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Alibaba gives Taobao mall retail site more prominence
Published on: 2010-11-02
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BEIJING—China's Alibaba Group created a new domain for its Taobao Mall business-to-consumer portal, separating the brand from the company's flagship consumer-to-consumer site to give the retail site more prominence.

Taobao Mall, through which such vendors as Adidas AG, Fast Retailing Co.'s Uniqlo and Lenovo Group Ltd. sell goods, now is available through its own Tmall.com Web address. It previously was available primarily through a link on the Taobao.com consumer-to-consumer site.

Alibaba's move comes in an increasingly competitive market, with online transactions expected to grow to roughly 7% of China's overall retail market by 2013 from about 2% now, according to Deutsche Bank AG analyst Alan Hellawell. Business-to-consumer transactions account for just a small portion of online transactions, but analysts say they expect that share to grow.

Taobao.com Chief Financial Officer Daniel Zhang said Monday that the move is meant to differentiate the Taobao Mall brand and "give people a very clear idea that this is the first choice to find high-quality products." Taobao Mall listings still will appear in Taobao.com search results.

Taobao.com said it will invest 200 million yuan, or about $30 million, over the next three months in a marketing campaign for Taobao Mall, including advertising through state broadcaster China Central Television and billboards in major Chinese cities.

The separation of Taobao Mall from Taobao.com follows the appointment of Ye Peng, formerly chief operating officer of Chinese Internet search company Baidu Inc., as vice president overseeing Taobao Mall.

Mr. Zhang said he expects the value of transactions on Taobao Mall to quadruple this year from last year, outpacing the growth of Taobao's consumer-to-consumer business. He declined to provide a value for the transactions. The Taobao.com consumer-to-consumer portal, which operates China's largest e-commerce site, has said it expects to double the value of its transactions to 400 billion yuan, or about $60 billion, this year.

Research firm Analysys International has said that sales on Taobao.com, which has 50 million daily unique visitors, accounted for 75% of all e-commerce transactions in China in the second quarter. But while analysts say they expect Taobao.com to maintain its dominance, they say competition will intensify.

A number of business-to-consumer platforms have emerged in recent years, including 360buy.com, a website operated by Beijing Jingdong Century Trading Co. Amazon.com Inc. also operates a Chinese website. Both sites are much smaller than Taobao.com in terms of transaction value.

In addition, Baidu is working with Japan's Rakuten Inc. to open a Chinese online shopping mall. The dominant Chinese search company and the Japanese e-commerce company plan to invest a total of $50 million in the site over the next three years. A previous Baidu foray into e-commerce hasn't gained traction among Chinese users, however.

Taobao Mall also will face challenges from established specialized websites for items such as airplane tickets. Ctrip.com International Ltd., China's largest online travel booking company by revenue, fills its own orders and has full control over its sales policies and service quality. Taobao Mall's travel site, which opened earlier this year, is a platform for other merchants and doesn't fill orders itself.

Taobao Mall said it employs measures to protect consumers, such as verifying the credentials of merchants and requiring that they offer a seven-day, no-questions-asked refund policy. But service quality still can vary from merchant to merchant.

Alibaba Group, in which Yahoo Inc. owns roughly a 40% stake, is the parent of business-to-business website Alibaba.com Ltd.

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