Two big factors could shake up the electronics supply chain in short time: Alibaba's much-anticipated IPO and Amazon's bet on B2B distribution.
Widespread analyst and news reports anticipate a massive business-to-consumer e-commerce faceoff between the Chinese powerhouse Alibaba and the US giant Amazon. However, some factors just below the surface at both companies could touch the electronics supply chain directly and indirectly.
First, there's Alibaba's IPO filing in the US a few weeks ago. Bloomberg reports that the IPO is expected this summer with a float of about $20 billion. This would leave the company flush with cash, which it could use to boost its cloud services and mobile payment platforms. There's already speculation that it could strengthen its relationship with Haier Group and expand its transportation and logistics capabilities via its new 11 Main e-commerce site.
As Marc Herman told us in a January EBN post, Alibaba and Haier are reportedly trying to deliver more goods to midsized cities in inland China. There may also be a play toward the smartphone market.
In a February EBN Q&A, Wade McDaniel, vice president of solutions architecture at Avnet Velocity, wrote that not much is known about the 11Main.com business model, except that it will be run independently by Alibaba's US subsidiaries Vendio and Auctiva. However, “Alibaba is expected to leverage its existing infrastructure and will be investing heavily ($16 billion) in logistics and support in the next six years,” he wrote. “Most of this is to support domestic customers in China, but I can't help but think that some of that might make its way into other markets where Alibaba is investing — say the US.”
The IPO could give Alibaba enough cash to invest in world-class logistics centers and state-of-the-art warehouse and transportation management systems, McDaniel wrote.
Interestingly, the company also has dedicated talent to engineering and data analysis, areas that could be of particular interest in building cloud, mobile money, logistics, and warehouse management services. The Wall Street Journal, citing IPO filing documents, reported that Alibaba had 20,884 employees as of Dec. 31, including 7,306 working in engineering and data analysis.
Next, there's AmazonSupply, a B2B wholesale and distribution market bet that got some updated coverage about the same time Alibaba's IPO filing was making headlines. The wholesale and distribution hub was started in 2005. EFT’s Vivek Sood reported last month that it carries 2.2 million products, including office equipment, industrial components, and materials.
Sood speculated that the age of B2B exchanges may finally be coming to fruition:
Already, wholesalers are whispering about the threats from AmazonSupply; although many specialty wholesalers and distributors are somewhat confident that their turf is safe from the giant's claws due to their highly segmented market.
Nonetheless, nobody knows what will happen in future. AmazonSupply, Alibaba, or B2B exchanges, could become so powerful that they will suck small players into their enormous vacuum of suppliers. The process can even accelerate if trust keeping mechanisms are built into B2B exchanges.
So while the competition heats up for Alibaba and Amazon, it will be interesting to see what the long-term effects will be on the way goods are bought and sold in the high-tech space. What do you think the bullwhip effect will be?