Baoku Online connected directly to China Southern Airlines' B2G system, reflecting the Alibaba business model

BEIJING, Nov. 20, 2017 /PRNewswire/ -- Tmall, the B2C e-commerce platform owned and operated by China's e-commerce giant Alibaba Group (BABA.N), continued to impress capital markets with a gross merchandise volume (GMV) of 168.2 billion yuan (approx. US$25.4 billion) on this year's Singles' Day, China's massive one day shopping day. The shopping day, an event that has been taking place on November 11 every year since 2009, ignited a "who can outdo the other" promotions war among Chinese e-commerce firms. The impressive results also attracted widespread attention to Alibaba's increased revenue in the Chinese retail market. Jack Ma founded Alibaba with the aim of connecting Chinese manufacturers directly to their customers and making the act of engaging in a business transaction as easy as possible. Baoku Online Inc. ("Baoku Online"), a low-profile business travel Software as a Service (SaaS) platform engaged in the business-to-business (B2B) sector, is taking the next step toward realizing the same in the corporate travel sector.

Baoku Online became the first business travel SaaS platform to seamlessly connect to China Southern Airlines' business-to-group (B2G) direct sales system for key customers at the recent China Southern Airlines Business Travel Forum and the B2G System Launch Event. In 2017, Baoku Online handled over 500,000 business trips for corporate employees.

Alibaba's business model applied in the vertical spectrum

A company's success is dependent on good timing, the right location and the right people. When the internet emerged as in industry in China, the country's manufacturing sector was facing challenges in terms of exports and  facing an urgent need to improve sales by boosting domestic demand. Those companies, who had a deep understanding of the need, were able to transform themselves rapidly into the industry's leaders by connecting suppliers directly with buyers.

Baoku Online CEO Wang Xuesong believes the same opportunity is presenting itself to business travel B2B firms. "We hope to address this need in a timely fashion by connecting business travel service providers with corporate users directly," he said. 

To start with, Chinese companies are expanding and going global at a faster pace, in turn, driving the growth of the country's business travel market. According to the Global Business Travel Association, China's business travel market has reached 2 trillion yuan (approx. US$302 billion) and surpassed the USA as the world's largest.

Secondly, suppliers, meaning the airlines and hotel groups, and travel agents, the middlemen or intermediaries in the mix, maintain a love-hate relationship at every step in the sales chain. On one hand, the suppliers rely on the agents to sell products, on the other hand, they urgently need to fully understand the buyer's expectations, with, as a result, consumer behavior as data becoming increasingly important. However, the efforts by suppliers to meet customer expectations cannot be felt by the buyers due to the existence of the intermediary sales channels, including online travel agencies. In addition, the users of business travel products and services fail to keep complete or clear records of their business travel consumption.

Lastly, such modernized management technologies as the "cloud" and enterprises management software are still in very early stages of development in China.

The Baoku Online CEO explained that the firm faced many difficulties during the startup phase, just as Alibaba once did. The low level of digitalization within the Industry when compared with others is one of the major hurdles. As TravelSky's eTerm is the booking system most adopted by airlines, Baoku Online developed a direct sales system for Air China's small and medium-sized enterprise clients in 2011 and then followed up with similar systems for Shenzhen Airlines, Hainan Airlines and Shandong Airlines, among others, in an move to create a barrier-free sales environment. In terms of accommodations, the company established partnerships with several large hotel groups, including 7 Days Group, Jinjiang International, Plateno Hotels Group and Vienna Hotels Group. Furthermore, traditional ticket agents are enhancing their services as a methodology for obtaining more customer data. Today, thousands of companies, including China's behemoths, among them, Sohu, AsiaInfo and China Construction Bank, have been engaging in data exchanges with suppliers through Baoku Online and improving management efficiency across the procurement supply chain.

How to enhance B2B enterprise services in the future

In the opinion of most executives, B2B SaaS is a controversial solution as the upstream is closed and the downstream is scattered. A lot of work on the infrastructure needs to be done and the way it is set up means that it takes a long time to get paid. Overall, the solution is not considered an agile one.

However, B2B enterprise services also have huge advantages, such as their large size and stable customer base, which may yield strong user stickiness once the closed loop is formed.

The combination of a SaaS management platform and e-commerce is a solution to successfully enhance B2B enterprise services similar to Alibaba, according to Wang.

Baoku Online has been compared favorably to business travel reimbursement software developed outside of China. Many reimbursement software packages are proficient at collecting travel and entertainment expenses, which is a boon to the customer's financial department, but it is only the first step in achieving enterprise management and data collection via the Internet.

Combining the functions of a company's internal management with external e-commerce procurement, Baoku Online is adept at managing business travel booking behavior as well as the service providers and seamlessly accomplishes information exchange for approval, booking, changes during the trip itself and filing of expenses once the trip is complete. Furthermore, the match-up between internal procurement and the external supply chain is also established.

Wang said although SaaS software development for Chinese enterprises services is just beginning, the development potential is huge.

Survey data from consulting firm IDC shows that as of 2017, the growth rate for SaaS globally is 5.5 times that of traditional software, while, in China, the market size indicates the potential for additional growth at 7.8 times the current level of penetration. Companies hope to use the powerful data analysis feature and the ability to consolidate the number of suppliers needed in the mix to meet all business development needs efficiently. Over the next five years, China's SaaS market is expected to maintain rapid development and may exceed 30 billion yuan by 2021, with annual compound growth rate expected to be five times of that for traditional software.

Wang disclosed that, the finance sector can be expected to merge in many respects with the e-commerce sector in the future, helping e-commerce firms gain access to complete enterprise purchase data. Based on that data, a much wider swath of the finance sector will service companies in much the same way Alipay and Ant Financial are doing today. The availability of "all in one" corporate travel service systems, an in-depth understanding of enterprise user value, ongoing product upgrades, and improved service capabilities will be the key to the development of the SaaS enterprise market.

SOURCE Baoku Online Inc.