CRT Extra: More on New Taobao “Mall” Site

http://blogs.wsj.com/chinarealtime/2010/11/02/crt-extra-more-on-new-taobao-mall-site/
A plan to re-brand and expand the business-to-consumer platform of Alibaba Group’s online retail platform Taobao.com could lead to higher profits for the company (see yesterday’s story in The Wall Street Journal here ).

Tmall.com

Taobao is re-branding its B2C platform Taobao Mall, giving it an independent web address, Tmall.com, and spending $30 million in an advertising campaign to attract more users. The move is meant to differentiate listings by Taobao Mall merchants, who are either brand owners or authorized distributors, from Taobao.com’s consumer-to-consumer, or C2C, merchants, who are mostly individuals or small to medium sized businesses that don’t have to go through the same verification process to open a store on Taobao’s platforms.
Daniel Zhang, Taobao’s CFO, said at a press conference on Monday that the company intends to launch more sales categories, such as a category for groceries, and to create unique features for each category, like a price guarantee for air tickets.
Taobao Mall currently has more than 20,000 merchants who sell products from more than 30,000 brands, Zhang said.
Expanding the Taobao Mall product could translate to higher profits for Taobao, which charges fees to B2C merchants for listings while allowing C2C merchants to list products for free (revenue on C2C listings comes from advertising and additional services value added services–see below). Taobao’s free listings have made it difficult for other companies including eBay to compete in the Chinese C2C market.
With Taobao Mall expanding rapidly (the company expects to quadruple its transaction value this year), Zhang said fees will be one of four main sources of income for the company going forward. The others: Keyword advertisements so merchants can advertise their listing when users search for related products, other types of advertising, and value-added services such as aiding merchants with warehousing and other logistics issues.
So far, Adidas, Lenovo, Uniqlo, and Procter and Gamble products are all sold in Taobao Mall.
Zhang reiterated that the company has no plans for an initial public offering, and told reporters during an interview that the new plans for Taobao Mall are not an indication of any plans for a listing.
– Loretta Chao. Follow her on Twitter @lorettac