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Alibaba Set Up In OZ, Australia Post Cuts Deal Distributors Set to Be Hit

Australia Post who has not denied, that they are currently cutting deals to work directly with Amazon, has announced a tie up with China’s biggest online operator Alibaba, the move could be a blow to Australian distributors supplying house brand products to Australian retailers.

Australia Post is set to gain access to Alibaba’s Southeast Asian online sales platform Lazada.

Lazada will deliver Australia direct access to more than 560 million consumers in six countries in the region.

Alibaba is one of China’s biggest tech companies, worth $205.4 billion and a major competitor to Amazon who are tipped to launch into the Australian market in September 2017.

At the weekend the Chinese Company set up a local headquarters in Melbourne, which they claim will generate employment and competition.

Russell Zimmerman, executive director of the Australian Retailers Association, said the Chinese retailer would generate employment and competition in Australia, but he said growing pressures were reducing Australian businesses’ ability to compete, including the high cost of rent, penalty rates, and loopholes in GST rules for online purchases from overseas.

Signing a deal with Alibaba founder Jack Ma and Australia Post chairman John Stanhope, Australia Post said that the arrival of Alibaba, allows Australia Post to extend its online “shopfront” for Australian companies from Alibaba’s Chinese platforms to Lazada’s platforms in Asia. The system also works in reverse in that it allows Asian suppliers to sell directly into Australia with Australia Post delivering the goods.

Australia Post has worked with Alibaba for the past three years to sponsor online “shopfronts” for small Australian companies looking to sell into China. Australia Post will announce the deal today, which will provide the first Australian market places on the Lazada platforms.

Bob Black, Australia Post’s executive general manager: parcels, who is also chief executive of StarTrack, told the Australian newspaper the Southeast Asian expansion built on Australia Post’s current strong relationship with Alibaba.

“We are committed to supporting local Australian businesses and delivering eCommerce solutions that make it easier to grow their businesses, whether that be across Australia or overseas,” he said.

“International expansion can be daunting for many businesses, particularly small- and medium-sized enterprises,” he said.

Zimmerman, told the ABC “Local retailers in Australia are doing it tough,” he said.

“They are doing it tough because things like penalty rates, that’s always going to be an issue, whilst we’re paying those penalty rates and whilst retailers have got to compete with overseas retailers sending product in directly.”

The deal opens the door for Australian consumers to shop Alibaba consumer sites. Products sold by manufacturers who often produce branded products for various Companies are often up to 85% cheaper than a branded product sold via a retailer in Australia.

A classic example is the JBL Pulse 2 Bluetooth speaker, this speaker sell in Australia for $299. An almost identical Bluetooth speaker can be purchased via an Alibaba site for $29. The factory making the speakers is selling them bulk for up to US$9.95 for a minimum order of 10.

Pricing In Australia

Similar Product selling on Alibaba Sites for $29

In 2015’s Single Day sales, Alibaba’s main retail site, Tianmao, sold more than $7 billion of merchandise in the first 90 minutes alone.

The group’s billionaire founder Jack Ma, who spent time in Australia as a young man, said he hoped the e-commerce giant would help Australian and New Zealand businesses “share their world-famous products with billions of customers around the world”.

There are more than 1,300 Australian and 400 New Zealand brands on Alibaba’s Tmall and Tmall Global, the company said in a statement.

Alibaba has already formed partnerships with Woolworths, Australia and in May 2014 signed a deal with Australia Post to connect Australian consumers with Chinese manufacturers while at the same time boosting Chinese consumption of Australian products.

It is the company’s first expansion in the region as it seeks to tap growing global demand for products from the two countries, but Mr Zimmerman said the move was no surprise.

Late last week Australian PM Malcolm Turnbull and Chinese billionaire Jack Ma met to discuss the possibility of his Alibaba group collaborating with the Australian Government to help create a regional free-trade “e-hub”.

Ma, who has been in Australia to open his Alibaba group’s new A/NZ HQ in Melbourne at the weekend, met with Turnbull on Friday and later told media he had a “wonderful discussion” with the PM.

They discussed a trade zone that would allow for freer online commerce, with less border bureaucracy to deal with, he said.

“Most of the free trade zones in the past 20 years are designed for big companies,” Ma said. “If Australia, New Zealand and other countries can create a free trade zone in the form of an e-hub for small businesses, they can work like the big companies – with 24-hours clearance, better tariffs and quicker [border] inspections. That could help a lot of small businesses.”

His message differs markedly from the views of Trump, who has pulled America out of plans for the TPP, a planned trans-Pacific free-trade organisation, and made it plain he aims to increase tariffs and other measures on foreign goods entering the USA – especially from China.

Malcolm Turnbull did not attend Saturday’s Alibaba HQ opening in Melbourne, though he was represented by federal Innovation Minister – and close associate – Arthur Sinodinos.

Victorian Premier Daniel Andrews did attend and Ma was able to confirm that the Andrews Government had given “generous” incentives to Alibaba to set up in Melbourne. He declined to reveal the exact nature of the concessions or the size of the investment.

He did say that Alibaba didn’t actually need the funds, but added that the Chinese company would use the moola to help Australian small businesses grow and expand offshore – especially with exports to China.

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