Alibaba Group proposes to privatize e-commerce site Alibaba.com

Alibaba.com expects slower revenue growth as it focuses on improving the site's quality

Chinese e-commerce giant Alibaba Group has proposed privatizing business-to-business platform Alibaba.com as the site faces slower revenue growth brought on by a shift to focus on long-term gains.

The proposal, announced on Tuesday, will free Alibaba.com from the market pressures of being listed on the Hong Kong Stock Exchange, said company CFO Maggie Wu during a conference call.

Alibaba.com, which connects buyers and sellers to source goods, had previously focused on rapidly increasing the site's customers to maximize revenues. But last year, Alibaba.com shifted its strategy to improve the buying experience on the site.

Although Alibaba.com said its strategy will pay off over the long-term, the company will face slower growth in the near term as it adds fewer paying customers over the period and makes additional investments in its business, Wu said.

The announcements comes after reports that Yahoo was in negotiations to sell off its share of Alibaba Group. Alibaba.com, however, said the proposal to privatize was unrelated to any talks with Yahoo.

The proposal from Alibaba Group, which owns 73 percent of Alibaba.com, would give minority shareholders Hk$13.50 (US$1.74) per share in cash. Alibaba.com had suspended trading on the Hong Kong Stock Exchange earlier this month.

Alibaba.com's shift in strategy came after an internal investigation found more than 2,000 suppliers on the site had engaged in scams against overseas buyers. The investigation concluded that Alibaba.com had been too focused on short-term financial gains. Alibaba.com moved to quickly restore confidence in the site, paying back customers of the fraud and appointing a new CEO for the company.

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Michael Kan

IDG News Service
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