Alibaba waives some fees to help merchants hit by virus outbreak

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Alibaba Group Holding Ltd plans to waive some of the fees it charges merchants to list products on its direct-to-consumer online mall, offering relief to retailers and brands grappling with a nationwide coronavirus outbreak.

The e-commerce company said it will stop charging certain platform fees for the first half of 2020. While that’s a chunk of revenue, Alibaba mainly earns from advertising, marketing and advisory services for retailers on Taobao and Tmall.

The move should go down well with the merchants it depends on to attract and keep online shoppers. China’s most valuable corporation has shed about 5% of its value since investors began selling off the country’s stocks around Jan 20, fearful of the longer-term impact of the epidemic on the world’s No 2 economy. The online retailer, whose fortunes wax and wane alongside national growth, is also grappling with an economic slowdown that began before the novel coronavirus first emerged from the central city of Wuhan to spread across the globe.

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The waiver – while curtailing Alibaba’s revenue – would not deal a major blow to income as many big sellers on the platform already don’t pay such fees, said David Dai, a Hong Kong-based analyst at Bernstein.

“Alibaba is more focused on helping the smaller sellers get through the hard times, ” said Dai. “The setback is limited, but Alibaba is not exempt from the downturn brought on by the virus outbreak.”

Alibaba, which unveils earnings on Feb 13, is expected on average to report 36% growth in revenue in the December quarter and about a 35% rise in the January-March period. The company is now spending at a furious pace to expand non-core businesses from cloud computing to media and entertainment. Analysts on average expect a 10% decline in net income in the December quarter and a 49% dive in the March quarter.

Health authorities in China and around the world want a better sense of whether the world’s largest known quarantine effort has been effective in containing the pneumonia-causing virus in Wuhan and across other cities in Hubei province, a landlocked region of 60 million people. The epidemic is already paralysing manufacturing in a plethora of industries from automobiles to flat screens and mobile phones, and threatens to disrupt global electronics supply if the situation persists. – Bloomberg

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