Alibaba's Sales Restructure

TradeMediaBlog: Global Sources was offering for the very first time a low cost entry package for their export marketing services which was a concern for Alibaba.com. It now seems that these new packages are starting to gain traction.

South China Morning Post reported today that Global Sources’ new pricing plan is being so well received that its largest competitor, Alibaba.com, is making some changes of their own:

1. Restructuring Sales Force - One team will now manage new accounts and another existing accounts/renewals.
2. Updated Commission Structure.
3. Discounts - Rumors of price reductions for its Gold Supplier service.

This news is being seen overall as negative in the near term with Analysts reducing sales forecasts and downgrading the stock. It is hard to say how this new sales structure will work in the long run but it is good to see Alibaba.com taking a serious look at competitive threats and improving after sales service.

We at TradeMediaBlog think these Analysts may be overreacting because:

1. Alibaba.com enjoys an estimated 70% renewal rate.
2. Most suppliers, who pay for the Gold Supplier service, have been clients of Alibaba.com for many years so there is brand loyalty in place.
3. Suppliers who list on one B2B global trade marketplace typically will list across multiple sites.

Thus, we believe that if this does negatively impact Alibaba.com’s overall sales figures for the year that they will be less than expected by these investment banks.