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Chinese auction giant Alibaba/Taobao looking to compete with eBay and Paypal in the US?
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Disgruntled eBay sellers who have long been hoping for a strong, viable alternative eBay ecommerce site might find help on the horizon from unlikely source. China and Jack Ma.
Jack Ma founded Alibaba, (www.alibaba.com) which is a very successful site based out of China that has struck gold by by opening up a business to business marketplace which cut out the middleman and allowed western companies to connect directly with suppliers and manufacturers from around the world, but mainly with Chinese companies.
When eBay opened up eBay.cn the hopes of expanding to China, Alibaba (headed by Jack Ma) started up a competing auction site, Taobao (www.taobao.com) to challenge eBay for the Chinese auctiom market. While eBay had the experience and the big name, Taobao knew the Chinese local market and what Chinese people desired. Even the name Tao Bao translates roughly into "digging for treasure" in Mandarin. eBay partnered with an existing site (www.eachnet.com) and used its tried and true cookie cutter formula that had found success in every other market it had expanded to. The usual insertion fees and Final Value Fees. Taobao knew that people would be reluctant to pay money up front without any guarantee of results so they made Taobao free of risk for sellers by not having insertion fees at all. In 2007 eBay threw in the towel and pulled out of China. There was talk later on of eBay partnering with Tom.com (www.tom.com) but nothing has come to fruition yet. Right now Taobao has over 80 percent of the Chinese person to person ecommerce market, a percentage that overshadows even eBay in the US market.
The bottom line is that Taobao and Jack Ma won the auction site wars in China and they may have their sights set on the US market.
Jack Ma and a group of senior Alibaba executives are in the US speaking with several potential partners in the hopes of bringing TaoBao and and the payment service, Alipay (www.alipay.com) to US and the rest of the world. Potential partners include Microsoft, Yahoo, and Google with even eBay being mentioned.
Breaking into the US market won't be easy as eBay has a virtual monopoly in the US auction market and it would be tough for any company to step in and in be successful at the same level. If any company can do it though, it might be the company who has already shown that eBay can be beaten. However, Taobao won Round One on their home field. Can they deliver eBay a knockout blow on their home turf?
Stay tuned.
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