Alibaba splits online retailer into three
Mainland e-commerce giant Alibaba Group Holding has implemented a sweeping restructuring of Taobao, its online retail services unit, in a bid to stay ahead of the competition and better engage more customers.
The new operating structure, which took effect yesterday, split Taobao into three wholly owned subsidiaries focused on specific e-commerce market segments.
Taobao Mall runs the online shopping portal where international brands and major retailers sell directly to consumers, while Taobao Marketplace is responsible for social networking website Taojianghu, small consumer-to-consumer transactions and the Juhuasuan group -buying portal.
The eTao shopping search engine, which Taobao launched in October to help users scour the internet at large for products and services, now also covers the Taoke online advertising platform.
'We believe that reorganising Taobao into smaller companies will create more value for the whole industry, and therefore more value to our company and shareholders,' chairman and chief executive Jack Ma Yun said in an internal e-mail to Alibaba Group employees.
The group's other subsidiaries are Hong Kong-listed flagship Alibaba.com, third-party online payment service Alipay, data centre operator Alibaba Cloud Computing and China Yahoo.
Ma said the three new 'Tao' companies, along with business-to-business e-commerce firm Alibaba.com, will connect consumers, merchants, manufacturers and other services providers in a larger business platform that would help improve and expand e-commerce activities across the country.
Prior to the reorganisation, Taobao estimated it had more than 370 million registered users and over 800 million product listings. It sold an average 48,000 items per minute last year, as more consumers in inland provinces shopped online.
According to mainland internet market analyst firm iResearch, Taobao accounted for 90.5 per cent of the consumer-to-consumer online shopping market segment and 46.9 per cent of the business-to-consumer segment in the first quarter this year.
The combined business-to-consumer and consumer-to-consumer e-commerce market segments on the mainland are forecast to grow an average 42 per cent annually over five years and be worth 1.52 trillion yuan, or 7.2 per cent of the country's total retail sales, in 2014, according to a Deutsche Bank report.
'We feel the decision to split Taobao into three companies makes abundantly clear what we have been saying for years - there is no Taobao IPO,' an Alibaba Group spokesman said. A spokesman for United States-based Yahoo, which owns about 40 per cent of Alibaba Group, said the company was informed about the reorganisation ahead of Ma's announcement.
With the restructuring, Jonathan Lu Zhaoxi has stepped down as chief executive of Taobao to serve solely as chief executive at Alibaba.com. Each of the three 'Tao' companies have their own management.
