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Alibaba’s former CEO: to succeed in B2B, prioritize individual business people

David Wei, the former CEO of Alibaba and now founder of the private equity fund Vision Knight Capital, shared his insights on B2B commerce, emphasising the needs of individual business people, rather than whole business entities. His thoughts were posted on Chinese tech news website 36Kr.

B2B redefined

“What is ‘B2B’ in English?” Jack Ma once asked Wei.
“Why? Doesn’t that refer to ‘business to business’?”
“Not exactly,” said Ma. “B2B in fact means ‘business people to business people’.”

One day, late in the evening, Wei was hit by an urgent phone call from Ma, who yelled, “David, how could you replace it with ads? Are you crazy? Our company could be ruined!”

What was replaced was a column on Alibaba’s website called “Community for Businesspeople”, a platform where businesspeople share their ideas and information. It was replaced with ads because Wei believed that the column was not valuable in comparison with the potential revenue from advertising.

Ma explained that businesspeople do not have deals done every day, yet they can visit the column every day for sharing. Wei started to realize that, when it comes to the field of B2B, it is not the needs of businesses, but the needs of indidual businesspeople that must be prioritized.

“At the end of the day, you’re interacting not so much with with businesses, but businesspeople,” wrote Wei.

Springtime for B2B has come… get ready!

Wei believes that the prime time for B2B has begun.

Five or six years ago, while working for Alibaba, the majority of clients that Wei encountered were born in the 1970s or 1960s. They had little knowledge of the internet or e-commerce. It was hard educating users back then.

Today, the society of businesspeople is to a large extent made up by people born after 1985. These young entrepreneurs started familiarizing themselves with the internet at a young age, and are now ready to prosper in the online world of B2B.

In his article, David Wei mentioned two strategies for succesful B2B that are worth hilighting: The first is the importance of offering a system of multiple accounts within a B2B service. The second is classifying or grading the customers.

Multiple account systems

The most distinct feature of serving businesses rather than individuals is that actions taken by the former usually involve more than one person. This might seem obvious, but it has implications when it comes to offering B2B services.

In his article, David Wei used the example of Alibaba. Alibaba offers accounts to companies that want to sell their goods on Alibaba’s platforms; the company account is known as the “parent account”, and is charged on a yearly basis. Beneath this yearly company account are “subsidiary accounts”, or “child accounts” which are assigned to individual salespeople in the client company.

The parent account, used by the boss, receives reports of the employees’ use of its subsidiary accounts. In this case, the system encourages the sales staff to use their accounts more often, thus benefiting both the service provider – whose users are more likely to continue using the accounts – and the boss, who is given a simple system with which to monitor his or her employees’ work.

In other words, a system of multiple accounts is a simple but crucial tool of accountability, applicable to many different structures or styles of B2B business.

Wei Zhe, former Alibaba CEO. From Baidu Images

Classifying Customers

The second crucial factor for B2B ecommerce, according to David Wei, is making sure that the customers are classified into different grades. However, the criteria for grading should not not solely be based on money – instead of letting customers pay for more rewards in your company system, let them contribute by doing what you want to do yourself: for example, by attracting more customers for you.

Though the springtime for B2B has come, Wei said that it is not necessarily a good thing for all: those who want to succeed must find a way to stand out from the crowd.

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