This is the official plan for Alibaba and Amazon to revolutionize the way Argentine companies sell to the world
"The formalities of world trade are changing, and the electronic channel is the future, for me it is not an alternative, it is the great solution for SMEs and for globalization," Jack Ma said in his last presentation in Buenos Aires. founder of Alibaba Group, one of the two giants of e-commerce worldwide.
And this, far from being a trend whose effects will be seen only in the long term, is something palpable at present and that, even, are experiencing companies and entrepreneurs in Argentina.
Honey, prawns, wines, medical instruments, clothing and other products with different levels of added value make up the offer that small and medium companies today are marketing in China, through Alibaba, or in the United States, hand in hand with the other heavyweight of electronic commerce: Amazon.
The strategy of offering products through the Internet and reaching directly to Asian or North American buyers is not the result of isolated efforts.
Behind these success stories, there is a plan that the Argentine Investment and International Trade Agency (AAICI) is facing, which is working with a group of companies in its different programs aimed at using e-commerce sites as a platform for exporting and generate business.
"We are carrying out three initiatives linked to e-commerce: one with Alibaba, another with Amazon and a third, called Buy Argentina, which consists of a portal through which SMEs promote their products to generate contacts with buyers from abroad", explains Juan Pablo Tripodi, president of the Investment Agency, to iProUp.
"All these programs, which are complemented by a plan to open logistics hubs in different ports of the world to facilitate the arrival of products and lower the export costs of small and medium-sized firms, are intended to enhance the integration of Argentina with the world, relying on the great growth of electronic commerce globally ", adds the manager.
Ambitious agreement with Alibaba
According to data provided by the AAICI, currently, 20% of sales transactions in China are made via the Internet.
Of this total, 85% is already done through smartphones. And, the number one player of the Asian giant is Alibaba and its different portals.
To have a notion of the size of the operation, during the "Day of the Bachelor", an informal celebration that takes place every year in the month of November, Alibaba recorded a turnover of U $ S 30,000 million in 24 hours, equivalent to that Argentina exports in a whole semester.
In a first stage, the AAICI, together with Wines of Argentina, signed an agreement with the company founded by Jack Ma to create an official store in Tmall, one of the most popular platforms of the group.
Finca las Moras (Grupo Trapiche), Luigi Bosca, Atamisque and El Porvenir de Cafayate, are some of the wineries that are present today in Alibaba.
"We started focusing on wines, but then we added other fresh products, such as fish, prawns and squid, which ended up being the stars, and we are also incorporating beef, especially premium cuts," says Tripodi.
At this moment, the Agency is implementing a plan for trainers from the company to come to Argentina and train SMEs that were previously pre-selected to be part of the Global Gold Supplier program.
The goal is for each firm to learn how to use the platform and boost their sales.
It is even planned to carry out a business mission in 2019 with some of these same small and medium-sized firms to the city of Hangzhou, where the Alibaba headquarter is located.
In addition, as part of this benefits package, the Agency signed an agreement so that small and medium-sized national companies can obtain the Global Gold Supplier membership at a lower value. It allows your products to appear within the first three pages of the search engine, which account for 90% of sales.
After this agreement, microenterprises have access to a discount of 60%, while for medium-sized companies the reduction is 40%.
In parallel, to facilitate the insertion of SMEs in that market and to have stock of merchandise in China and at a lower cost, the AAICI recently opened its own logistics hub in Shanghai, within a free trade zone.
This allows companies to access with special financing from BICE and with the first 60 to 90 days 100% subsidized, to further reduce costs.
"The objective is to bring the market closer because we know that entering China is not easy, with the agreement with Alibaba we focus on the virtual part, while with the hub we aim to facilitate the entire logistics and storage process," Tripodi said. He affirms that there are already some 25 Argentine companies taking advantage of these advantages.
The government's goal for this year is to have another hub in southern China, and then open a third in the north of the Asian giant, in addition to those already operating in Dubai, Panama and Antwerp.
In parallel, the Investment Agency is starting a third stage of the plan, which includes providing directly to the platform to be responsible for the distribution of the merchandise.
"The e-commerce company is aiming for a business model similar to Amazon's, which includes not only connecting supply with demand but also taking charge of storage and logistics," explains Tripodi.
Under this strategy, the official says that in recent months "we received a delegation from Alibaba that visited fishing plants in Puerto Madryn, refrigerators, poultry plants and even warehouses."
As a result of this relationship, "they already bought the first containers of meat, wines and prawns, and our idea is to be able to include fruit and dairy suppliers soon".
As for expectations, the Agency says that "the long-term goal is to have some 500 national companies offering their products through Alibaba or selling directly to this company."
TO USA. through the big door
The giant Amazon, which accounts for 50% of online sales in the United States and whose area of influence extends to Canada and Mexico, is also part of the Government's strategy.
In this case, the business mode is called Amazon Fulfillment, which consists of selling directly to the company that Jeff Bezos commands.
The group has nine deposits in different parts of the United States, from which it covers all demand.
"It's a simple but very efficient model, which is beginning to allow some SMEs to enter the North American market," explains Tripodi.
The official adds that "the framework agreement we signed with Amazon is for the selected companies to receive virtual training to operate on the platform, and we also provide them with a specialized consultant who provides personalized follow-up."
"The objective is to provide critical mass to this platform, since we have access to a list of more than 5,000 signatures with potential," he stresses.
The Agency aims to promote products with high added value, such as clothing, cosmetics, perfumes, organic products, non-alcoholic beverages, medical equipment, sports supplements and food.
As soon as the initiative was launched, almost 80 companies registered to receive training and 10 were the ones that started exporting. And while the goal is to double the figure before the end of the first quarter, the Agency says it is a program that has no ceiling.
"The interest that was generated was very great, and the more we insist, the more SMEs will be added, it is a matter of constancy," says Tripodi, who stresses that from the time a signature is written down until a sale is made, a learning process.
One of the companies that is already exporting and marketing through Amazon, after the agreement signed by the AAICI, is Miel de Chaco,
"We sent the goods to the warehouse they have in Seattle and they then take care of the distribution, we have had a very good turnover level, in fact, we already made three shipments, and although the commissions are high, the profitability is good, with which it ends up being a good equation ", indicate from the company that supplies Amazon with high quality honey.
Currently, a jar of 250 grams is marketed through that platform at $ 9, that is, almost $ 360 at the official exchange rate. The 500 grams, meanwhile, is offered at $ 12 (about $ 480). These are interesting values considering that in Argentina, the kilo of good quality honey does not exceed $ 200.
Tripodi also points out that "export must be understood as a long-term business, and experience tells us that as soon as a firm registers and begins to be trained until it reaches its first export, it can take six months."
"So it is necessary a quota of effort on the part of the private ones that want to add to this program", adds the official.
In addition to connecting local SMEs with buyers from China and the United States, the Investment Agency launched a directory of firms with export potential, which are already part of a virtual showroom called Buy Argentina.
"We have already registered more than 2,500 companies, of which 1,500 already made sales abroad, while the rest has not yet completed operations but has the conditions to do so," says the president of the Investment Agency.
This portal is not transactional. And from the Agency they assure that the goal is to keep it that way.
"For e-commerce sites are the great players and with whom we already have agreements. With this portal we have another objective: to nuclear a good part of the Argentine offer of products with added value with international demand and that is a useful tool for our Embassies around the world, "says Tripodi.
Then conclude: "2019 was decreed by the Government as the year of export, and all these alliances we have made with these platforms summarize the spirit and vision that we have to achieve that Argentine products with added value reach the consumers of the Exterior".