Most people in this country have never heard of Taobao – an online aution site owned by Alibaba in China (See my previous post).
On the other side of the globe, the situation is very different. Sitting in the hotels in Beijing and Shanghai, I noticed the ads about Taobao popping up on TVs almost every 15 minutes. Since its name “??” means 
“digging for treasures” in Chinese, it gets a lot of attention very cleverly.
Fierce competition between eBay EachNet (eBay China) and Alibaba / Taobao is apparent (see this). Morgan Stanley analysts estimated Taobao’s market share increased from 9% to 40% in 2004. For the first quarter of 2005, eBay EachNet reported 100 million in gross merchandising value while Taobao reported 120 million.
I believe that understanding the customers’ preferences and tastes gives the local players an upper hand against their global counterparts. Taking Taobao and eBay EachNet as an example:
- With most users not sophisticated for auction, auction accounts only 10% of Taobao’s listings, while eBay EachNet has about 40% of its listings for auction.
- Taobao offers free listings. As a result, its listings reached 10 million in September of 2005, almost 10 times more than eBay EachNet’s.
- Taobao also offers longer listing periods (14 days) and let customers extend for one more period automatically. eBay EachNet does not have this flexibility.
- Taobao’s listings appear to be more customer-centric while eBay EachNet’s listings more product-centric. For example, Taobao’s listings are organized into several categories, such as “Men,” “Women,” etc., while eBay EachNet sticks to its “global platform” grouping users into “Buyers” and “Sellers.”
- Taobao has higher customer satisfaction than eBay EachNet. According iResearch, the user satisfaction level was 77% for Taobao versus 62% for eBay EachNet.
I have to say I am impressed with Taobao’s performance. I remember only about a year ago, I was having a conversation with a senior executive of Alibaba at its headquarter in Hangzhou, I couldn’t help asking:”Aren’t you afraid that eBay will buy you out?” To my surprise, the answer was:”No, we will buy eBay.”
This is very interesting… keep up with the good work!
Thanks for the insightful article…I’ve been searching for business/news articles about the situation between eBay and Taobao, and of the dozens I’ve read yours is the most insightful and informative- great work! How about an update?
Thanks, Anonymous. I do have an updated article: http://helenwang.rdvp.org/pacific/2006/05/e-commerce-momentum-in-china.html. Hope you find it useful too.
This is a very good article about Taobao and eBay. Very good one…
I’m in the U.S. and would like to shop on Taobao. Do they do business with the U.S.? Do they have a translated site for American consumers? I could only find the one in Chinese.
Imangiar,
I am afraid that Taobao is only for Chinese users at this time.