Alibaba.com CEO David Wei and COO Elvis Wei have decided to quit to take responsibility for a “systemic breakdown” in the company’s culture of integrity.
After noticing an increase in complaints of fraud by buyers dealing with Alibaba Gold Suppliers since late 2009, an investigation found that around 100 100 of the company’s 5,000 salespeople were allowing over 2,000 fraudulent Chinese suppliers to evade the company’s authentication and verification measures.
Many of the scam suppliers offered bulk orders of consumer electronics at “very attractive prices, a low minimum order quantity and less reliable payment transfer methods,” according to the statement. Although Alibaba has not made public the list of Gold Suppliers, we believe many of them also operated in AliExpress.
Although Alibaba is certainly taking a blow in their short term revenue, many analysts believe that such a dramatic action will increase trust and reputation in the long term. Alibaba will compensate their buyers using money from their “Fair Play Fund”, which has already paid out $1.7 millions since 2009.
Jonathan Lu, who heads China e-commerce leading player Taobao.com, was named Wei’s replacement. Lu, 41, joined Alibaba in 2000 and led the team that formed Alipay, an online payment service, in 2004, according to the company.
