Alibaba rises after report of planned merchant fee change

Alibaba’s U.S.-listed shares rose in premarket trading Monday after a report that the company plans to change how it charges merchants on two of its main shopping platforms. For investors, the move points to a possible new revenue lever at a time when Alibaba’s stock has lagged the broader U.S. market this year.

The shares were up 2.8% before the opening bell, according to MarketWatch. Alibaba’s American depositary shares, which trade under the ticker BABA, finished Friday’s session 1.5% higher.

Bloomberg reported that Alibaba plans to begin charging vendors a 0.6% service fee on confirmed transactions on Taobao and Tmall. A confirmed transaction generally means an order that has gone through rather than a listing or potential sale.

That would mark a shift for at least part of Alibaba’s merchant fee model. Bloomberg said Tmall currently charges sellers a fixed annual fee, meaning merchants pay a set amount rather than a percentage tied directly to each completed transaction.

Local media outlet LatePost first reported the change, according to Bloomberg. Bloomberg also cited a person familiar with the matter as saying Alibaba may waive the new service fee for smaller merchants.

How the fee change works

A transaction-based fee can rise and fall with sales volume. If merchants sell more goods through the platform, Alibaba collects more in service fees. If sales slow, fee revenue from that charge would also slow.

That structure differs from a fixed annual merchant charge, which gives the platform a set payment from sellers regardless of how much business those sellers do. The reported 0.6% fee would tie a piece of Alibaba’s revenue more directly to activity on Taobao and Tmall.

MarketWatch reported that Alibaba had not responded to its request for comment. The company has not confirmed the reported change in the MarketWatch report.

Why investors reacted

Alibaba remains one of the most closely watched China-based companies trading in the U.S., and small changes to its e-commerce economics can draw attention. A service fee increase could support revenue if transaction volumes hold up, though the report did not include company guidance or financial estimates tied to the plan.

The stock has had a weaker year than the broader U.S. market. MarketWatch reported that Alibaba’s U.S.-listed shares were down 1.3% in 2024, while the S&P 500 was up 14.5%.

Alibaba and other U.S.-listed Chinese companies also came under pressure earlier in July after data showed China’s economy grew more slowly than expected in the second quarter, according to MarketWatch. That macro backdrop matters because Alibaba’s core commerce business is tied to consumer and merchant activity in China.

The reported fee change gives investors another data point to watch as Alibaba tries to generate growth from its existing platforms. The key questions now are whether Alibaba confirms the change, how broadly it applies, and whether any exemption for smaller merchants limits the revenue impact.

This story draws on original reporting from MarketWatch.