Taobao
1. What was Alibaba Group’s motivation for diversifying into the consumer business with the launch of Taobao? Does it make sense?
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 transition to the SME segment. Additionally, Alibaba has experience in the B2B market, which helped SME expand their businesses online. Alibaba has Alipay, which they have experiences in handling the Chinese business culture and payment method that helped Alibaba diversify into Taobao. The external environmental factors also did have an influence in the launch of Taobao. The increase of internet and broadband users penetration rate, increase motivation by both sellers and consumers, high technological growth rate are few of the factors that influence Ma’s decision. Moreover, since eBay had not start moving towards B2B yet, Alibaba’s group decided to be proactive and moved to capture the C2C segment.
2. How did Taobao beat eBay?
There are many aspects to how Taobao moved ahead eBay with factors:
Familiarity with Chinese aesthetics and preference
Jack Ma being a Chinese and serving the Chinese market for a long period knew what the (chinese) consumers wanted. He wanted to imbue Taobao with a strong local culture that reflected a deep understanding of Chinese consumers and an attitude of informality. When it came down to the little nuances, he wanted to differentiate it as much as he can. For the website interface, they took
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 transition to the SME segment. Additionally, Alibaba has experience in the B2B market, which helped SME expand their businesses online. Alibaba has Alipay, which they have experiences in handling the Chinese business culture and payment method that helped Alibaba diversify into Taobao. The external environmental factors also did have an influence in the launch of Taobao. The increase of internet and broadband users penetration rate, increase motivation by both sellers and consumers, high technological growth rate are few of the factors that influence Ma’s decision. Moreover, since eBay had not start moving towards B2B yet, Alibaba’s group decided to be proactive and moved to capture the C2C segment.
2. How did Taobao beat eBay?
There are many aspects to how Taobao moved ahead eBay with factors:
Familiarity with Chinese aesthetics and preference
Jack Ma being a Chinese and serving the Chinese market for a long period knew what the (chinese) consumers wanted. He wanted to imbue Taobao with a strong local culture that reflected a deep understanding of Chinese consumers and an attitude of informality. When it came down to the little nuances, he wanted to differentiate it as much as he can. For the website interface, they took