What Is Alibaba, And Can I Use It To Buy 280 Pairs Of Pants At A Time?

pantsIf you’re like most Americans, you’ve never heard of Alibaba or Taobao, even though they’re the biggest e-commerce sites in the world. That was the case for Bloomberg’s Sam Grobart, who was curious about the site because of its upcoming initial public stock offering, which experts think will be the biggest ever. So Grobart did what all business reporters do to learn about an unfamiliar company: he hired a factory in Pakistan to make $2,500 worth of hideous pants.

Let’s back up. Unless you’re buying wholesale, checking up on a fishy-looking Kickstarter campaign, or shopping for extremely specific items, you would have no reason to visit any sites owned by Alibaba. The company has different public-facing parts: there’s Taobao, a regular e-commerce site for ordinary shoppers in China. There’s Aliexpress, a global e-commerce site where you can buy, say, a t-shirt with Mickey Mouse giving the finger (here’s the live link, which I predict will not last long) or a 10-pack of earbuds for $1 each because you tend to lose your headphones. Then there’s the main Alibaba site, designed for people who do business wholesale and who buy their pants a pallet at a time. This site has changed manufacturing and wholesale all over the world forever, making it easier for businesses to connect with each other from opposite sides of the world. (For example, I’ve used Alibaba for a few years now to source truly alarming quantities of craft supplies.)

Buying things through Alibaba is like a strange hybrid of making a “wanted” post on Craigslist, shopping on Amazon, and a slow, unwieldy 3-D printer. One way that you can do business is to post a buying request, where you post what you want and companies bid on the work. Grobart did this in order to have neon-colored pants made in a variety of sizes, eventually choosing a company in Pakistan to do the work. He had 280 pair of pants made at $9 each. That’s only $2,520: he soon learned that getting the pants here is the expensive part, and that almost $2,000. That’s common, especially if you’re ordering a relatively small quantity of goods. Yes, 280 pair of pants is small by the standards of Alibaba. If you have enough to fill a pallet and are willing to wait for a ship to arrive and head to the nearest port with your own truck to pick it up, well, that would be cheaper.

That’s about $18 per pair: not bad, considering the relatively small production run and that this whole process took only a month.

For more first-person accounts of what it is Alibaba does and why people want to invest in it, check out this story on NPR’s Planet Money, which uses backyard chickens, tiny drones, and a city full of motor factories in China to explain why you should care about Alibaba.

I Used Alibaba to Make 280 Pairs of Brightly Colored Pants [Bloomberg Businessweek]
Episode 565: The Story Of Alibaba [NPR]