Alibaba Group’s motivation for diversifying into the consumer business with the launch of Taobao was mainly because of the rise of eBay in China. Jack Ma, the founder of Alibaba, observed that the entry of eBay through EachNet, which held an 85% market share, was a threat to Alibaba. He was especially concerned that the rise of eBay would encroach their existing B2B business. Jack also noted that the line between individuals and small businesses are blurry, meaning that he knew that once eBay had hold of the individual sellers or consumers in the market, it would be easier for them to get a foothold and …show more content…
They also offered pay-for-performance contracts. Sellers would have to pay their bid only if a customer actually bought the advertised product.
In my opinion, Ma should not implement Zhao Cai Jin Bao. This is because Taobao prided them by the notion of free service. If by implementing Zhao Cai Jin Bao, users might feel this service is a hidden service fee that go against Taobao’s promise to provide e-commerce services for free. The buyers were also concerned that sellers would pass on the cost to them through increasing prices of the items.
Additionally, some sellers had misused Zhao Cai Jin Bao service to attract customers to their storefront. This is done by aggressively bidding on keywords but listed the relevant products at unreasonably high prices. This attracted buyers to their website where they would find other products that were more competitively priced. At the same time, the seller did not need to pay Taobao for their bids because no one would buy the overpriced items.
4. What do you think is the most appropriate way to monetize Taobao?
To maintain its original free e-commerce services and diversify from it, Alibaba launched Tmall, which is similar to an offline mall, where different categories are on different virtual floors. The difference between Taobao is that the merchants must be authenticated, pay both registration and transaction fees. This allows Alibaba group to monetize the traffic from Taobao. Many branded suppliers have