Alibaba Group is adding new features to a service designed to reassure buyers—many of them retailers in North America and Europe—that they can trust the sellers offering merchandise on the business-to-business e-commerce site Alibaba.com.
The Alibaba Trade Assurance program, introduced in January, has been limited to transactions completed via bank transfers, but will soon also cover purchases made with credit cards, Sonny Chhabra, a U.S.-based global marketing and business development executive with Alibaba.com, told attendees Thursday at the ThinkGlobal Retail conference in Las Vegas.
In addition, the program, which until now only covered Chinese suppliers selling on the business-to-business Alibaba.com platform, will be extended to other manufacturers and distributors in other countries. India will be the next country added, he said.
Already 54,000 Chinese suppliers, or about half the number that offer to fill bulk orders on the Alibaba site, participate in Alibaba’s Trade Assurance program. An Alibaba subsidiary called OneTouch vets companies that wish to participate. If a buyer purchases from a participating supplier Alibaba will refund the buyer’s deposit, up to a specified amount, if the goods are not delivered on time or are not of the quality specified.
“If the supplier is at fault, the buyer gets their money back,” Chhabra said. “You’ll be covered by Alibaba. We’ll go after the supplier to recoup our losses.”
To receive compensation for poor quality, he noted, the buyer will have to engage a service that inspects the goods, either at the factory or at the buyer’s warehouse.
Buyers now can filter suppliers at Alibaba.com by those participating in Trade Assurance. When a prospective buyer hovers over a participating supplier the amount Alibaba will guarantee appears. That amount varies based on feedback from buyers. If a supplier gets good reports from customers then Alibaba gradually increases the amount it will guarantee.
When a retailer or other buyer purchases from a participating supplier, the two parties sign a contract on Alibaba.com and the purchase is completed on the site. That’s a departure for Alibaba.com, which, since its introduction in 2003, has served as a way for retailers, wholesalers and other bulk buyers to find mainly Chinese suppliers, but has never been a transactional site. One of the advantages for Alibaba is that now that transactions are completed on the site, the Chinese e-commerce giant for the first time gets accurate information about what products companies are buying and how much they are paying, Chhabra said.
Alibaba executives also said the company has begun allowing some foreign suppliers to sell on 1688.com, a site that until now has enabled Chinese retailers and other companies to buy from Chinese suppliers.
Alibaba reported that its revenue from international wholesale transactions, mainly Alibaba.com, totaled $201 million, 6% of revenue and a 12% year-over-year increase. Revenue from domestic wholesale, mainly 1688.com, was $161 million, 5% of revenue and a 41% increase over the same period a year ago.
The bulk of Alibaba’s revenue, more than $2.5 billion, came from its huge online marketplaces in China, primarily Taobao, where some 8.5 million sellers offer products in a wide-open online bazaar, and the more brand-friendly Tmall, which features products from such major Western companies as Nike, Apple, Burberry and Juicy Couture. Those Chinese marketplaces, which together account for roughly 80% of online retail sales in China, accounted for 78% of Alibaba’s revenue in the quarter.
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