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 U.S. companies apply for credit lines of $5,000 to $300,000 through the site, which they can then use to finance purchases there.
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 the Lending Club partnership may help Alibaba secure new overseas customers.
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.
In addition to enabling disputes, the trade assurance program also ranks suppliers based on the quality of their products and shipment speed.
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.
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