case Alibaba serves as a trusted intermediary. At that point transaction volume would be better compared against the NYSE than Visa or Amazon.

Personally I think the third option is most likely which would dramatically limit Alibaba's ability to monetize those transactions and it's valuation.

I would like to add some extra information, to prove that above post is rubbish (I was shopping inside China):

- number of packages

Courier costs ~ 1.5USD, and on top of that, for 11-11 you need small amount to get it for free. As a result, I have around ~30 packages coming to me, from which 5-6 six are from Xiaomi. That's thanks to free delivery, instead of preparing what I want and bundling shopping together I just got multiple packages - and orders.

Number of delivery people:

- for singles days there are horror stories of what's happening in centers. Even thought it's against the law (I think), guys are paid for number of delivered packages, so for workers it's a gold time to work. Last year some of them were working 22 hours a day just to have a huge influx of cash

- Alibaba had tents inside office where people were sleeping. That one just for fun, not related to above :)

Overall, if his work related research is equal in quality to the one he had for this post, that's a very nice sign of not to follow him.

Do countries other than China celebrate singles day?

If the price is good, I would assume customers will jump in and buy, they may even schedule their buy to align with this day, to celebrate this day or not doesn't matter imho.

For many countries, November 11 is 'Armistice Day', 'Remembrance Day', Veteran's Day, or some other day remembering those fallen in war and as such would probably take offense at any attempt to commercialise or cash-in on such a day.

I can't tell whether or not you're being sarcastic but in the US, Veteran's day usually means a major sales holiday not unlike Labor Day, Memorial Day, or Black Friday.

Ok. Interesting to know that. I wasn't being sarcastic. In Australia at least you'll still get a minute silence at 11am with schools and most work places stopping to commemorate it (it's not a public holiday).

> We are a Gold VIP on Aliexpress ($4,000 in sales every 90 days to maintain this level; we do about $1.5-2K/month average on there.)

Even $2k/month does not reach $4K per 90 days.

EDIT: Oops, sorry. I apologize for this silly error. I know it sounds bizarre, but I was converting 90 minutes to 1.5 hours a minute ago, and for some reason converted "90 days" to "1.5 months". :-)

Or maybe I can blame it on an errant gamma ray that tweaked a bit in one of my cores.... :D

Your primary school math teacher is weeping in bathroom...

Hopefully I'm not missing something? 90 days ~= 3 months 2k/month*3 months ~= 6k

6k > 4k

For someone who's handle is "1024core" your integer arithmetic sure is pretty bad...

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