Alibaba.com and peer-to-peer financing site Lending Club have inked a strategic partnership designed to get more U.S. businesses to buy inventory from the e-commerce giant’s wholesale marketplace. The two will offer a new financial service called the Alibaba.com e-Credit Line that will let American companies apply for credit lines of $5,000 to $300,000 through the site, which they can then use to make purchases there.
The program will eventually expand beyond the U.S.
Though Alibaba dominates China’s e-commerce market, holding about 45 percent of the market, its growth stalled last year thanks in part to increasing competition from rivals like JD.com. Furthermore, Alibaba’s earnings have worried investors since its record-setting IPO in September. Last week, the company disclosed revenue for the quarter ending in December that was below expectations, due in part to ongoing investments in its mobile business.
In order to develop new markets for its e-commerce businesses, Alibaba has taken a two-pronged approach. In China, it is targeting smaller cities and villages by developing its logistics system. Meanwhile, initiatives like Alibaba.com e-Credit Line may help Alibaba (and Lending Club) secure new international customers.
The two companies said their agreement is multi-year and exclusive.
In addition to capital, the Alibaba.com e-Credit Line also comes with a trade assurance, which allows buyers to open disputes and potentially get a refund if they receive goods that are late or don’t match listing descriptions. This is especially important because Alibaba is constantly faced with criticism that it does not do enough to prevent the sale of counterfeit goods on its site.
China’s State Administration For Industry And Commerce recently backed down from a report that said Alibaba employees took bribes and otherwise made it easy for shady merchants to sell fake goods on it sites, but the company has dealt with complaints for years. In fact, Taobao Marketplace, was removed from the Office of the U.S. Trade Representative’s “notorious markets” list only two years ago.
Alibaba has responded with a series of anti-counterfeiting measures, including purging 90 million suspicious listings from its sites before its IPO, but the open nature of its wholesale marketplaces still make running into knock-offs a risk.
The trade assurance program also ranks suppliers based on the quality of their products and shipment speed. Having a platform for disputes and a quality guarantee may help persuade merchants who are interested in Alibaba.com’s vast selection of goods, but wary of its reputation.
Other initiatives Alibaba has undertaken to encourage more foreign companies to use its sites include launching Taobao and Alipay in Australia, one of China’s key trade partners, and expanding its affiliate, Ant Financial, in the U.S. and Russia.
Alibaba.com e-Credit Line also follows several other programs that Alibaba Group has launched to provide financing for SMBs who want to use its platforms. Last week it announced a loan program for female business owners in China, and yesterday it unveiled a foundation to help young Hong Kong entrepreneurs.