Is Alibaba not playing fairly with US firms?
Alibaba is one of the biggest e-commerce firms in the world. It is two times more profitable than Amazon, serving more people than those who live in North America. It is believed to generate nearly $550 billion in annual sales, which is more than the online sales in the US. With its size, it is not surprising that many American firms want to sell their products on Alibaba.
Alibaba accused of sabotage
However, a recent story by the Associated Press raises questions on the integrity of the Chinese e-commerce giant. Quoting industry sources, the AP mentions the story of a top US clothing brand which agreed to sell its products on Alibaba’s Tmall platform.
However, the firm didn’t sign an exclusive contract with Alibaba. Worse, it also took part in a big promotion with Alibaba’s fierce rival, JD.com.
In return, Alibaba was said to have ‘punished’ the US firm by cutting traffic to their storefront. Two executives from the US firm also accused Alibaba of removing banners from prominent areas in Tmall sales showrooms. Moreover, its products were prevented from appearing in top search results.
As a result, the well-known US brand had its Tmall sales dropping by 20 percent for the year.
Other US firms have accused Alibaba of doing the same to them. According to AP, five big consumer brands were also affected by low sales after refusing to enter exclusive contracts with Alibaba. Three of those are American firms which have billions in yearly sales and were looking to grow further by expanding their online business to China.
Alibaba denies accusations
Reached by the AP for comment, Alibaba denied the charges of unfair play. It did, however, said that exclusive deals are a typical industry practice.
The accusations may affect Alibaba’s attempt to expand its business outside of China and Asia. Founder Jack Ma has said he dreams
that his company will serve 2 billion people by 2036.