History
Before its launch of Taobao, Alibaba had focused on online business-to-business wholesale sales.
In 2003, eBay acquired Eachnet, China's online auction leader at the time, for US$180 million. It became a major contender in the Chinese consumer e-commerce market.[7]
Responding to eBay's moves Alibaba launched Taobao as a rival consumer-to-consumer platform. To counter eBay's expansion, Taobao offered free listings to sellers. It introduced instant messaging for facilitating buyer-seller communication and an escrow-based payment tool: Alipay. Taobao's focus on institutional trust building mechanisms like escrowing payments became a major reason for its success in the market for eBay, despite eBay's first-mover advantage.[8] Taobao became mainland China's market leader within two years. Its market share grew from 8% to 59% between 2003 and 2005, while eBay China dropped from 79% to 36%.[9] eBay shut down its Chinese site in 2006.
In 2008, Taobao established a platform rule providing that customers had the right to return clothes sold on the platform within seven days of receipt without cause, and subsequently expanded the rule to cover other commodities.[8] This rule became an influential standard in Chinese e-commerce and in 2014 was made an industry standard through the State Administration for Industry and Commerce's Administrative Measures for Online Trading.[8]
In October 2010, Taobao beta-launched eTao as an independent search engine for online shopping to provide and merchant information from a number of major consumer e-commerce websites in China. Online shoppers would be able to use the site to compare prices across sellers. According to the Alibaba Group web site, eTao offers products from Amazon China, Dangdang, Gome, Yihaodian, Nike China and Vancl, as well as Taobao and Tmall.[10]
In June 2011, Jack Ma, executive chairman and former chief executive officer of Alibaba Group, announced that Taobao would split into three different companies: Taobao Marketplace (a consumer-to-consumer platform), Tmall.com (a business-to consumer platform, then called Taobao Mall), and eTao (a search engine for online shopping). The move was said to be necessary for Taobao to “meet competitive threats that emerged in the past two years during which the Internet and e-commerce landscape has changed dramatically.”[11]
In 2012, Taobao began to accept international Visa and MasterCard credit and debit cards.[12][13]
On April 29, 2013, Alibaba announced an investment of US$586 million in Sina Weibo. According to Reuters, the deal "should drive more web traffic to Alibaba's Taobao Marketplace".[14] On August 1, 2013, Alibaba launched Weibo for Taobao, which allows users to link Sina Weibo accounts with Taobao accounts.[15]
In addition to hosting individuals and businesses, Taobao includes online stores for courts, customs offices, state-owned banks, and asset management companies selling distressed assets.[8] By early 2014, more than 500 local Chinese courts had established Taobao store fronts to sell seized property, including property which had been confiscated as part of the anti-corruption campaign under Xi Jinping.[8]
