Alibaba, the world's largest online marketplace for trade between companies, has started offering on-site transactions outside China for the first time, taking a step which brings it closer to head-on competition with global market leader Ebay.

The company yesterday launched AliExpress, a platform where businesses from China and abroad can close transactions for smaller orders.

In the past, it had only offered a platform on its main site, alibaba.com, on which corporate buyers and sellers could find each other for foreign trade, but transactions had to be conducted offline. Taobao, Alibaba's retail site, offers on-site transactions but only inside China and not between businesses.

Ebay, the global e-commerce market leader, offers transaction-based services but mainly for consumers.

“This will push Alibaba down two very important paths: first, it will help transform its revenue structure from reliance on annual membership payments to transaction-based fees, allowing the company to take on greater risk and creating opportunities for bigger profit margins,” said Cao Fei, an e-commerce expert at Analysys, a Beijing-based internet research group. “Second, going for consumers globally is definitely something Alibaba will eventually do – and that's going to bring them into direct competition with Ebay,” Mr Cao said. “As Chinese users are beginning to use international e-commerce sites, this is something they need to do.”

Since 2008, Alibaba has taken steps to move from its original focus on annual membership payments to a more complex, flexible fee menu. This model is expected to increase user loyalty.

The new service will also expand its online payment services beyond Chinese borders for the first time. So far AliPay, the company's equivalent to Ebay's PayPal, had only been used domestically. AliExpress allows users the choice of different third-party payment methods, but offers an escrow service which is derived from AliPay.

Alibaba said it did not see itself as a competitor to Ebay. “We actually view our services as complementary,” said Annie Xu, Alibaba's head of operations for the Americas and one of the executives leading the AliExpress project. “Ebay is a B2C [business-to-consumer] business, so companies can source at our site and then sell to the consumer there.”

For the time being, AliExpress admits only Chinese suppliers, but it plans to open the site to international suppliers as soon as it is confident of operating it without glitches.

It has set an initial $10,000 cap per transaction for security reasons.