Alibaba.com’s 2023 Guide to Stay Competitive provides data-backed insights and actionable tips for small businesses to thrive amidst difficult market conditions
Alibaba.com, one of the world’s largest B2B e-commerce marketplaces, a business unit of Alibaba Group, released its 2023 recommendations for small businesses in the United States trying to navigate rapidly changing consumer decision making with its Guide to Stay Competitive and Thrive.
The new report from Alibaba.com provides actionable and easily implementable strategies for small businesses seeking to differentiate themselves, with category-specific recommendations for businesses in essential and non-essential categories.
“As small businesses continue to adapt to the pressures of inflation, supply chain delays and worries of recession, small business owners can feel confident in their growth strategies and know where to turn for resources if they need to pivot due to the changing market environment,” said Stephen Kuo, President of North America at Alibaba.com. “We at Alibaba.com are happy to provide resources, such as support in finding more cost-efficient suppliers and logistics services, to help business owners not only survive volatile market conditions but grow their business and thrive.”
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Go Where the Growth Is: Essential vs. Non-Essential Product Category Growth
Volatile economic conditions in the United States have led to reduced consumer spending with 53% “holding back” on non-essentials¹. Spending on essentials has experienced less of a decrease as shown by grocery spend only dropping 24%.
Alibaba.com internal data indicates essential products have enjoyed a 40.3% rate of active B2B buyer growth, while businesses sourcing non-essential products are seeing just 16.5% active B2B buyer growth. So, across industries, non-essential products are still seeing growth, but it is slowing due to a decrease in demand. With less demand for non-essential products, small businesses may want to revisit their inventory management tactics, prioritizing in-demand essential products to increase profit margins.
Consumer spending habits may shift categorization year to year, but generally essential products include home and pet supplies, baby products, renewable energy products, auto parts, building and construction materials, medical supplies, oil and gas, food and beverages, industry machinery, and electric tools and supplies.² Non-essential products include consumer electronics, apparel, beauty products, toys, sports and entertainment, furniture, jewelry and eyewear, and accessories.
How SMBs Can Implement Product-Specific Strategies to Compete & Win
For business owners seeking to combat lower active buyer growth rates on non-essential products, Alibaba.com recommends focusing on product differentiation – for example, focusing on customization, sourcing quality materials, improving packaging and developing a robust consumer ratings program to build both consumer interest and drive purchasing decisions. Alibaba.com data analysis found that suppliers with customizable products, for example in the consumer electronics category, had 110% more product inquiries than competitors with products that simply met the regular technical standard. Additionally in both the apparel and consumer electronics categories, suppliers with higher customer ratings received more than 200% more inquiries than competitors with low ratings.
“We found our supplier from Alibaba.com, and it was the only supplier that was skilled enough to create a customized mold for our product, without having multiple engineers involved, in less than 30 days,” said Amanat Anand, co-founder of Soapen. “Being able to build our niche product in such an efficient manner helped us gain more customers.”
For essential business owners, Alibaba.com recommends focusing on being a cost leader to maintain competitive advantage. For example, in the auto parts sector, businesses with absolute cost advantage over peers received 11.7% more inquiries about their products – and in the home goods sector, lower average transaction value corresponded with year-over-year growth for businesses. This means businesses selling essential products should seek not only to compete on individual item prices, but make it possible for consumers to purchase multiple items and still feel as though they received a good value for the number of items purchased.
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Tactics for SMBs to Differentiate & Drive Purchases Amidst Volatile Market Conditions
As small businesses continue to vie for consumer spend in uncertain market conditions, Alibaba.com recommends the following tactics:
- Ride the wave of trends by regularly introducing new products and frequently connecting with quality suppliers to explore new product innovations. Offering trend-driven products that meet changing consumer demands can drive success.
- Leverage promotional events like Alibaba.com’s March Expo, which offers more than 2 million newly released products and connects small businesses with manufacturers and suppliers directly. Assessing a variety of manufacturers and selecting the right supplier is a crucial step in achieving cost-effectiveness, which is cited by 53% of Alibaba.com users as a key to success in 2023.
- Utilize efficient sourcing tools to cut down on unnecessary steps in sourcing inventory, supplies and production, ensuring small business owners are able to re-invest profits into their business and continue to scale by making smart sourcing decisions.
- Protect your ability to grow by leveraging logistics supports like trade assurance, which helps create a transparent buyer-seller relationship by assuring a desirable outcome for buyers in the face of supply chain issues.
Alibaba.com is committed to supporting American SMBs as they continue to face increasing challenges in an uncertain economic environment, and regularly provides resources and tools necessary for small businesses to succeed as part of the company’s dedication to building the world’s commerce connection. During March Expo, one of Alibaba.com’s largest annual events, Alibaba.com helps entrepreneurs learn what trends are impacting their businesses, shares insights on sourcing, helps provide order protection through Trade Assurance and offers other resources.
Insights for Alibaba.com’s 2023 Guide to Stay Competitive and Thrive were gathered through a combination of focus groups and surveys of small business owners using the Alibaba.com platform to source products for their business, along with United States market data collected from the company’s B2B e-commerce platform regarding active buyers, inquiries and transaction data.