x Abu Dhabi, UAESaturday 20 January 2018

The View from Here: eBay competitor opts to treat sellers with dignity

Unlike eBay, Alibaba does not treat newbies like scam artists.

eBay has long been the only game in town for anyone wanting to make extra cash by trading online. Now, with the indefatigable Alibaba boss Jack Ma stalking Yahoo, this could change.

Currently, eBay rules online person-to-person commerce like a dictator and sellers have to put up with it because they have few other places to go. It treats vendors like criminals by withholding funds for weeks. Accounts get suspended for the slightest complaint. Buyers enjoy great protection, but sellers are left vulnerable to being ripped off by customers. As long as sellers have no alternative, eBay is under no pressure to change this.

Alibaba may just change that. Unlike eBay, newbies are not treated like scam artists. You do not need to undergo a probation or have restrictions on getting your funds out if you sell below a minimum limit. All you need to join Alibaba is an e-mail address and telephone number at which you can be reached.

Once you've done this, your account becomes active and it's possible to list items you want to sell, as well as go in search of sellers who seem to have what you need. It claims that 56 million people use its business-to-business website and that 370 million use Taobao, its online mall. It also owns Alipay, an online payment system similar to PayPal.

In theory, if you want to find a provider of those cool oriental bird cages, or motorcycles or dried shrimp, chances are there is someone on Alibaba who provides them. Not for nothing does China completely dominate modern retail.

And while eBay is most definitely biased towards US and Europe-registered users, Alibaba is kind of like the UN of global shopping. Dealers from Pakistan to Dubai, Bahrain to South Africa are registered. Even though most of its users are from China, it is by no means restricted to Asia. It even has English-proficient help staff who will quickly attend to queries, should you have any.

Alibaba also takes no commission from sales. It merely serves to introduce buyers and sellers and does not cream off a percentage of the transaction for itself.

But this is where it begins to come apart. Alibaba is great for linking people up from all over the world; unfortunately, your new customer could be a guy in Nigeria. Indeed, the bulk of the queries that landed in my inbox after registration seemed to be precisely those kinds of e-mails.

Fraud is perhaps the biggest risk of doing business on Alibaba. You can, of course, pay almost US$3,000 (Dh11,019) to become a Gold Supplier - and join the ring-fenced group of registered users who are vetted. In theory, doing business with a Gold Supplier protects you from getting ripped off. Selling Gold Supplier membership is also where Alibaba derives its income.

Alibaba took a knock earlier this year, when the company sheepishly revealed that 2,236 Gold Supplier dealers had ripped off buyers. The company blamed sales staff who had either mistakenly, or perhaps not, registered dubious businesses as fully vetted.

The company's share price took a beating at the time, falling 15 per cent in Hong Kong.

After all, establishing trust between a buyer and seller is what its entire business model revolves around. But Alibaba shelled out millions to compensate those who lost money. A few high-placed heads rolled and ever since, it has been business as usual.

In any case, for many small entrepreneurs, spending 3,000 bucks to join a website is probably too much to ask. The little guys will have to be content with hocking their wares outside the gold ring, and fielding endless enquiries from a man named John in Lagos.

But whatever its shortcomings, Alibaba is undoubtedly a force to be reckoned with. Yahoo, in its day, was an innovator, too. A few years ago, Yahoo shelled out US$1 billion for a 40 per cent stake in Alibaba, so the two are no strangers to each other, even if the relationship has been fraught with problems.

Mr Ma has not really said what he intends to do with Yahoo if he gets hold of it. It would be great for entrepreneurs, though, for the essentially China-focused Alibaba to have a foothold in eBay's home territory. It could possibly provide the first real competition to eBay, which has sat, toadlike and unassailable in its corner.

It's possible that with Alibaba's youth and vigour, combined with Yahoo's profile and relative gravitas, a new online trading platform could emerge. If I was eBay, I would be worried.

Gavin du Venage is a business writer and entrepreneur based in South Africa.