Alibaba’s push to rival Amazon by bringing US businesses on to its ecommerce platform has struggled to meet its targets, dealing a blow to the Chinese tech giant’s global expansion plans.
The group launched Alibaba.com, its business-to-business ecommerce website, in the US three years ago with the aim of signing up more than 1mn local businesses and compete globally with the likes of Amazon, which has a similar platform for wholesalers.
But Alibaba.com’s US operation has failed to meet its initial targets, forcing the Chinese company to readjust its growth plans, according to three people familiar with the operations. The project has also been hit by dozens of staff departures from its New York office.
The troubles at its US business-to-business arm come as Alibaba steps up its international push as its domestic operations continue to get hit by Beijing’s tech crackdown, slowing economy and rising competition.
However, Alibaba.com has struggled to retain US sellers since its launch, in part down to the difficulty of competing with the prices of global merchants.
“US manufacturers aren’t as competitive, the cost of everything is a lot higher including labour. The team do not have enough support internally, so they can’t get enough suppliers and sellers on board,” one current employee said.
The majority of US sellers cancel their subscriptions after a year, according to past and current employees. Alibaba.com has now slashed its target of signing up 1mn US small businesses to just 2,000 each year, one person said.
Meanwhile, at least 35 staff working at Alibaba.com in New York have left their jobs in the past year, amounting to more than half of the team, as the platform underperforms as well as complaints of bullying from senior management and long working hours, three people familiar with the US office said.
Most roles are not being replaced in a move by the platform to quietly retreat from the US market, two of those people added.
Alibaba.com is a central pillar of its global push, and the group’s original business. While it represents a small portion of the group’s overall commerce — which primarily focuses on selling to consumers — at the time of its 2019 launch into the US, Alibaba cited a US government report which said the B2B ecommerce market represented a $23.9tn opportunity. That is six times larger than the global B2C ecommerce market.
The site has more than 20mn active buyers on the platform from around 200 countries, as well as 200,000 global sellers, but only a few thousand of these are US companies. It charges subscribers $3,000 a year to sell on the platform.
In the financial year to end of March, international commerce wholesale, including Alibaba.com, generated Rmb18.4bn ($2.9bn), around 2 per cent of the group’s total revenue.
In 2018, Alibaba acquired US software firm Opensky for an undisclosed amount to expand in North America. Co-founder John Caplan, as well as some Opensky staff, were redeployed to launch Alibaba.com in the US.
Caplan left the company in May this year to become co-chief executive of Payoneer, a payment services company, while the majority of former Opensky employees have now left the company unhappy with the takeover, people familiar with the team said.
Alibaba did not respond to requests for comment.
Additional reporting by Eleanor Olcott in London and Ryan McMorrow in Beijing