Alibaba shares rise after reported plan to lift merchant fees

Alibaba Group Holding Ltd.’s U.S.-listed shares rose 2.8% in premarket trading Monday after Bloomberg reported that the Chinese e-commerce group plans to raise service fees for merchants on two of its main retail platforms. The reported change would introduce a 0.6% charge on confirmed transactions for vendors using Taobao and Tmall, according to Bloomberg.

The move, first reported by Chinese media outlet LatePost, would alter the way Alibaba collects revenue from sellers on its marketplaces. Bloomberg reported that Tmall currently charges merchants a fixed annual fee, while the new model would link Alibaba’s take more directly to completed sales activity.

Under a transaction-based service fee, a platform collects a percentage of the value of sales that are confirmed through its marketplace. That differs from a flat annual charge, which does not vary directly with transaction volume. For Alibaba, such a structure could make merchant-fee revenue more sensitive to the level of activity on Taobao and Tmall.

Bloomberg, citing a person familiar with the matter, reported that Alibaba may exempt smaller merchants from the new fee. MarketWatch said Alibaba had not responded to its request for comment.

Market reaction

The reported fee plan came after Alibaba’s U.S.-listed shares finished Friday’s session 1.5% higher, according to MarketWatch. Despite that advance, the stock was down 1.3% for 2024 at the time of the report.

That performance lagged the broader U.S. equity market. MarketWatch reported that the S&P 500 index had gained 14.5% in 2024 over the same period.

Alibaba is among the China-based companies whose U.S.-listed shares have recently traded against a weaker macroeconomic backdrop. MarketWatch reported that shares of several China-based companies, including Alibaba, fell earlier in July after data showed China’s economy expanded at a slower-than-expected pace in the second quarter.

Platform economics

Taobao and Tmall are central parts of Alibaba’s e-commerce business, serving merchants that sell to consumers through the company’s online marketplaces. A higher or broader service fee would affect the cost structure for vendors that use those platforms, though the reported possible waiver for small merchants suggests the company may seek to limit the effect on some sellers.

The reports did not provide an implementation date, the exact scope of merchants affected, or any company estimate of the financial effect. Alibaba had not publicly commented in the MarketWatch report, leaving the details dependent on reporting by Bloomberg and LatePost.

This story draws on original reporting from MarketWatch.