Alibaba's Latest Assault on Pinduoduo Could Backfire

Alibaba (NYSE: BABA) recently launched Taoxiaopu, a new platform that encourages its 693 million annual active shoppers to become dropshippers -- middlemen who peddle goods for other merchants without stocking any physical inventories.

Users who join Taoxiaopu gain access to various products sourced from Alibaba's core marketplaces like Tmall. If they convince other users to buy those products, they earn a small commission. Alibaba handles all the payment, shipping, and logistic costs.

The entire platform is gamified to persuade its dropshippers to sell more products. New sellers start on a trial basis and gain access to 30 products, which range from fruits to cosmetics. If they make five or more successful sales, they're promoted to an "L1" status and gain access to over 10,000 products.

Source Fool.com