Tencent’s Ecommerce Dilema
Tencent’s ecommerce efforts started in 2005 with the launch of Paipai – its alternative to Taobao – in September of that year, a move to combat Alibaba’s Taobao which ruled the Chinese C2C market at that time. Now after almost seven years, Taobao still topped the sector with a market share of over 90% while Paipai accounted for a far far behind 8.9% share.
Then in early 2010, the Shenzhen-based company launched its QQ Mall (QQ商城), two years after Taobao spun off Taobao Mall as an independent presence of B2C service in April, 2008. An iResearch report showed that in the first quarter of 2011, Taobao Mall took 46.9% of the B2C market by transaction volume. QQ Mall? Not even in the Top 10 list.
As Tencent came to realize the growing potential behind B2C service – Beijing-based market researcher AnalysysInternational said that China’s B2C market generated US$ 38 billion (RMB 240 billion) in sales in last year, up 131% from the same period a year ago – the company launched QQ Wanggou (QQ网购) in late last year to capitalize on the shift.
Frankly, QQ Wangou looks more like an integrated platform for Tencent’s portfolio companies from its ecommerce investments in last year, as of now there’re a bunch of companies operated on the platform providing customers with items ranging from diamond, home appliance, shoes, cosmetics, flight tickets to groceries, including 51buy.com, Okbuy.com, elong.com, kela.cn, Maibaobao, Tiantian.com, yihaodian.com and so on, most of which received investments from Tencent. (Refer to this story for more details.)
From C2C to B2C, from Paipai to QQ Shop and now QQ Wanggou, Tencent had a bumpy ride in half a decade with poor harvest.
2012, Year of Consolidation
Now Tencent want (and it really needs to) reduce the complexity by integrating Paipai and QQ Shop into QQ Wanggou, Paipai might act as the C2C marketplace while QQ Shop will be rebranded as a retail hub dubbed “Brands Street(品牌街)”. Tencent’s ecommerce effort will be centering around QQ Wanggou. Less confusion for its customers.
Wu Xiaoguang, SVP of Tencent disclosed that consolidation will be Tencent etailing business’s keyword in this year, and the company expects to top RMB 200 billion in transactions in five years.
Tencent built its empire on entertainment business in the past, he said, now the company hopes to tap into the ecommerce heat and recreate a platform based on online consuming. Ecommerce will be Tencent’s new growth engine.