PayPal service on AliExpress
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Alibaba.com announced Tuesday it will offer eBay's Paypal services on its new wholesale platform, indicating a partnership, the first of its kind, between two sides that have been rivals for years.
The announcement came just one day after Alibaba.com, a listed unit of Alibaba Group, officially rolled out its wholesale site - AliExpress, allowing buyers across the world to directly purchase goods from exporters, mostly in small quantities.
"It is a win-win deal, helping both sides expand their business globally," said Sun Chonghui, an analyst with iResearch, an online market research firm based in Beijing.
Alibaba's Alipay, though a leading online payment platform in China, is not very popular with overseas users, such as those in the US, Sun said, which made it necessary for Alibaba.com to strike a deal with Paypal, a top global online payment platform.
"With millions of customers using PayPal in 190 global markets, when you offer PayPal, you open your business to the world," Scott Thompson, president of PayPal, said in a statement released by Alibaba Tuesday.
Paypal can also expand its business in China, the world's largest Internet market by users, with the help of Alibaba. com's clout in China's online business-to-business (B2B) market, Sun said.
Of China's 1.62 billion yuan ($237.30 million) online B2B market in the first quarter of this year, Alibaba.com accounted for 74 percent, according to Analysys International, a Beijing-based research firm.
The company will invest over $100 million in AliExpress, said Wei Zhe, CEO of Alibaba. com. A beta test of AliExpress was launched last September, and currently listed products on the wholesale site include more than 3 million items in over 40 categories, according to the statement.
While generally applauding the deal, Sun voiced concern it would affect Alipay's global expansion goal in the short-term, given that Paypal's worldwide popularity will be promoted further by the move.
Alibaba Group and eBay have vied for a larger slice of China's online auction market since the early years of the last decade.
Alibaba Group's Taobao, an auction and retail platform, finally won out while eBay largely withdrew, with its China operations left to a joint venture formed by eBay and Tom Online.
Prior to the deal with Alibaba, Paypal announced in March its partnership with China UnionPay, China's largest bank card network, allowing Chinese customers to buy from overseas sellers.
Neither side has disclosed any further cooperation plans. However, Sun believes there will be more partnerships between the two companies, as online business grows globally.
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