Olympics Deal Could Give Alibaba More Trouble
Top Olympics sponsor
Last month, Alibaba (BABA) announced that it had become a top sponsor of the Olympics following a deal with the International Olympic Committee, or IOC. Alibaba will be the Olympics’ official cloud services and e-commerce provider until 2018. The company has joined other major Olympics sponsors such as Coca-Cola (KO), McDonald’s (MCD), Samsung (SSNLF), and General Electric (GE).
Through the Olympics partnership, Alibaba is hoping to gain more credibility as a global e-commerce brand. Although the company has been looking abroad to drive its next phase of growth, going overseas also means facing greater competition from rivals such as Amazon (AMZN).
Deals such as that with the IOC could help Alibaba strengthen its global brand recognition, which could lead to more sales. Alibaba reported 54% revenue growth to 53.2 billion Chinese yuan ($7.8 billion) in the December quarter, or fiscal 3Q17, continuing a streak of quarterly top-line growth.
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Fighting brand pirates
However, given the fake goods problem on Alibaba’s marketplaces, the IOC deal could complicate its fight against brand pirates. As the official Olympics e-commerce partner, Alibaba will sell Olympics merchandise globally. However, with this task comes the burden of keeping a closer eye on vendors of counterfeit goods.
Despite Alibaba insisting that it has stepped up its fight against brand pirates, little seems to be coming from its efforts. Last year, the United States returned it to the list of marketplaces notorious for fake goods. According to the International Anti-Counterfeiting Coalition, the fake goods market was worth more than $1.7 trillion in 2015.