Updated: 2012-02-03 10:58
By Su Zhou (China Daily European Edition)
Danielle and Jonathan Jenkins work closely with a Chinese jewelry supplier. Provided to China Daily
Website offers small western businesses a chance to purchase Chinese goods in small quantities
Jonathan and Danielle Jenkins, a young American couple from Texas, want to challenge Jack Ma's e-commerce empire. Even though they speak little Mandarin, the Jenkinses started OrderWithMe.com in July in Hangzhou, the cradle of Ma's Alibaba Group.
The group-buying website allows Western small- and mid-sized companies to buy high-quality products in bulk from Chinese factories. In turn, this allows the retailers to save money and earn greater profits.
OrderWithMe competes with AliExpress, a similar platform operated by Alibaba, but the Jenkinses say they can do better.
"Most small businesses cannot order directly from factories in China because they cannot meet the factory minimum quantity. Small businesses are also wary of buying a product from China without seeing it first," Jonathan Jenkins, 29, says.
By grouping orders from multiple small businesses together, OrderWithMe gives retailers the opportunity to meet the minimum order requirements.
In six months, OrderWithMe has already handled $100,000 (76,600 euros) in transactions. Businesses log in to the website, browse products and pre-pay for the items they want. If the order costs more than $250, the items are delivered for free.
"I once met staff members from Alibaba at a tradeshow in Las Vegas. They were very interested in our idea," Jonathan Jenkins says.
Alibaba uses a third-party payment system called Alipay. Buyers pay for the items when ordered, but Alipay places the money on hold until the buyer confirms the order has been received.
OrderWithMe, on the other hand, pays factories directly, eliminating the payment delay.
"Alibaba is a great company, but small businesses need more than just an e-mail contact to a factory."
Jonathan Jenkins is fully aware of the growing competition and has decided to move faster to gain an advantage in the group-buying platform.
After securing $3 million in angel funds from Japan- and China-based Infinity Venture Partners and the US firm SOSventures, the company's website is undergoing a face-lift, which will be revealed Feb 20.
Because of its six-month growth spurt, the company expanded from a 100 square meter office to a 2,000 sq m warehouse. And in three month's time, the two hope to look at business opportunities in Japan.
Beyond growing in size, the company also plans to offer more products as well as more categories.
"We only started from niche, fashion and home decor. But our customers need more," he says.
OrderWithMe is currently researching products ranging from home and garden supplies to electronics.
"Our American buyers work with the pre-qualified factories to select their best products. Our customers will give us feedback on which items they like. Our buyers will then select the top products to be available for deals (posted on our website)," Danielle Jenkins, 24, says. "After the deal runs, we group the small business orders together and place one large order with the factory."
OrderWithMe plans to branch out beyond Chinese brands and offer its own products this year, starting with fashion accessories and home decor. In-house employees will design the products, and production will be outsourced to Chinese manufacturers.
"A lot of Chinese factories don't know how to market their products in a way that captures the attention of Westerners. And their Chinese brands may not make any sense in English or don't sound appealing, such as Yang Hangzhou Leather Company Ltd," Jonathan Jenkins says.
Once the new website is up and running, Jonathan Jenkins says new products will debut online each week.
Different from Chinese foreign trade websites, OrderWithMe is the combination of "foreign trade" and "group buying". It integrates the demands of small businesses all over the world and offers the same prices offered to large retailers.
Its business model is simple. By allowing the retail stores to buy directly from the factories, they can save up to 70 percent versus buying from a US wholesaler.
"We are cutting out so many middlemen and providing the best prices to the small businesses," says Gao Yang, co-founder of OrderWithMe.
Jonathan Jenkins says the company helps Western small businesses connect with the Chinese e-commerce world.
"Everyone knows that it is cheaper to buy directly from China, but most of them are overwhelmed with the number of factory options," he says.
The Jenkinses say their team provides great customer service by simplifying the process of buying overseas goods. OrderWithMe finds products customers are looking for, takes pictures and video, and interacts with customers by Twitter, Facebook, e-mail and the phone.
"We take care of our customers and treat them like family. And with our money-back guarantee and ability for them to talk to our buyers, they learn to trust us," Jonathan Jenkins says.
He conceived the idea of purchasing goods in China and bringing them to the US while touring the Middle Kingdom. He graduated from Abilene Christian University in Texas in 2005 with a political science degree and took a job teaching in Shanghai soon after.
During one of his travels, he noticed how cheap item were in Yiwu, Zhejaing province, which is known for its wholesale small merchandise market.
"In the US, handbags may cost you like $50, but in Yiwu, it only costs you $4," Jonathan Jenkins says. "I thought it could be a successful business if I bought goods from China and sold them in the US."
So he opened two shops in Texas called Zida, which means to be arrogant or conceded.
"We picked the name cause the American women thought it was funny because they liked to buy fashion accessories to feel better and look cooler," Jonathan Jenkins says.
He purchased a variety of items from China. But because he was required to order at least 100 of each item from factories in Yiwu, he was overloaded with inventory and his business ultimately failed.
"I was thinking if I can create a group-buying platform that can allow small businesses to buy together, then we remove the inventory risk," Jonathan Jenkins says. "Small businesses are too busy to sort through thousands of handbags, so our buyers can help them quickly find the best products."
Despite learning from his mistakes, the Jenkinses did have some troubles in the beginning. It took at least four months working with the local government to get the company up and running.
"There are limitations on foreign-funded companies, but I think things are getting better now," Gao says.
But the most trying time might be the next three months as the company looks to expand as well as debut a redesigned website.
Jonathan Jenkins wants the company to grow quickly to squash competitors, but at the same time, doesn't want to lower its standard of quality service.
Many websites in China, such as LightInTheBox and DinoDirect, are jumping into the e-commerce market of foreign trade, but it's not as easy as it looks.
"Foreign trade websites will face the problems of brand recognition, cultural difference as well as the high cost of tax and delivery," says Chen Shousong, an e-commerce analyst at market-research firm Analysys International. "It is not easy for small- and middle-sized businesses to succeed in this sector.
"What's more, the situation of foreign trade is not as promising as before due to the financial crisis," Chen says. "I think the competition of e-commerce will focus on the Chinese market for a long time."