In yet another expansion into new markets, Alibaba launched Alitrip (or Qu’a (去啊) in Chinese) in late October. Like the e-commerce giant’s other market places, Alitrip is a platform for travel agencies big and small to set up online storefronts. Vendors on Alitrip have the same resources as Taobao and Tmall retailers, such as Alipay payment options and Alibaba’s huge user base. Alitrip is initially expected to make money through using the same approaches as other Alibaba marketplaces, in search marketing, display advertising, sales commission, and affiliate programs.

Alitrip is a latecomer to China’s online travel market. Major online travel agencies such as Ctrip and eLong have long been aggregating services from traditional travel agencies onto their sites. More recently, Qunar, the travel search and service platform, wants to be the Taobao for travel services.

After starting off as a travel search service, Qunar then added a transaction processing system, or Total Solution (TTS), to enable travel service providers to sell products or services directly on its site. Qunar supports numerous online payments services, including Alibaba’s Alipay, Tencent’s Tenpay and 99bill. So there is little differentiating it from a Taobao-like marketplace, with the only difference in revenue sources from Alibaba marketplaces in its lack of affiliate programs.

Market share battles

Majority owned by Baidu, which then channels traffic to it, and with exclusive rights to operate Baidu’s own new travel platform, Qunar is considered the largest travel search engine in China. But beyond search marketing, Qunar has been struggling to compete with the big online travel agencies such as Ctrip, and eLong, in travel product sales. Qunar has been up against them since adding transaction processing functions in 2010. Ctrip, eLong and removed some of their offerings from Qunar in retaliation in recent years.

Price wars have broken over several times. Qunar’s net profits declined sharply in the past year as the marketing and sales spending soured. The company is also spending more on product development, trying to set itself apart from online travel agencies through technology.

It’s unknown how Ctrip and the like perceive Alitrip. But there’s a long way to go for Alitrip to be as powerful as Taobao or Tmall, where users’ purchasing power is strong enough that companies can’t ignore it, even if they have had their own online stores.

A new wave of travel startups

A large number of Chinese travel startups have emerged and raised funding in recent years. By contrast to the established online travel agencies who all have the same essential business model, the new travel services try to differentiate themselves. They focus either on niche service categories or cater to niche markets. A Taobao for travel makes sense when the offerings available are diversified. And these new startups, unlike Ctrip and eLong, are nowhere near to being direct competitors to platform providers like Qunar or Alitrip.

Recently Qunar announced an open platform project, providing its resources, from data to tech support, and funding for entrepreneurs to bring their travel products or services onto the site or develop new ones. Simply put, the company aims to induce future travel startups to set up on Qunar and grow with the platform. More than 600 applications and 292 products had been received by Qunar by last month, according to the company. The company plans to have 1000 entrepreneurs launch travel products on its platform by 2015.

Alibaba doesn’t have the same edge

Alibaba’s Juhuasuan became the leading group-buying platform as it successfully provided extra resources for retailers on Taobao and Tmall. But, in contrast to Juhuasuan, there aren’t a large number of travel agencies on Alibaba’s marketplaces that Alitrip can convert into adopters.

Alitrip had over 10,000 merchants on board before launch, according to Alibaba, while there were millions of retailers on Alibaba when Juhuasuan was launched.

Juhuasuan was established when group-buying was about to explode in China and there wasn’t a dominant player in the sector. While a wave of independent group-buy sites would come and go in the following years, Juhuasuan has become the go-to place for retailers on Alibaba’s marketplaces. Those retailers can of course initiate projects on other group-buying sites, but with Juhuasuan retailers are able to promote deals to their existing consumers and potential customers with marketing help from Alibaba.

But in the online travel market, Ctrip, eLong and Qunar are the sites Chinese consumers visit first. Merchants on Alitrip also cannot benefit as much as retailers on Juhuasuan.

Alitrip is of course striving to make its offerings more attractive to startups and users, as Qunar is pulling ahead here as it already has an large user base. For instance, Alitrip users can check into hotels without using credit cards to guarantee payment, providing their forward their Alipay account information for automatic fee deduction following their stay. Also, Alitrip has enabled pre-ordering and reservation of travel products through Yu’e Bao, the mutual fund only available to Alipay users.

image credit: Shutterstock

Editing by Mike Cormack (@bucketoftongues)

Tracey Xiang is Beijing, China-based tech writer. Reach her at

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