Alibaba merges Taobao and Alimama

BEIJING - Alibaba Group has merged two of its fastest-growing divisions, digital advertising exchange service Alimama and consumer-based auction platform Taobao.com.

In a statement, group chairman Jack Ma (pictured) said consolidating the platforms' operations will better attract sellers and provide consumers with more options, further advancing the Alibaba name brand.

The move comes after Alibaba posted stellar second-quarter earnings, which includes a 159 percent rise in net profit.

Five-year-old Taobao claims that RMB 300 million (US$43.8) is traded on its site daily and from 80 million registered accounts, up from 72 million in June. Meanwhile, Alimama, which launched, claims 3 billion total page views and works with 400,000 small- and medium-sized websites. However, media buyers have argued that Alimama has yet to have a significant impact on the Chinese ad networks operated by Google and Baidu.

Alimama offers free services

Alibaba Group's online ads subsidiary Alimama said yesterday it will make most of its services available free of charge, as it tries to challenge market leaders like Baidu and Google.

Alimama said it will scrap an 8 percent commission on sales from cost-per-time ads on its websites starting from next month and will open its advertising tracking system to users for free.

But it will continue to charge for pay-per-click ads, which account for 20 percent of the company's ad sales.

"China's online advertising market is in its infancy and for companies like us, the future is definitely to embrace the country's huge number of small and medium-sized enterprises," Wu Yongming, general manager of Alimama, said.

"By making our services free, we can significantly help China's huge number of website publishers and bloggers - and differentiate ourselves from the competition."

Alimama is an online advertising exchange set up by Chinese e-commerce giant Alibaba Group in November last year. The website connects advertisers with the country's countless small and medium-sized websites and bloggers. It takes revenue from each ad sale, in direct competition with market leaders like Baidu, Allyes and Google.

The company claims to have signed up 330,000 small and medium-sized website publishers and 170,000 bloggers in China.

Alimama's latest move is reminiscent of another Alibaba subsidiary, Taobao.com, which beat auction giant eBay to become the largest player in China's customer-to-customer market in 2004 using a similar strategy.

Winning customers with free services has become a proven practice for many latecomers to China's Internet market, as the monthly income of nearly 70 percent of the country's Internet users is below $280.

Baidu Inc yesterday declined to comment on Alimama's latest strategy.
Domestic research firm Analysys International said the move will help Alimama win new users.

Alimama Offers Better After-sales Service For Online Advertisers

Alimama, an online advertising business unit of Chinese online e-commerce service provider Alibaba, has announced plans to provide a better after-sales service for its online advertisers.

Alimama is recruiting credible small and medium-sized websites. It says it will provide a "3 Packets of Plans" to qualified websites by ensuring their profit-making, guaranteeing their compensation and recommending businesses to them.

In the initial stage, Alimama will choose several thousand websites and mark each of them with a "3 Packets of Plans" sign. After making sure that each of these websites has a real-name certification and stable traffic, Alimama will purchase advertising placement from them to ensure that they will earn stable income.
Wu Yongming, general manager of Alimama, says they hope to build a basic standard for online advertisements and improve the service of the online advertisement sector through the "3 Packets of Plans".

Alibaba - A B2B Trade Company Overview

Corporate Overview

Alibaba Group is a global e-commerce leader and the largest e-commerce company in China. Since it was founded in 1999, the Alibaba Group has grown to include six core member companies:

Alibaba.com - Alibaba.com (1688.HK) is the Alibaba Group's flagship company and the leading B2B e-commerce company in China, serving small and medium sized enterprises in China and around the world

Taobao - A leading online shopping marketplace for consumers in China

Alipay - China's leading online payment service

Yahoo! China - A search engine and lifestyle portal, acquired from Yahoo! Inc. in October 2005

Alisoft - An Internet-based business management software company targeting SMEs in China

Alimama - An online advertising exchange for web publishers and advertisers to trade online advertising inventory in China

History & Milestones

1999

Alibaba Group officially established, led by Jack Ma and Alibaba's 18 founders working out of a Hangzhou apartment

1999-2000

Alibaba raises US$25 million from Softbank, Goldman Sachs, Fidelity, and other institutions

2003

May: Consumer e-commerce site Taobao is founded, again in Jack Ma's apartment

2004

Online payment system Alipay is launched

2005

October: Alibaba.com forms a strategic partnership with Yahoo! Inc. and takes over the operation of Yahoo! China

2007

January: Business software services company Alisoft is launchedNovember 6: Alibaba.com Limited lists on the Hong Kong Stock ExchangeNovember 20: Alibaba Group launches Alimama, an online advertising exchange company

Alibaba.com (1688.HK) is the leading B2B e-commerce company in China. We provide an efficient, trusted platform connecting small and medium-sized buyers and suppliers from China and around the world. Our international marketplace (www.alibaba.com) focuses on global importers and exporters and our China marketplace (www.alibaba.com.cn) focuses on suppliers and buyers trading domestically in China. Together our marketplaces form a community of more than 24 million members from over 200 countries and regions, as of June 30, 2007.

Founded in 1999, Alibaba.com is the flagship business of the Alibaba Group and one of the world's premier e-commerce brands. Our operational headquarters is based in Hangzhou in eastern China. We have field sales and marketing offices in more than 30 cities in China, Hong Kong, Switzerland and the United States. The company had more than 4,400 full-time employees as of June 30, 2007.

Taobao operates an online shopping marketplace for consumers in China under the names "Taobao" and "淘宝" ("Taobao" in Chinese). With a registered user base of approximately 39.9 million as of June 30, 2007, Taobao facilitates transactions between individual consumers and a wide range of sellers including individuals and retailers. Sellers may post new and used goods for sale on the Taobao marketplace either through a fixed price or negotiated sale or by auction. Consumers may search, shop and transact with sellers on the Taobao marketplace. Alibaba Group founded Taobao, headquartered in Hangzhou, in 2003.

Alipay is an online payment services provider operating under the names "Alipay" and"支付宝" ("Alipay" in Chinese). Alipay's service enables individuals and businesses to execute payments online in a safe and secure manner. Alipay's users are primarily buyers and sellers engaging in e-commerce transactions. With a registered user base of approximately 43.5 million as of June 30, 2007, Alipay is an accepted online payment method for many online retail websites and other online goods and service providers in China as well as the designated online payment service provider on our China marketplace and on Taobao. Alipay partners with domestic PRC banks to provide an escrow service for payments, which reduces the settlement risks faced by Alipay's customers in their e-commerce transactions. Alibaba Group founded Alipay, headquartered in Hangzhou, in 2004.

Yahoo! China's website operates Chinese language portal services, such as email and the provision of finance, sports, lifestyle and entertainment information, as well as a web search service that crawls and indexes web pages generally available on the Internet targeted at individual Internet users in China. Yahoo! China's paying customers primarily consist of advertisers that purchase fixed price banner advertisements, text-links or auction-based pay-for-performance marketing services on Yahoo! China's website. In October 2005, Alibaba Group acquired Yahoo! China in a transaction whereby Yahoo! became a substantial shareholder of Alibaba Group. In connection with this transaction, Yahoo! agreed to grant to Alibaba Group the exclusive rights to use in China the "Yahoo!" name and certain technologies owned by Yahoo!, as well as the right to sub-license these rights to other members of Alibaba Group. Yahoo! China is headquartered in Beijing.

Alisoft develops, markets and delivers Internet-based business management software targeting SMEs in China. Alisoft's software provides its customers with various tools, including enterprise management tools, such as email, customer inquiries and information management, and basic financial management tools, such as invoicing and bookkeeping. Alisoft owns the copyright and other proprietary software rights of the "阿里旺旺" ("Aliwangwang" in Chinese) instant messaging communication tool, which is the designated instant messaging communication tool for Taobao and which we offer to our users as TradeManager on our international marketplace and as 贸易通 (TradeManager in Chinese) on our China marketplace. Alibaba Group founded Alisoft, with operations in Hangzhou and Shanghai, in January 2007.

Alimama is China's leading online advertising exchange, which allows web publishers and advertisers to trade online advertising inventory. A wholly owned subsidiary of Alibaba Group, Alimama is designed to serve the more than one million small- and medium- sized websites in China which generate an estimated 80% of China's website traffic. Alimama helps connects these web publishers to advertisers, allowing them to monetize their website traffic while offering advertisers an affordable way to reach highly targeted audience groups.

Alibaba Releasing APIs & Revenue-Sharing Initiative

Alibaba Group, the parent company of Alibaba announced recently that they will be making Alibaba’s software platform open-source through the form of APIs that are available for applications and services. The API will be based on the concept of SaaS (Software as a Service). Alibaba has about 40 million users and they hope to build a bigger market share within the industry. Alibaba started in the SaaS market last year.

Alibaba plans to allow their free APIs capture the interest of independent software vendors to promote and sell Alibaba’s services, while being compensated through a revenue-sharing model. Other Alibaba Group companies that are participating in open-source SaaS initiatives are Taobao and Alimama. Alibaba partners include Microsoft, Oracle, Cisco Systems, Sun, Dell, IBM, and China Unicom.

Alibaba is known in the web world as being the “eBay of China.” Yahoo! acquired 40% of the company in 2005. And most recently, Alibaba has had one of the most successful IPOs since Google. The API announcement was made official on Alisoft.com. There is some additional coverage at China Web 2.0 Review.