How China’s Alibaba.com Fights Fraud for Future Growth

In a quarterly earnings report sent to us, China’s largest B2B e-commerce website, Alibaba.com, unveiled 5 points in which the company would take as steps to battle fraud:

1. Enhance measures to prevent suppliers with high-risk characteristics from entering the Gold Supplier program and improve verification of Gold Supplier storefronts;
2. Further enhance proprietary methodologies to monitor the quality of information displayed in existing Gold Supplier storefronts;
3. Strengthen enforcement of take-down policies and promptly eliminate questionable Gold Supplier storefronts;
4. Revamp the incentive and disciplinary systems of the Company’s field sales organization; and
5. Improve governance structures, policies and procedures, including organizational changes to strengthen independence of the Company’s quality assurance and trust and safety functions.

Building for future growth

“Looking ahead, our priority will be to enhance the value of our existing paying member base by focusing our resources on the development of quality supplier information on our marketplaces, giving our buy-side users a great experience when they use our websites, and enhancing trust and safety in online trade between buyers and suppliers,” said Jonathan Lu, CEO and Executive Director of Alibaba.com

While tough measures could deter paying member and revenue growth, the company believes that quality and trust are key factors that would support future growth. Alibaba.com requires potential vendors to provide business registration documents to set up storefronts on the site.

But fraudsters attack the loophole by submitting fake papers, sometimes with the help of Alibaba.com sales staff. Once fraudster vendors were established on the site, they take orders, get paid up front but never ever send out the merchandise. But all these should change with the above measures. Aliababa-owned news commentary site, Alizila, even reported that the company would go as far as visiting the company to ensure it is legitimate.

“In the future, monetization from paying suppliers, whether membership, performance-based or transaction-based fees, will be built on the foundation of buyers who choose to come to our marketplace because they trust the quality of our information and the security of our online trading environment.”

Jack Ma, the head of Alibaba Group is a strong believer in building his company based on trust and integrity. Similar measures were also practiced on Alibaba’s Taobao, China’s largest B2C e-commerce website where the company partners with major brands like Apple and Gucci to fight against counterfeit goods.

Each Taobao page has a “report” button for users to alert the company on suspicious products (It works much like Facebook’s “report button”). The key thing is that through these practices, not only the company, but also users will be influenced to uphold integrity and fight against fraud/illegal goods.