"Beam me up, Scotty!" With this famous line, the Star Trek television series ushered in a new era of teleportation in the realm of science fiction. Some time in the distant future, hi-tech transporters on board spaceship USS Enterprise can convert Captain Kirk and Commander Spock into energy waves and "beam" the pair to locations on alien planets with exotic names. Alas, humankind is still waiting for this piece of groundbreaking technology that can help us cover vast distances in split seconds and render actual traveling unnecessary.
When it comes to traveling, businesses all over the world used to let their procurement staff go to extraordinary lengths and travel extensively to locate trustworthy suppliers. Japanese conglomerates will even treat vendors they can rely on as long-term business partners. Many of them still recruit suppliers through references, travel to visit their warehouses and factories, compare their samples and quotations, try them out with small orders, inspect their goods before shipment, and pay them by issuing letters-of-credit through banks. It is a relationship born of time and patience.
However, times have changed and globalization has radically redefined the rules of the game. With advancements in technology, businesses have increasingly taken up online procurement to adapt to rapid changes in business environment. This is fast becoming the new norm, which in turn invites the question: how to instill trust when parties to online transactions have little information about one another, and when buyers probably will never meet their vendors?
Enters Alibaba Group and its big data solution that helps build up credit profiles for parties to online transactions. This leading e-commerce group operates a dozen Internet-based businesses, including B2B as well as B2C online marketplaces, a shopping search engine, data-centric cloud computing services as well as a third party online payment platform that serves 451 million active registered users in China and processes over 153 million daily transactions (by comparison, Visa and MasterCard process an average of 260 million and 180 million daily transactions respectively). The online activities of the group generate huge data sets, including information on transaction history, verification of customer status and identity, ratings of customers in their respective trades and industries, revenue growth, user ratings and feedbacks, and usage levels as well as frequency of repeat buyers. By tapping these data sets, Alibaba group overturned the traditional approach adopted by banks and built its own credit scoring model for understanding customer characteristics and behavior.
The merging of these in-house data sets with third-party data resources has enabled the group to keep a finger on the pulse of each and every one of its private and corporate customers - their shopping history and habits, the size of their utility bills, their work and home addresses, contact information of their friends and relatives, and even properties owned by them and their families. It also helped lay the foundations for Alibaba.com to start offering financial products as well as services to grassroot investors and small businesses. These impressive achievements demonstrate the efficacy of its big data model, which have been accomplished by leveraging the group's cloud computing services for processing huge amount of data efficiently and at low costs. Alibaba.com put the same model to use when it launched the Trade Assurance program in 2014.
Trade Assurance is a free service that provides a set of protections to buyers and guarantees suppliers will honor key terms of their contracts. It offers buyers three-fold protection for compliance with product quality and specifications, on-time shipment as well as refundable payment for covered amounts. When buyers place orders with Chinese Gold Suppliers that come with Trade Assurance icons, they need to look for Trade Assurance amounts listed under the entries for their prospective vendors. These are the maximum amounts covered by the protection scheme, and are assigned to qualified sellers in accordance with their Alibaba credit ratings achieved under the big data model. Buyers also have to register their transactions through the Alibaba.com online order process, followed by payments to specified bank accounts by e-checking, credits cards or telegraphic bank transfers.
When it comes to product quality protection, there a choice between pre-shipment or post-delivery coverage. With pre-shipment coverage, buyers have to check their goods before shipment either by themselves or arrange a third-party inspection. With post-delivery coverage, they need to inspect their products within 180 days of shipment and within 15 days of their products clearing customs. They are entitled to refunds from Alibaba.com if the quality or the quantities of products they ordered do not comply with the terms and the specifications set out in their contracts, or if their suppliers fail to ship their goods by the dates set out in their contracts.
In his best seller The Earth Is Flat, the Pulitzer Prize-winning journalist and author Thomas Friedman describes how globalization and technology have managed to level the playing field, break down entry barriers, drive down costs, speed up workflow and business processes as well as intensify competition among companies, industries and countries. It is a trend that encourages out sourcing and online transactions. In this environment, Alibaba.com and its big data model is well placed to enable trade by helping business owners manage credit risks and open doors to reliable vendors. That is, until future teleportation technology can put us face to face with suppliers at meetings and trade fairs held on celestial bodies light years away from our planet Earth.