Chapter 1272 – Taobao
“The first snow of 2002 is much later compared to the past…” The phone on the table rang.
“h.e.l.lo, Manager Ma? What is it? Alright. I know.”
On 10th April 2003, Ma Yun invited Feng Yu, Zhong Qingxian, and the rest to attend the opening ceremony of Taobao.
Taobao is another eCommerce site set up by Alibaba and is using the C2C model. Everyone can become a boss, and everyone can be a consumer.
Alibaba had started as a B2B trading platform and tried the B2C model. It was until this year, they felt it’s time to start the C2C model. They felt the C2C model is more advantageous than B2C as they don’t need to invest too much.
Alibaba had no choice as they are running low on funds. Setting up a website is not a small amount, and they are prepared to suffer losses in the initial phase as they will not be collecting fees from the sellers.
Of course, the fees are not their main source of income. Their main source of income will be from Alipay. Alipay a payment software jointly developed by Feng Yu, Kirilenko, and Alibaba. Although Alibaba has lesser shares in Alipay, they can still get high profits from it.
It takes an average of one week for the seller to receive payment from the buyer. Even if the buyer received the goods earlier, it is also at least four to five days for the seller to receive the payment through their Alipay account. This is deposit capital.
The deposit capital will be used to invest in other instruments to get high returns. Furthermore, many sellers will not withdraw all of their earnings at once and leave them in their Alipay accounts. This allows Alipay more time to invest.
After that, selected advertis.e.m.e.nts will be sent to the consumers based on their spending records, and this is a form of income model. Sellers can also opt to pay to be ‘personalized recommendation’ to the consumers or a recommended seller.
Most importantly, Aliw.a.n.gw.a.n.g is the third most popular instant messaging program after QQ and MSN in China. It has more users than NetEase Bubbles.
When the number of users increased, Alibaba will start its Ecommerce profit model. This is why Alibaba can be so successful in Feng Yu’s previous life and why so many people want to buy their shares.
As the number of users increases, Alibaba can start the B2C model, Taobao mall, in the future. The name is changed to Tmall later on.
Taobao will be split into three parts in the future. Taobao, Taobao mall, and E Tao.
The sellers’ commissions are only a small part of Taobao’s profits than the consumers’ data.
But now, Ma Yun decides to waive off the commissions for three years and will continue to provide good services!
This means within three years, Taobao will not have any profits and had given up the most basic sellers’ commissions.
But Taobao’s top priority is to attract users and sellers.
The current data is still not ma.s.sive, and Alipay is their only source of profits. However, Ma Yun has to invest several times more into Taobao now.
Setting up and maintaining the website, etc., requires a large number of funds, and all of Alibaba’s profits from other sources must be invest into Taobao’s operations.
But Ma Yun firmly believes Taobao will become China and Asia’s biggest online retail platform. It might even exceed Tai Hua Supermarket Group!
Feng Yu does not agree with Ma Yun on this point.
Tai Hua Supermarkets are located in prime locations and started developing the commercial s.p.a.ces around them, forming business cl.u.s.ters.
More importantly, the compet.i.tion between supermarket chains in Feng Yu’s previous had been fierce. But in this life, Tai Hua Supermarket Group is the biggest in China.
The two overseas supermarket chains, Walmart and Carrefour, cannot penetrate the Chinese market successfully. They only have a few outlets in China and are not doing well.
If a supermarket chain cannot reach a certain scale, the membership cards and other profiting models cannot be implemented. Furthermore, with lesser outlets, they will not have economies of scale.
Having lesser outlets also means the supermarket chains have lesser influence and lower reputation. All these reasons will limit their growth in China. China also has other supermarket chains. Although these new supermarket chains cannot be compared to Tai Hua Supermarkets, they are much bigger than Walmart and Carrefour.
The smaller supermarket chains have at least seven to eight supermarkets, and the bigger ones have thirty to forty outlets.
These Chinese supermarket chains are mostly located in the third or fourth-tier cities, as Tai Hua Supermarket has occupied all the first and second-tier cities.
Last year, the total transaction of Tai Hua Supermarket exceeded 30 billion RMB, and Taobao will not exceed this figure within the next three years.
Tai Hua Supermarket is still expanding. The third and fourth-tier cities are not suitable for Hypermarkets, but they can still set up Tai Hua Supermarkets.
Tai Hua Supermarket Group’s transaction will continue to rise in the future and will continue to challenge Taobao to be the top corporation with the highest transaction sales.
Although traditional retailers are affected by the appearances of Taobao and other online shopping platforms, large-scale supermarket chains will still be profitable.
After all, many people still like to see and touch the products, like fresh groceries, etc., before buying.
Tai Hua Supermarket Group’s profit is much higher than Taobao’s. If Feng Yu wants, he can make Tai Hua Supermarket a compet.i.tor to Taobao. This will push Taobao to develop much faster!
But Feng Yu will not do this. Both are his businesses, and regardless of who won, the profits will still go to him. Taobao’s success can also prevent other compet.i.tors from entering the market.
…….
“Our Taobao welcomes everyone to shop or set up online shops with us. There will be no sellers’ commissions in the first three years, and buyers do not need to pay any fees. We will be using Alipay as payment services, and this is to protect our customers’ interests. Of course, we, the major banks’ online payment services, and Paypal, the world’s top online payment service, support us. In the next five years, we will create one million jobs…”
Ma Yun gave a speech on the stage, and many reporters were invited to attend. If it’s only Ma Yun, there might not be so many people attending this opening ceremony. But when the reporters heard Tai Hua Holdings, Zhong Qingxian, Lenovo Group’s Liu Chuanzhi, Pony Ma, Ding Lei, w.a.n.g Zhixi, Zhang Chaoyang, Shi Dazhu, and many other top businessmen would be attending, they rushed over.
There are rumors that the mysterious World’s Richest Man, Feng Yu, might make a sudden appearance during the ceremony. This rumor made all the reporters excited as whoever can get a picture of Feng Yu’s front view, or will be promoted!
Feng Yu had come but is seated in a corner. No one knows this young man is the World’s Richest Man, and even the people seated beside him thought he is one of Alibaba’s staff.
But what made them curious is why is this staff wearing sungla.s.ses? Is he a security guard? But this guy is not fit at all.