Mar 5, 2019

Alibaba's steady march into the U.S.

Alibaba's Jack Ma on the floor of the NYSE. Photo: Andrew Burton/Getty Images

Alibaba, which seemed contained to China for the first two decades of its existence, is steadily buddying up with U.S. companies and making inroads into the American market.

Driving the news: In just the past 12 months, Alibaba has teamed up with Kroger and Tiffany & Co, among other American companies, and has brought its payment system, Alipay, to thousands of U.S. stores. The latest partnership is with Office Depot — and the millions of small businesses which buy their office supplies there.

The big picture: It's increasingly difficult for small U.S. retailers to go up against giants like Amazon and Walmart, which have the cheapest prices and the fastest delivery options. Amazon's competitors, Alibaba among them, have happily turned this into a business opportunity, selling logistics and manufacturing services to the smaller companies that want to battle the behemoth.

  • Through the new deal, the 10 million small businesses that buy supplies at Office Depot will be able to tap Alibaba to set them up with Asian factories and call on Office Depot to help them with deliveries — all to cut their costs. They'll also be able to sell on Alibaba's site, which has more than 600 million active users.

Office Depot, like many brick and mortar companies in the age of Amazon, is struggling. Its stock price has fallen from around $9.50 in March 2015 to $3.50 today and its sales have shrunk from $15.5 billion in 2007 to $11 billion last year. The partnership with Alibaba is a play to stay relevant with a service offering for its customers as its traditional retailing business falters.

For Alibaba, a partnership with an old American brand is helpful at a time when U.S. tensions with China keep escalating. "We recognize that the brand that Office Depot has matters," John Caplan, head of Alibaba.com's U.S. arm tells Axios.

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