Alibaba-Taobao

Alibaba-Taobao

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Answers

1. Alibaba group was launched by Jack Ma in 1998 as a B2B platform. It was doing very good in China targeting the SME’s marketplace (over 40 million SMEs in China). There major threat came when eBay entered China with a JV with EachNet. eBay in 2002 had a large market share in C2C business. It was feared that eBay would enter B2B market too.

Therefore Alibaba entered into C2C business with Taobao to compete with eBay for the market share.

It made sense as Taobao became the dominant market player slicing off eBay’s market share of C2C by providing better and safer transactions using AliPay and more attractive displays.

2. Taobao beat eBay by finding loopholes in eBay’s e-commerce platform.

• eBay charged the buyers and sellers for using its services while transacting whereas Taobao provided free services to its users.
• Chinese culture and tastes were different as they wanted more attractive and colorful display. Taobao managed to recognize the local context and culture better and made a localized webpage full of vibrant colors to look better than eBay.
• False accounts were eliminated as users were required to register on Taobao by their real identity cards and had to provide bank account so that proper and authentic identification is made.
• Taobao had a separate rating system for buyers and sellers unlike eBay. It helped in creating mutual trust between the buyers and sellers as a higher rating was more preferred.
• The PoS in the online transaction used AliPay which was an escrow service which rest assured the buyers that there money was safe in case of any problems faced during the transaction. In this the money is not released to the seller until the buyer has given a confirmation that goods have been received by him.
• Taobao also provided and IM service named Wang Wang to enable its users to communicate with each other building further trust in Taobao.

3. Ma should not implement Zhao Cai Jin Bao as the buyers and sellers are used to the free services. Also the target audience is SMEs and for them to pay extra fees for providing them

Prioritized listings may not turn well. It will subsequently add to the total cost for buyers and which may lead for them to seek corroborative options.

It is later seen that the buyers made online groups of “anti-Taobao” to protest the new system and within 32 days of the new project’s announcement the termination of the project was announced on 21st June, 2006.