Alibaba.com today announced new initiatives and products designed to make the international business-to-business website safer and more valuable to small and medium-sized businesses that use the site to source products.
Among the new programs announced at Alifest, the company’s annual Internet conference at its Hangzhou, China, campus, is an ambitious program calling for on-site inspections of all Chinese manufacturers and distributors selling through Alibaba.com’s international website to ensure they are legitimate. “We’re taking the existing authentication and verification process, and we’re adding another layer to it,” said Linda Kozlowski, Alibaba.com’s director of global marketing and customer experience.
Next month, Alibaba.com employees will begin visiting some 112,000 of the e-commerce platform’s paidChina Gold Suppliers in person to physically confirm that the factories exist and conform with members’ registration documents, a process that is expected to take up to a year, Kozlowski said. A third-party inspection service will also conduct random, unannounced checks on an ongoing basis to make sure the manufacturers remain compliant. Kozlowski said a recent increase in membership fees will cover the cost of the labor and time-intensive inspections.
The company also announced an expanded escrow program; an online sourcing concierge service called Custom Sourcing; and elaborated on its new Inspection Service, an onlinesolution that allows overseas buyers to hire inspectors in China to verify that goods ordered are shipped as promised.
The announcements are part of a continuing campaign to combat fraud committed by Chinese sellers operating on Alibaba.com who were taking money from overseas buyers for a wide range of products without delivering any merchandise. The illegal activity came to a head in February when Alibaba.com CEO David Wei and COO Elvis Lee resigned in connection with an organized group of scammers that was discovered operating on the site, sometimes with the help of Alibaba employees. The executives were not involved but voluntarily stepped down to take responsibility for not being more aggressive in responding to fraud.
About 100 of the website’s workers were fired after the incident, and thousands of fraudulent sellers have been removed from the site.
Alibaba.com has since taken many other steps to restore its reputation. Company officials said the measures appear to be getting results. According to Kozlowski, the monthly number of fraud complaints received by the website have fallen 77 percent since February. Customers have apparently not been deterred. Alibaba.comsaw an 86 percent increase in monthly unique page views between July 2010 and June 2011.
Another indication that the company’s campaign to clean house has been effective is that payouts from a special fund set up to compensate fraud victims have fallen 81% since the restitution program was introduced in March of 2010. When the company first created its Fair Play Fund to reimburse victims of fraud, the average monthly payout totaled $164,889. The most recent monthly payout totaled $32,049. “We’re very happy with our progress,” Kozlowski said.
