Tencent VS Alibaba: A Scramble For B2C Businesses

Taobao Mall, the B2C arm of Taobao which brought in RMB30b ($4.6b) in sales last year and topped the list of B2C initiatives according to a report by market researcher iResearch announced its long-awaited B2C partnership strategy “Open B2C Platform” yesterday with local B2C sites including NYSE-listed Dangdang.com, Walmart backed Yihaodian.com, electronic retailer Gome’s online arm Coo8.com. internet fashion brand VANCL.com and maternity-children products e-tailer RedBaby.com.cn onboard alongside other 38 major Chinese independent B2C sites ranging from online general stores to verticals.

The 38 sites will operate their flagship e-stores on Taobao Mall through the strategic partnership, which is expected to put Taobao Mall in a better position against 360buy and QQ Shop, the B2C arm of Tencent’s Paipai, both are major competitors to the Hangzhou-based B2C powerhouse. Taobao Mall already claims 48.5% of China B2C market while 360buy comes in second with 18.1%.

According to Zhang Yong, head of Taobao Mall, the service is more of a platform provider than online retailer. So there’s no competition between Taobao Mall and other independent B2C sites. For this year Taobao Mall’s transaction volume is about to hit a record RMB100b ($15b) and is expected to surpass RMB200b ($31b) in 2012.

Retailers and brands on Taobao Mall numbered 50k and 70k separately as of now.

Tencent Stealing Some Thunder With Leaked Updates

Tencent which has been trying to catch up with Taobao and has not yielded any good outcomes yet of course can’t sit squarely with Alibaba’s grand announcement. The Shenzhen-based internet powerhouse tried to steal some thunder from Taobao Mall by leaking updates on and screenshots of its super B2C platform, named QQ Wanggou (means QQ Online Shopping), to tease users as well as test out market response.

QQ Wanggou will be made accessible through second-level domain buy.qq.com (not up yet) for the time being and will be moved to an independent domain name next year.

In this case, Tencent will own 3 ecommerce initiatives, QQ Wanggou, QQ Mall and Paipai that target independent-operated B2C sites, brands and individual sellers separately. Target customers for QQ Wanggou are said to be upper-middle class with decent income who care about product and service quality.

As for operating model, people familiar with the matter said that Tencent will operate the business under concession agreement with one exclusive B2C partner takes over one specific category including 3C, sportswear, cosmetics, clothes, grocery and jewelry. That means Tencent will introduce 6 strategic partners to take their reins. 3C e-tailer 51buy.com, one of China’s Zappos Okbuy.com and online jewelry retailer kela.cn were confirmed to join QQ Wanggou platform and to run their own category. All these three companies are backed by Tencent.