Everyone’s Competition Rising Alibaba is striving to deliver products anywhere in the world within 72 hours, for about 3 bucks.

Using a combination of highly automated robotics in their distribution facilities to efficiencies being built-in at all points of their distribution system, the company is trying to take retail and sourcing to the next level. Imagine being able to source a single product, from anywhere in the world (primarily Asia) and have it hit your house within 72 hours.

It will allow consumers to source inexpensive products very quickly and will intensify competition in the process. Alibaba has worked out ways of clearing Chinese customs paperwork in a matter of minutes (for processes that historically could have taken as much as a month or more). By streamlining the flow of data, clearance, processing and converting funds, and logistics/delivery supply chain operations, it has figured out how to trim hours off of processes across the value chain and has reduced order-to-delivery times to just 72 hours. Rather than build out its own fleet, it uses a combination of contract carrier partners to drive its global supply chain (including large parcel firms like UPS, FedEx, DHL and others). It also has dedicated charters that it uses to ensure that it has access to critical air cargo space.

Counterfeit and Poor Quality:  Alibaba and other companies that source products from Asia face a host of risks from counterfeit items to just poor-quality control on many items. And that could continue to push consumers to companies like Amazon where the reputation for quality control is better. But, even Amazon and strong US domestic aggregators have some of the same issues according to popular public opinion. Even if these concerns are overblown (and these mega-aggregators are working on alleviating those risks), there is a public relations challenge that they must get over.

Wholesalers are going to start facing some more intense pressure as these companies start to offer both consumer and business facing solutions. Not only will they have to find a way to compete on price, but Alibaba is now starting to ramp up the competition on delivery times by making the 72- hour pledge for many products.

Anti-trust: The Biden Administration has started to take on “big-tech” because they have started to build what they believe are anti-trust levels of competition in the marketplace. Alibaba has started to even intensify some of that competition and through billions of dollars of investments, is starting to build a sourcing solution that few companies will be able to match.

Overcoming the sourcing risk:  If Alibaba and others can get over the sourcing risk that comes via uncontrolled product quality and control, it could usher in the next wave of competition that companies really need to be keeping an eye on.

Courtesy Keith Prather ARMADA Corporate Intelligence.