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.