PayPal Triggers the End of the Partnership between eBay and Alibaba

PayPal triggers the end of the partnership between eBay and Alibaba. Will AliExpress business be greatly reduced? What this termination's influence on eBay? Who will be the beneficiaries? Please read on for more information.
By: Linda
 
June 14, 2011 - PRLog -- No forever enemy and no forever friends. This tells the relationship between eBay and Alibaba.

Recently, PayPal, the third-party Internet payment platform of eBay, announced that they will end their cooperation with AliExpress on August 3, 2011. AliExpress, established in the year of 2009, is a wholesale marketplace launched by Alibaba.com. They provide global buyers wholesale prices on almost all of their items on even the smallest orders.

One year ago, PayPal was the reason for the re-cooperation between eBay and Alibaba. However, PayPal becomes the trigger for the end of their partnership.

There is a popular believe in the industry that the cooperation termination is because PayPal worries the development of AliExpress would impact eBay's business in China. No matter what is going on, Alibaba will lose an influential tool for their market expansion abroad. PayPal is the most popular payment method in the international transaction. They have over 220 million clients all over the world.

eBay Strategy
In April 2010, Alibaba announced their cooperation with PayPal. Their international online payment issue had successfully solved since then. Although we couldn't quantify PayPal's effect in the rapid development of AliExpress, undoubtedly, PayPal did help in the past year.

According to the 2011 First Quarter Financial Report from Alibaba, AliExpress' volume of business doubled in half year. Its rate of flow is topped among all online B2B websites on Alexa.com. And it still grows in a very fast speed. However, good times don't last long.

On the 3rd of June, PayPal announced in their official website in China that from August 3 this year, they will not support payment in AliExpress platform. In just one year, eBay and Ali became enemy again.

Though AliExpress' scale of transaction couldn't threat eBay directly, it will grow to be the most powerful competitor of eBay in the future according to its current developing speed. What eBay is doing now is to delay the arrival of this day.

The Rupture Had Earlier Omens

At the beginning of this year, PayPal asked Alibaba to raise the rate of payment fees of AliExpress members to 7%. But Alibaba disagree.

Previous conflicts including the charge were preludes. Insiders from industry thought that their competition in small foreign trade platform is the decisive reason for the termination. One of the main competitors of eBay in China is AliExpress.

"eBay has made a right decision." Feng Lin, an analyst in China Ecommerce Research Center, told the journalist from China Enterprise News. "EBay's decision avoids making things become worse in the future."

Feng Lin also expressed that there is likelihood for Alibaba to use AliPay instead of PayPal in the future if eBay didn't terminate the cooperation. AliExpress growth is out of many people's expectation. "At that time, Alibaba would pull out of eBay partnership, not PayPal." Said Feng Lin.

But PayPal will not leave China market. They will continue offering safer and more convenient payment method for businessmen in China and helping them sell their products to millions of PayPal clients all over the world. Today, there are over 9 million businessmen using PayPal. About 100 million active people in 190 markets world wide rely on this payment solution to sell or buy. PayPal allows users to transact with over 20 kinds of currencies.

AliExpress Would Undoubtedly Suffer from the Impact

In order to response PayPal's announcement, Alibaba claimed, "AliExpress would offer different payment channels for clients. Its cooperation termination with PayPal would not influence them to offer global consumers diversified and secure payment methods."

Although Alibaba didn't give a positive answer to the cooperation termination impact, comparing to eBay, Ali might lose more.

Among all the online payment methods on AliExpress, PayPal has a considerably high ratio. No other people than those in Alibaba know the exact number. According to insiders' estimation, the ratio is above 50 percent.

Most users on AliExpress get used to using PayPal to make payment. PayPal's departure will definitely lower their using experience. "Even worse, AliExpress will lose certain number of clients, although the result needs to wait until August." Feng Lin told the Journalist from China Enterprise News, "AliExpress would unavoidably suffer from the impact."

PayPal's importance to AliExpress is evident. Last year, when Alibaba cooperated with PayPal, the CEO of Alibaba said, "We wish we could offer fast, safe, simple and convenience payment method to serve our users. Therefore, the cooperation with PayPal is ultra important."

"However, it is not all bad if PayPal left Alibaba." Feng Lin Said, "It is not good for Ali to use PayPal payment solution as they have AliPay, a leading third-party online payment platform in China."

Wang Ningyuan, an IT industry researcher and China investment consultant, thought that clients who use PayPal have to opt for other payment method if PayPal and AliExpress partnership really ends. The total amount of AliExpress transaction would be influenced in short time.

Alibaba should try their best to develop AliPay international version and expand its influence, according to industry insiders' point of view. It's necessary for Alibaba to choose more payment channels to solve the current operation difficulty. At present, users could pay via Visa, MasterCard, Moneybookers, etc. on AliExpress.com.

Who will be the beneficiary?
"Most eBay business in China is foreign trade business. The termination of the partnership would give a heavy attack to the potential threat." said Wang Ning Yuan. "However, this termination have little affection on eBay's business. In some degree, it might enhance its sale."

Yahoo will also benefit from the termination. "Alibaba might focus on developing their payment system. At present, Yahoo and Alibaba are negotiating about AliPay stock rights. Maybe Alibaba would give in." Said Wang.

Beltal, which is similar to AliExpress, will be one of the beneficiaries as well. As Beltal haven't developed their third party payment platform, the majority of the transaction on the platform is through PayPal. Beltal started their cooperation with PayPal in the year of 2003 and it received Best Risk Control Reward. They have stable, friendly partnership with PayPal.

"The cooperation between PayPal and us will not be changed because of the partnership termination between Alibaba and PayPal." said Jonny, the marketing manager from Beltal.com. Beltal would like to explore more oversea markets with PayPal.
End
Source:Linda
Email:***@gmail.com
Tags:Paypal, Alibaba, Aliexpress
Industry:Business
Location:China
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