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3 Major Chinese E-commerce Names to Know …and fear?

By Josekun <July 22, 2012>

Part I


Statistics from iResearch show that China’s e-commerce revenue reached 276 billion U.S.  Dollars (21  trillion Japanese yen) just the first fiscal quarter of 2012.

Online retail generated $121 billion in sales in China last year, up 66% from 2010, according to Barclays Capital. The size of China’s e-commerce market is expected to grow more than triple over the next three years, with sales reaching $420 billion by 2015. That’s 20% more than what the U.S.’s ecommerce market is forecast to bring in that year.

Alibaba, Baidu and Tencent are the three biggest Internet companies in China. They dominate three different categories of the market: ecommerce, search and messaging, respectively.

Open sesame! ALIBABA  (Alibaba and his …accomplices?

Alibaba Group. A privately-owned Hangzhou-based family of Internet-based businesses. They cover business-to-business online marketplaces, retail and payment platforms, shopping search engines and data-centric cloud computing services.

Meaning (simplified Chinese: 阿里巴巴集团; traditional Chinese: 阿里巴巴集團; pinyin:Ālǐbābā Jítuán)

Their products and services are designed to make the benefits of the Internet accessible to small businesses, entrepreneurs and consumers and it operates its business primarily in the People’s Republic of China.

  You don’t know Jack Ma

Alibaba’s owner  Jack Ma said, ” I was in San Francisco one day, and I was thinking ‘Alibaba may be a smart name’ And then a waitress came to take my order, so I said do you know Alibaba? and she said yes! I said what does Alibaba remind you of?, and she or he said ‘Open sesame’ and then I thought  “yes, this is the name!”
Then I went onto the street and asked a lot of people. About thirty guys: ‘Do you know Alibaba?’
People from India, Germany, Tokyo and China, all of them knew Alibaba, all responded “open sesame”

“Alibaba may be a kind, good business person, and he helped his village. Strength with an easy to remember and globally known magic spell, Alibaba does ‘opens sesame’ for small- to medium-sized corporations”

Alibaba Group is the owner of Taobao, Tmall, eTao, Alipay [Aliexpress], Alibaba Cloud Computing and lately; China Yahoo!

From then:

Alibaba.com (and it’s Chinese version 1688.com)

Alibaba.com is the largest marketplace for global trade in the world. It is a provider of online marketing services for importers and exporters.
Alibaba.com is an online business platform to search or post information to find potential business partnerships and deals.

Suppliers (exporters) can post company information and product information and compliment it with photos, descriptions, specifications, shipping terms, etc.

Buyers (importers) search and browse supplier’s products and then make inquiries to negotiate or place orders.

Their  version in Chineseis www.1688.com

Taobao Marketplace  is the biggest C2C online shopping platform in China. Founded in 2003, it has a wide variety of products.
They claim that it has served more than 370 million registered users (as 2010)  They claim to have more than 800 million product listings and more than 370 million registered users.
Taobao Marketplace is one of the world’s top 20 most visited websites. 

Tmall  began operations on April 2008 as a dedicated B2C service platform to complement Taobao’s C2C marketplace and then became an independent business (June 2011).
Tmall.com currently features more than 70,000 major multinational and Chinese brands from more than 50,000 merchants. It offers several product verticals with customized customer services, including Consumer Electronics mall; Book mall; Home Furnishing mall; Designer Footwear mall; Beauty mall; and Imported Goods mall.

Brands with flagship retail storefronts on Tmall.com include UNIQLO, L’Oréal, adidas, P&G, Unilever, Gap, Ray-Ban, Nike and Levi’s. Tmall.com set a record for highest single-day transaction volume during a special promotion on November 11, 2011, facilitating the sales of goods totaling RMB3.36 billion (US$531.76 million) on the day or an average of more than RMB38,000 (US$6,022.18) per second.

eTao was first launched by Taobao in 2010 on it’s Beta-version, designed to work as an independent search engine but then, also became an independent business in June 2011. 
eTao includes product search, rebates, coupons, group buy search, Tao Bar community and product pinboard eTao Faxian. It currently showcases more than 1 billion product listings, more than 5,000 business-to-consumer and group shopping websites, as well as more than 200 million pieces of shopping-related information.

eTao reflects product results from various major B2C online shopping platforms and individual brand owners including Taobao Marketplace, Tmall.com, Amazon China, Dangdang, Gome, Yihaodian, Nike China and Vancl.

Alipay Launched in 2004, Alipay is a third-party online payment platform. With some restrictions of operations in China, Paypal had a very, very lucrative market to tease Alibaba onto. Therefore the idea of an alternative for Paypal.The obvious result; Alipay
On November 11, 2011, Alipay set a record for the highest daily number of transactions, facilitating 33.69 million transactions during the 24-hour period and it’s now  the preferred online payment tool of Internet merchants in China..

[suggested read “Alipay Looking To Take A Chunk Of Paypal’s Monopoly!” ]

The company claims it had more than 650 million registered accounts as of the end of 2011.
Alipay provides a payment service called escrow, in which consumers can verify whether they are happy with goods they have bought before releasing money to the seller.

Alipay has partnerships with more than 100 financial institutions including Visa and MasterCard to provide payment options for Taobao.com and Tmall.com as well as more than 460,000 Chinese businesses and they are also looking to team up with several international credit card companies.

Transnationally, Alipay helps more than 300 worldwide merchants sell directly to consumers in China. It also  supports transactions in 12 major foreign currencies.

In 2009 Alipay ownership was transferred out from the Alibaba Group to a private company managed by Jack Ma. It was a very controversial and sudden decision that had the media reporting  in 2011 that Alibaba Group’s controlling shareholders (Yahoo! and Softbank) were not informed of the sale for nominal value.

The incident was widely criticized in foreign and Chinese media as harming foreign trust in making Chinese investments. The ownership disputes with Yahoo! and Softbank were lately resolved by Alibaba Group in 2011.

Aliexpress Founded in 2009, AliExpress.com is an online wholesale marketplace platform that offers products at factory prices direct from China.  Orders can be as small 1 item. 

Different from Alipay, Aliexpress sellers are only from China. AliExpress its a B2B and B2C ships exclusively by air while its creator, Alibaba, offers a choice of shipping by sea or air.
With a growing reputation of unethical suppliers, it got an user beware rating from the WFHW ‘Work From Home Watch Dog’

Suggested read: Great Aliexpress review by the The WFHW 

Alibaba Cloud Computing Created in September 2009 , Alibaba Cloud Computing is build an advanced data-centric cloud computing service platforms. (Developers the cloud-based mobile device operating system, “Aliyun OS”, now available also in English)
Their research and market targets also include e-commerce data mining, high-speed massive e-commerce data processing, and data customization (specialty focused, flexible, front-end applications) Mostly for the Chinese market as the  Aliyun OS. See It HERE
http://bit.ly/QaPZxV

I think personally, Alibaba Cloud Computing is a company to watch when it comes to future solutions for cheap smart-phone systems. As good as the actual rivals? Definitively NO, but cheap.

China Yahoo! Yahoo! used to hold a 40% stake in Alibaba, which manages Alibaba’s web portal in China using the Yahoo! brand name. 
Yahoo! in the USA has no direct control over the operations of Alibaba, which operates as a completely independent company.
After years of negotiations, on May 21st 2012 Alibaba announced that it would buy back half the 40% stake owned by Yahoo. The deal would raise about $7.1bn (£4.5bn) for Yahoo!, which has been losing ground to rival Google and Facebook in online advertising.

Same as Yahoo! anywhere; Yahoo! China is an Internet guide designed specifically for Web users there (Baidu or Yahoo! China? Click here) http://aol.it/OfHlbS

It includes more than 20,000 Chinese Web sites created in simplified Chinese characters and approximately 20,000 Web sites created in traditional Chinese characters.

Same as Google, Yahoo! China has also been a target on the cyber attacks originating in China (Operation Aurora) due to allegations that the Chinese government used the company’s’ service to spy on human rights activists. http://bit.ly/MAz2LR

Personal comments (To be, or to Drop-ship?…)

ALIBABA

I have been using Alibaba for both my companies (Mondo Books / Mondo Media Networks) and it has been working good to network with international Book traders.
All of our business proposals have come from Asia, so I’m not sure that Alibaba’s reputation elsewhere might be that strong.

As for advertising services (B2B), Alibaba might still not be such a good option but good enough by being free.
To get better attention in marketing service related business, I might relying in other marketplaces.

– Alibaba has an escrow service that comes obviously necessary.
– They also have membership verification thou is only available only for members in U.S.A., India, Malaysia & few other European countries.
– Alibaba has a Gold Supplier account upgrade though is disappointing to find to be connected to a page in Japanese with poor design that suggest an unclear service that cost fees of 60,000 Yen (764 U.S. dollars) a month. [I’m registered in Japan but I chose to receive notifications in English]

Alibaba’s sign-in system is poorly built and it does not accept alphanumeric characters, making the password very vulnerable to hacking. 

I have tried to use Alipay but their set up fee of 1000 USD +  3% for transaction might be too much for a low starter. If you are looking for payment processing services to sell in China, China Payment Services (CPS) might be a good option. 

Same as Alipay, CPS has fast and friendly costumer service. 

CPS integration system is easy to understand and use, and it is as far as I know, the best option for small starters on e-commerce to China thou it might be hard to integrate to sites e-commerce platforms.  I tried Shopify and Highwire but they had issues allowing CPS.

Getting pay from China is tricky so  my suggestion would be; to built your own site from scratch and add your own payment option like Alipay (don’t forget that you need 1000 USD just to get you started) CPS or Paypal, and build your own shopping carts.

I had some problems with Paypal before since they couldn’t accept payments in RMB (Yuan) but it seems that is lately possible. It works the same as it does in every other country. It accepts Chinese bank accounts, cards, addresses and RMB payments (very important when getting your customers to know price values)

 Now they offer two types of account: An RMB only account for payments within China, and a Global account for payments in any paypal accepted currency world wide.  More info HERE (Use a translator) 

Amazon China

Amazon China. Its only available in Chinese and  there is no marketplace for second-hand books  (other second hand products) 

TAOBAO and other temptations. 

If you want to sell in Chinese e-Commerce platforms, it’s easy. There are a bunch of companies that offer to register your products and charge you a not very affordable rate. Even if your products where made in, yes, China.

OR you could register your company in China in all different kinds of incorporation… Easy if you have a good amount of Money and the guts to take high risks. 

 Selling in China it’s as easy as saying, OPEN SESAME!