Teaming up with Taobao

 Coo8.com, the online arm of Chinese BestBuy Gome today announced reaching an agreement with Etao on joint force promotion/affiliate program, CPS advertising and so forth. The two are expected to cooperate more comprehensively in many areas for mutual benefits. For example, every month Coo8 will provide Etao with selected items, only for Etao users.

Coo8 will share with Etao all its inventory information – over 100,000 items, meanwhile, Etao will pay Coo8 back with user traffic, Alipay accounts and user behavior statistics.

Apparently, Gome is striving to catch up with Suning.com, the online subsidiary of Suning, one of the largest electronic chainstores in China.

 

Lagging Behind Suning

To many industry insiders, Suning.com was THE black horse in China B2C forefront last year. According to iResearch, a Beijing-based internet think tank, Suning.com is the third largest Chinese B2C by transaction volume in 2011, only next to Taobao Mall (or Tianmao) and 360buy. Chen Nian, founder of Joyo.com (sold to Amazon) and VANCL also believed that “Suning.com is the real black horse of the year, and if the site is taking the online business seriously, then we are assured a spectacle.”

As a matter of fact, Gome is having a hard time in keeping up with the pace of Suning on both online and offline fronts. Though self-claimed as the largest electronic stores in China on its website, the financial results of the two speak to the truth. In the first three quarters of 2011, Gome offline business generated RMB 1.791 billion in net income on revenue of RMB 43.983 billion, the outcome was overshadowed by Suning’s RMB profit of 3.422 billion on revenue of RMB 67.625 billion.

According to Wang Zhiquan, CEO of coo8.com, the 3C-centric site recorded RMB 2 billion in sales. While, Suning.com grabbed RMB 5.9 billion in sales last year, according to iResearch.

Coo8.com planned spending up to a whopping RMB 100 million on Etao’s affiliate program in this year.

 

The Siblings

Interestingly, Gome operates another more-of-its-own B2C site Gome.com.cn. The service went online in May of last year, about 7 months after Gome acquired 80% of Coo8.com in November, 2010.

When asked about the siblings, Wang said that “coo8.com and gome.com.cn are both brothers and competitors. The two belong to the same parent company. Electronic online retailing is a huge market, gome.com.cn to coo8.com is nothing different from to other online outlets.”

 

Price Engine Picking up

With the proliferation of Chinese B2C services, price engine like Etao help Chinese users buy smarter are burgeoning. B5M.com announced raising US$ 7.1 million in Series A round of funding in last month. Other competitors in the market include Smarter.com.cn, askyaya.com, Youdao Shopping (by NetEase), Beargoo.com (3C-centric) and so forth. Put aside how eager Coo8 is to catch up with or even outrun Suning,  at least, tapping into the trend to foster its business is a smart move for the beleaguered company.