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Taobao Sites to Add Social Networking Features

Taobao, 12/07/11

Daniel Zhang, president of Hangzhou-based B2C e-commerce platform Taobao Mall, recently disclosed that Taobao companies, including Taobao Mall, Taobao Marketplace and shopping search engine eTao are looking to build an e-commerce social network for Taobao's 400 mln registered users. Although he offered no details, Zhang noted that consumer product reviews and ratings systems, and the ability to share likes and dislikes with friends on microblogging site Sina (Nasdaq: SINA) Weibo and SNS Renren (NYSE: RENN), are just the first step.

Taobao Mall has reached 50,000 independent merchants, including major international brands like Uniqlo, Adidas, P&G, Gap, Ray Ban and Levi's. Zhang pointed out that online shopping is becoming more mainstream. "People are buying stuff that is close to their daily lives." Today, clothing and household items are among the most common products purchased online. That's a big change from five years ago, when the largest categories were consumer electronics and virtual goods like Internet games and mobile phone prepaid recharge cards, Zhang said. As a result, users are demanding the online shopping experience become more secure and predictable.

Zhang reiterated that all vendors must accept the website's 7-day, no-questions-asked return policy, and a "100% no fakes" guarantee, which promises customers who receive counterfeit goods will be compensated three times the cost of the item, an amount that rises to five times next year.

As a result of the controversy following Taobao Mall's announcement of increases in fees and consumer protection deposits in October, Taobao has announced a one-year grace period during which the higher fees and deposits would be adjusted to help merchants make the transition. Smaller businesses will also be able to switch their stores to sister B2C/C2C website Taobao Marketplace, which charges no fees. Under the new fee structure, the maximum annual fee for Taobao Mall is now RMB 60,000, a large increase from the previous fee of RMB 6,000. However, Zhang added, Taobao Mall stores that earn top ratings from customers and high sales volumes are entitled to partial or full refunds of the fee.

Editor's Note: For more background information on the controversy surrounding Taobao's fee increases, please see"Taobao Mall Revises Rules in Response to Protests," MD 10/17/11 issue, and "Taobao Mall Tightens Rules for Merchants," MD 10/10/11 issue. For more information on Taobao and parent company Alibaba's SNS products, please see "Alibaba Launches SNS Laiwang," MD 12/05/11 issue, and "Taobao Updates Social Product Sharing Feature," MD 9/08/11 issue.

Keywords: e-commerce Taobao Internet B2C C2C SNS registered users Etao Taobao Mall Daniel Zhang business model strategy

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