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Why Home Depot Is a Great Fit for Alibaba

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Alibaba creating a special business-focused marketplace

Alibaba (BABA) has teamed up with Home Depot (HD) on a program to help American small businesses sell more by tapping into global market opportunities and procure supplies from overseas suppliers. On its global digital platform, Alibaba hosts more than 150,000 suppliers to which it wants to give small US businesses access. Meanwhile, Home Depot works with more than 10 million small US businesses that could benefit from Alibaba’s expansive global supplier network.

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How Alibaba could benefit from the deal

The tie-up with Home Depot could benefit Alibaba in many ways. Home Depot’s millions of small businesses could mean more sales for Alibaba suppliers, in turn earning Alibaba more commission income. Also, Alibaba’s third-party delivery service could see increased demand. Alibaba generated $316 million in international wholesale revenue in fiscal 2018’s third quarter.

Alibaba’s Home Depot deal presents a new challenge for Amazon (AMZN), eBay (EBAY), and Walmart (WMT), whose revenue grew 20%, 6.0%, and 1.9% YoY (year-over-year), respectively, in their latest quarters. Alibaba’s revenue rose 41% YoY in its latest quarter.

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