AliExpress leverages the long tail

Cheap stuff is marvellous! I know it’s shallow but there’s a sense of achievement and pride in buying something dirt cheap, especially when you’ve seen the same goods on sale for a much higher price. The retail website, AliExpress, taps into this bargain hunting drive in consumers like me. It successfully leverages the long-tail of demand to connect chinese manufacturers with consumers across 240 countries.

Long tail distribution (From INN347 lecture notes)

What is interesting about AliExpress is the way the ‘head’ of the product distribution has been through the parent company, Alibaba, an e-commerce site connecting small manufacturing businesses in China with wholesale buyers around the world. Alibaba has borne the costs of the initial setup required for these businesses to attract and finalise sales. It offers them business management software, access to internet infrastructure and export related services to the point where there are now 7000 companies supplying goods through the online shopfront. AliExpress has built on the driving force of the long tail, supplying the same products (just at a lesser volume for individual sales) to a large consumer base through the already established sales channel.

Of course the ‘tail’ of AliExpress’s product distribution is quite fat compared to an online retailer like Etsy: more like a scared cat’s tail than the skinny mouse tail (niche small volume products) of Etsy.

There are a huge number of products available on AliExpress and it can be a little overwhelming. However it provides an effective search engine and also data algorithmic data management to help connect the buyer with goods that may meet their need.

For example, when I’m looking for a leather mobile phone case for my iphone, I’m prompted with other similar products from the same seller as well as related products from other sellers.

To be honest I was a little wary when first purchasing from AliExpress. However, the site uses the architecture of participation through user reviews, to show feedback from individual purchasers and overall ratings from past orders. For me, the key feature was the payment escrow: all payments are held in escrow and only released to the supplier when delivery of goods intact is confirmed by the purchaser. The supplier is assured

they will receive their funds and the purchaser has leverage if the goods and service supplied are not up to the standard expected. In fact, this process is automated to to this on the scale required for this type of online store. The self-service interface for this automated process gives the buyer clear signals on where they are in the process and what steps they can take next, as shown in the screenshot on right.

For buyers we have direct access to the manufacturers; while we’re not paying wholesale prices on small orders, we are still paying a fraction of the retail price for the same products in a bricks and mortar store.

The online nature of the shop means some manufacturers are able to produce to actual demand with goods being made to fulfil confirmed orders; it also means that products can be tailored to individual consumer demand, products like customised name necklaces. Certainly this online sales channel gives the benefits of not maintaining stock in individual stores as well as allowing the operation to scale to a huge number of users, nearly 80 million, who may be purchasing quite small amounts. Something that really stands out about this shopfront is the way it allows smaller business to connect on such a scale with consumers who speak different languages and are geographically distant.

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15 thoughts on “AliExpress leverages the long tail

  1. What an interesting service! So you have used it quite a bit and feel comfortable with it? I am always a bit anxious when it comes to buy things of the internet, especially from web sites and manufacturers I havent heard of before, but I got to say, this seems pretty safe, with the way of payment and all. Isnt pretty similar to how eBay does it?

    • So far I’m finding it really handy (and cheap!) for things like fairy lights for the garden, although I’ve only made a couple of purchases so far. I haven’t yet had problems with goods delivered so I haven’t experienced it, but the payment is a little different to ebay. With ebay, using paypal, the payment goes to the seller on payment of the invoice which will usually be before receipt of the goods. If there is a dispute, that is the goods don’t meet the buyers expectations, then the dispute process starts with a case raised with the paypal resolution centre. With aliexpress, the seller doesn’t get payment until the buyer confirms the goods have been received and meet expectations. To me it seems like greater protection than ebay.

      • I think you are right. At least in these days, when a lot of people still are skeptical when it comes to online shopping. For sites like these (AirExpress and LightInTheBox) I would say one important issue to confront is trust. Would you agree?

  2. It is very interesting to see how AliExpress managed to combine addressing customers both in the ‘head’ and ‘tail’ parts of the demand curve. As you mentioned, their self-service and escrow model also help in raising user confidence in the service. I think it is very important to combine long tail business models with algorithmic search functionality—possibly based on user reviews and feedback—otherwise it would be next to impossible to find a particular ‘niche’ item you’re looking for among the thousands (or millions) or similar products in the ‘tail’.

    The biggest problem though I see with this online shopping model is that on the Internet, as opposed to purchasing goods in a real shop, you cannot ‘taste, touch and smell’ the stuff you’re going to buy. But perhaps that will too change with the coming of the new touch-and-small enabled Web in a few years time… 🙂

  3. The website seems to have a large number of products. I had a look at the electronic goods and most of them seem to be almost identical copy of well know brand products. People who don’t have a lot of knowledge about electronics would buy it thinking that it was the product they were looking for but cheaper in price. I would be interested to know if they supply the item and you are not satisfied if you are able to return it.

    • Yes, there’s been quite a lot of criticism of the site for selling suspiciously cheap electronic goods that turn out to be copies of the authentic items. Much of this criticism has been countered with suggestions that buyers should know that if something is too cheap buyers should be aware that it can’t possibly authentic. To me, it’s the online equivalent of shopping at the markets. As you’ve raised the success of this website is not without quite a bit of controversy. What about you, would you risk buying on the site?

  4. The long tail seems to be “fatter” than the head which is amazing. From most of the top selling Android phones I do not even know the company!

  5. Great example to present the pattern. AliExperss is using a method called ” Remove Intermediation between the suppliers and the customers ” which would make the products a lot cheaper than buying them from the distributor. moreover, AliExpress assures their customers by holding the money until they receive the products as described, to me this much better than eBay which you must pay up-front for your products.

  6. Hey there Amanda nice post! i had never heard of AliExpress before reading this and frankly i like getting a bargain so i will have to check it out. Seeing as though you have used this service substantially more than I have i will ask you a question. AliExpress provide you with cheap goods which is all well and good but, if there are disputes how well are the really handled? have you had problems where the service simply was not how it was described? Customer service really is a bit part of these online “shelf space” providers and i think it makes or breaks the entire thing.

    • To be honest I haven’t hit a problem yet (knock on wood!) but I’ve only ordered three times so far. I’ve put my faith in the ratings system and the escrow payments feature. I understand where you’re coming from, I always feel much better about an online supplier when I’ve seen how they handle things that go wrong so unfortunately I can’t give you too much comfort based on my limited experience. As @brendonwong mentioned above there’s also the question of authenticity – I just buy the cheap stuff I’d otherwise buy at markets or cheap shops (my ipad still comes from the apple store!) so I haven’t had any issues with the quality of the products yet. All up I reckon it’s worth a go if you find something good!

  7. AliExpress is cool! even i have never heard AliExpress before, but i was familiar its brother, called “TaoBao” which is the sub-site of Alibaba and only focus on Chinese market. “TaoBao” is really much more famous than than ebay in China. it provide a nice strategy for user find their destination. i think, payment escrow is the most fantastic service. it can effective protect customers’ right. furthermore, the payment escrow service also wild used in other web payment process in China. when i first buy something from ebay in Australia, i was worried to directly input my card information to pay. LOL
    I think, the payment escrow service can be considered that it build a self-service mechanism to protect both customers and sellers and decrease the risk of e-commerce platform and cost.
    wish you have good experience in AliExpress !

  8. prefect post ,with good example and personal experience, meanwhile well word and pictures processing to make this post looks professional, thanks i also choose Ali’s application as a example , because it is totally a long-tail oriented company.

  9. Hi Amanda,
    Thanks for sharing this interesting retail website and explaining many details about it. After reading your post, it reminds me something. I heard Alibaba.com Corporation few years ago. This corporation is very famous and successful in China even around the world. Jack Ma who is Chinese entrepreneur established Alibaba.com Corporation in 1999 which focuses on business to business online trade market. it has developed and expanded its business field to business to customer as well. There is no doubt that AliExpress is a prefect example to demonstrate this week pattern- the long tail. I am the kind of person who loves to purchase something from online websites. XD~ But of course, sometimes I still worry about privacy and safety problems. Anyway, maybe I’ll try to buy something from AliExpress because it seems to be a really good platform to get better price with stuff. Nice post~! 🙂

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