China’s Alibaba

Bambi Francisco writes:

Alibaba owns two of the largest B2B marketplaces in the world; has a joint-venture partnership with Softbank in a popular Chinese online auction business, called Taobao; and owns a Chinese online payment system, called AliPay. Hmm, sounds like eBay’s Asian twin to me.

There’s quite a stir coming from Alibaba, and it’s likely because the company is seeing a dizzying combination of consolidation, investor interest and competition all at once.

Taobao had 9 percent of the market for online auctions in China, as measured by gross merchandise volume, at the start of 2004, while eBay had 90 percent. By the end of last year, Taobao, which is jointly owned by Alibaba and Softbank, had 41 percent of the market, Chi said.

AliPay doesn’t charge its users for the payment service just yet. But about $3 million worth of goods per week, or a third of Taobao’s volume, is completed using AliPay.

In addition to future revenues from a bigger AliPay, Alibaba and Taobao should be able to generate revenues in other ways, as they continue to grow and service their online communities. For example, Alibaba has just launched a trial of a keyword business for its domestic B2B clients to find more trade leads.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.