BDA-老虎基金阿里巴巴深度研究報告EN-2015 08 25

Deep-diveonAlibabaAug2015Tiger?BDA2015ExecutiveSummary2Q3.

WhatarethegroupsynergiesandcommoncapabilitiesacrossTmallandTaobao?Q1:IsthereadifferenceinconsumerperceptionofTmallandTaobaoapartfromthefactthatTmalldoesn’thavecounterfeit?QuestionListPageNo.Pg.Source:BDAanalysisQ2:HowimportantisTaobaofortheTmalltrafficandgrowth?IsTmalldrivingthemonetizationstrategyforTaobao?Q4:HowrelevantisTmalltoglobalbrands-Nike,puma…?DosellershavestoresonbothTmallandTaobao?Whyandwhynot?CantherebemorethanonestoreofabrandonTmall?Pg.Pg.Pg.Q5:HowdidTmallevolve?Inthebeginning,didtheystartwithjustonecategoryplayortheyalwayshorizontalplayers?Pg.Q6:HowdidTaobaogetbrandstoadopttheTmallmodel?Pg.Q7:DidTaobaoinvestalotinmarketingtolaunchTmallandcreatedifferentpositioningfromTaobao?Pg.Q8:Whatisthekindofspendthatplayersmakeonmarketing?Whichmediumisusedmostoften?Doplayersusemassmediaordigitalmedia?Pg.Q9:Isthemarketingmostlydiscount-ledcommunicationtogeneratetraffic?Ifnot,whatisthevalueproppitchedbyplayers?Pg.Q10:HowimportantistheAdbusinessforalllargeplayers?WhatisthesplitbetweenSellerandBrandAds?Pg.3TableofContentsHistoricalPerformanceAlibaba’sCustomerAcquisitionStrategyAlibaba’sMerchantStrategyAlibaba’sNewBusinessModel4TableofContentsHistoricalPerformanceOnlineRetailMarketinChinaAlibaba’sCustomerAcquisitionStrategyAlibaba’sMerchantStrategyAlibaba’sNewBusinessModel5WithaCAGRof48.9%,theChineseonlineretailmarkethasmaintainedrapidgrowthinthepastfewyearsandisexpectedtoreachapenetrationrateof~15%in2015Source:NBSC,iResearch,andBDAanalysis25,8772015E201414.9%23,45312.0%201321,2058.9%201218,6676.4%201116,3074.8%TotalRetailValueOnlineRetailValueCAGRUnit:RMBBN48.9%SizeofChina’sOnlineMarket(2011-2015E)12.2%TotalRetailValue14%14%11%10%OnlineRetailValue51%59%49%37%OfflineRetailValue13%10%7%7%YoYGrowthOfflineRetailValue9.1%JD調(diào)整數(shù)，自己拍了2013/2014年的數(shù)6Numberofonlineshopperskeepsincreasingsince2011,andcurrentlyoverhalfofinternetusershaveshoppedonlineSource:iResearch,andBDAanalysis2015E7114032014649361201361830220125642422011513194Unit:MNCAGR20.0%8.5%InternetUsersOnlineShoppersNumberofChina’sOnlineShoppers(2011-2015E)OfflineShoppers-0.9%7TheChineseonlineretailmarkethasgraduallyshiftedfromaC2CmodeltoaB2Cone;TaobaoMarketplaceisthemainplayerintheC2Cmarket,whileTmallandJDareleadingtheB2CmarketSource:iResearchandBDAanalysis40%201235%201125%201014%100%C2CB2C201445%2013BreakdownofOnlineRetailMarketbetweenB2CandC2C(2011-2015E)LandscapeofB2COnlineRetailMarketin2014LandscapeofC2COnlineRetailMarketin2014Others14%VIPS2%Suning2%JD18%Tmall64%Eachnet0.1%Paipai3.4%TabaoMarketplace96.5%Asforcategories,3C,apparel,andcosmeticshavethehighestonlinepenetration(1/3)8Unit:RMBBN+38%+108%+78%+46%+29%+52%Onlinepenetration3%2%19%22%13%7%16%10%31%26%25%19%20132014OnlinePenetration(2013-2014)Source:Wind,iResearch,BDAinterviewsandanalysisE-commerceGMV(2013-2014)ApparelHomeApplianceFurnitureFood&BeverageCosmetics3CProductsTaobaoandTmalldominateallthecategories,whileJDshowsstrongpresencein3Candhomeappliance(2/3)9Apparel3CProducts2%JDVIPS3%Others4%Tmall27%Taobao65%Yihaodian1%Others1%JDSuning3%50%Tmall19%TaobaoSource:Companyinformation,BDAinterviewsandanalysisE-commercePlayers’MarketShare(2014)Cosmetics1%OthersVIPSJumeiJD19%Tmall48%TaobaoTaobaoandTmalldominateallthecategories,whileJDshowsstrongpresencein3Candhomeappliance(3/3)10HomeApplianceFood&DrinksSource:Companyinformation,BDAinterviewsandanalysisEcommercePlayers’MarketShare(2014)FurnitureOthers2%Gome1%SuningJDTaobao35%Tmall44%Others2%Meilele1%JDTmall26%Taobao63%OthersYihaodianJDTmall23%Taobao40%11Geographically,TaobaoandTmallperformonparwithJDintier-1cities,whileithasremarkableadvantagesintier-2andtier-3citiesSource:BDAsurveyTaobaoMarketplaceTmallJDTier1City2Tier2City3Tier3City4OnlinePlatformRankingbySpending1(Jun.2012-May2015)21%19%42%14%25%47%22%52%11%26%32%28%14%44%32%45%33%13%TaobaoMarketplaceTmallJDJun.2012May2015Notes12TableofContentsHistoricalPerformanceAlibaba’sHistoricalPerformanceAlibaba’sCustomerAcquisitionStrategyAlibaba’sMerchantStrategyAlibaba’sNewBusinessModel13Alibaba’sGMVhasachievedrapidgrowthwithaCAGRof51%inthepastfewyears;Tmall,withaCAGRof83%,hasoutperformedTaobaoMarketplaceSource:CompanyInformationandBDAAnalysisAlibaba’sGMV1FY2013-FY20152Unit:RMBBN35%FY20152,44465%FY20141,67830%70%FY20131,07723%77%Tmall

+83%Taobao

+39%CAGRTotal+51%Note:1.Excludeswholesalemarketplace(B2B),2.Alibaba’sfiscalyearendsonMarch3114Therapidgrowthhasresultedfromasurgeinthenumberoforders;AOVslightlydroppedfromRMB168toRMB133Alibaba’sGMVFY2013-FY2015Alibaba’sRetailTotalOrdersFY2013-FY2015Unit:RMBBNUnit:MNAlibaba’sRetailAOVFY2013-FY2015Note:1.TotalordersinFY2015andQ1FY2016arenotavailablebutareestimatedbyBDAaccordingtopastdataUnit:RMBSource:CompanyInformationandBDAAnalysis+69.6%FY2013FY20151FY2014-11.2%FY2014FY2013FY2015+50.6%FY2015FY2013FY2014Duringthisperiod,theoveralltakeratedroppedslightlyto2.44%,butTmall’stakerateroseto2.50%15Alibaba’sRetailRevenueFY2013-FY2015Alibaba’sGMVFY2013-FY2015+48.8%FY2015FY2014FY2013Unit:RMBBNUnit:RMBBNAlibaba’sRetailTakeRateFY2013-FY2015Source:CompanyInformationandBDAAnalysis+50.6%FY2015FY2014FY2013FY2014FY20152.50%2.38%FY20132.44%0.00%0.00%0.00%Takerate數(shù)字quoteTmallTaobaoMarketplaceTheriseofTmall’stakerateinFY2015resultedfromincreasedproportionsofcategorieswithhightakerates16Overthepastthreeyears,TaobaohasmaintaineditshighPVandUVcountsonthePCend;TmallalsoenjoyedasignificantgrowthinPVsandamoderategrowthinUVsUnit:MNAlibaba’sRetailMonthlyPVJan.2012-Jun.201501/201407/201401/201507/201507/201207/201301/201301/20127,89827,19629,70718,78339,842+369.4%TmallTaobaoUnit:MNAlibaba’sRetailMonthlyUVJan.2012-Jun.201507/201501/201507/201401/201407/201301/201307/201201/2012131+75.4%TmallTaobaoSource:iResearchandBDAAnalysis17Alibaba’sactivebuyershasnearlytripledfrom133MNto367MNinthepastthreefiscalyearsAlibaba’sRetailActiveBuyers1

Q1FY2013-Q1FY2016Unit:MNNote:1.“activebuyers”inagivenperiodreferstouseraccountsthatconfirmedoneormoreordersontherelevantmarketplaceinthatperiod,regardlessofwhetherornotthebuyerandsellersettledthetransactionSource:CompanyInformationandBDAAnalysisQ1FY2015Q2FY2015Q3FY2015Q1FY2016Q4FY2015Q2FY2014Q1FY2014Q4FY2013Q4FY2014Q3FY2014Q3FY2013Q2FY2013Q1FY2013+176%tagline18TransactionsfromthemobileendalsomadeagreatcontributiontototalGMVgrowth(~40%share),reachingthatfromPC…Source:Companyinformation,BDAanalysisFY20152,44440.7%FY20141,67819.0%FY20131,0777.4%TotalGMVMobileGMVCAGRUnit:RMBBN253.8%MobileContributiontoTotalGMV(FY2013-FY2015)50.6%PCGMV20.5%加PCCAGR19…andMAUsurgedto307MNatthebeginningof2015,exceedingthatofPCterminalSource:CompanyinformationMobileMAUQ4FY2015Q3FY2015Q2FY2015Q1FY2015Q4FY2014Q3FY2014Q1FY2016HistoricalMobileMAUTrend(Q42013-Q12015)Unit:MN新聞原文：手機淘寶日均活躍用戶已超8000萬，淘寶無線端和PC端登陸的比例是1:1Tagline是否可以說已經(jīng)超過PC？沒有datasupportInDec.2014,MAUofmobileterminalcaughtupandreachedthesamelevelwiththatofPCterminal.20TableofContentsHistoricalPerformanceCompanyIntroductionAlibaba’sCustomerAcquisitionStrategyAlibaba’sMerchantStrategyAlibaba’sNewBusinessModelJuhuasuanwasbuiltasagroup-buyingwebsite21Alibabastarteditswholebusinessin1999andlauncheditsretailbusinessTaobaoin2003;afterthat,Alibabaexpandeditsbusinessintoareaslikefinance,technologyandlogistics,formingacompleteecosystemSource:CompanyinformationAlibabawasfoundedinJackMa’sapartmentinHangzhouAlibabaGroupwentpublicontheNewYorkStockExchangeAlaunchedasaglobalwholesalemarketplace1688.comlaunchedasadomesticwholesalemarketplaceTaobaoMarketplace,wasfoundedasaplatformforbuyerstoexploreanddiscoverproductsandforsellerstoestablishalow-costonlinepresenceTmall

wassetuptoaddressChineseconsumers’growingappetiteforbrandedproductsAlimamawaslaunchedasanonlinemarketingtechnologyplatform,offeringsellersonmarketplacesonlinemarketingservicesAlibabaCloudComputingisestablishedtohandlethehugetrafficvolumegeneratedanddatamanagementneedsAliExpress

launchedforexportersinChinatoreachconsumersaroundtheworldTmallHKwaslaunchedasacross-bordere-commerceplatformAlipaywasintroducedtoaddresstheissueoftrustbetweenbuyersandsellersonlineAntFinancialServicesGroupissetupbyintegratingfinancialproductsanddevelopingacreditsystemCainiao

wasfoundedwithaconsortiumoflogisticscompanies,operatingasaproprietarylogisticsinformationplatform199920032004200720082009201020132015EventsTradingPlatformsOtherBusinessandServicesAlibabastartedasabusiness-tobusinessplatformforglobaltradein1999,thenTaobaoMarketplacewaslaunchedtooperateconsumer-to-consumercommercein2003,whichhasdevelopedintothetopC2CmarketplaceinChina.Additionally,Alibabalaunchedthebusiness-to-consumerplatform,Tmall,tomeetconsumers’demandforbrandedproducts.Ithasalsobeendevelopingdiversebusinessesandservices,suchasfinancialservices,travelservices,acloudcomputingservice,andmoretoenrichitsbusinessline.IntroductionMilestone22IntermsofitsretailbusinessinChina,therearefiveBUswhooperatetherelevantbusinesslinesandcoordinatewithAlibaba’sadditionalserviceteams;ZhangYongiscurrentlymanagingtheretailbusinessSource:Companyinformation,BDAinterviewsandanalysisTaobaoMarketplaceTmallJuhuasuanIndustryCainiaoAlipayAlimamaAliyunMarketingApparelCosmetic3CFurniture…TmallSupermarket…AlibabaChinaRetailPlatformJianfengZhangYongZhangSupportingDepartmentsOtherServicesTeamsfromdifferentindustrieswillcommunicatewithservicesbusinessdivisionsdirectly.TmallHKCuntao1HumanResourceR&DIndustrySupportingDepartmentsJuhuasuan,TmallHKandCuntaooperateunderthesamestructureasthatofTaobaoMarketplace,organizedbyvariousindustriesandsupportingdepartments.…Note1:Cuntaoprimarilytakeschargeofchannelsinkingandbusinessdevelopmentinless-developedcities,especiallyinruralareas.BusinessUnionDepartment23Intermsofcorporatestucture,AlibabaoperatesitscorebusinessthroughcooperativepartnersunderVIEstructureforthepurposeofIPOinNYSESource:CompanyinformationAlibabaGroupHoldingLimitedTaobaoHoldingLimitedTaobaoChinaHoldingLimitedAlibabaInvestmentLimitedOtherSubsidiariesALimitedAInvestmentHoldingLimitedTaobao

(China)SoftwareCo.,LtdZhejiangTmallTechnologyCo.,LtdHangzhouAlimamaTechnologyCo.,LtdAlibaba(China)TechnologyCo.,LtdAlisoft(Shanghai)Co.,LtdZhjiangTaobaoNetworkCo.,LtdZhejiangTmallNetworkCo.,LtdHangzhouAliTechnologyCo.,LtdHangzhouAlibabaAdvertisingCo.,LtdAlibabaCloudComputingLtd.JackMa1Simon2100%100%100%100%100%(throughintermediatedholdingentities)100%(partlythroughaholdingentity)100%100%(partlythroughaholdingentity)100%(throughintermediateholdingentities)VIEholdersNote1:JackMaisthecompanyleadfounderwhoisthemajorityshareholderofAlibabaGroupaswell.Note2:SimonXieisoneofthefoundersandthevicepresidentofAlibaba’sChinainvestmentteam;heholdssignificantsharesofAlibabaGroup.TakechargeofthepracticaloperationofAlibabainChinaunderacontractagreementLocalCompanies,notbelongtopublicAlibabaGroupTagline改動24TableofContentsHistoricalPerformanceAlibaba’sCustomerAcquisitionStrategyTaobaoMarketplace/Tmall’sValuePropositionAlibaba’sMerchantStrategyAlibaba’sNewBusinessModelIntermsofkeypurchasingcriteria,TaobaoandTmallenjoyadvantagesinpriceandselection;JDperformswellonquality,deliveryanditsreturnspolicy25Customers’OverallEvaluationofDifferentWebsitesQ16.Overall,pleaseratethefollowingwebsitesaccordingtotheirperformanceineachofthesesevenaspects.1isthemostunsatisfactory,5themostsatisfactory(Score)PaymentReturnsPolicyDeliveryInterfaceSelectionQualityPriceSource:BDAsurveyN=1,605AverageScore 3.62 3.823.763.953.74 3.784.120.020.090.080.030.050.040.01StandardDeviation YihaodianSuningPaipaiAmazonDangdangVIPSJDTmallTaobaoMerchandizeShoppingExperienceRecently,wesee1)theimportanceofqualityandpaymentsafetyhascontinuedtoincrease,whileconsumerscarelessaboutprice…26Q14.Whenyouchooseane-commercewebsite,whichattributesdoyouconsiderthemostimportant?(Firstchoice)N=1,532December20133%3%3%16%14%48%2%5%18%15%45%2%N=1,548June2014N=1,514December2014Interface2%Delivery2%Returnpolicy4%SafetyofpaymentSelection17%Price13%Quality50%N=1,605May2015Source:BDAsurveys(May2015,December2014,June2014,andDecember2013)2%1%2%4%21%34%37%…2)thegapofalltheplatformsonmostcriteriastayedlargelyunchangedwiththeimprovementofecommerceplatforms’overallperformanceduring2012-201527TaobaoTmallJDAmazonDangdangVIPSTaobaoTmallJDAmazonDangdangVIPSPriceQualitySelectionDeliveryReturnPolicyInterfaceE-commercePlatforms’ScoresonKeyPurchasingCriteria(May2015versusJun2014,Mar2013andJun2012)HighLowHighLowHighLowSource:BDAsurveys(May2015andDecember2014)Mar.2013Jun.2012May2015Dec2014SafetyofPaymentHighLowTaglineupdatedIntermsofcategorypreference,TaobaoandTmalldominateinallthecategoriesexceptfor3C,MAandSA,whereJDhasstrongpresence28Apparel3CProductsOthers18%Amazon2%JD12%Tmall33%Taobao35%Source:Companyinformation,BDAinterviewandanalysisQ21.Whenyoubuyapparel/3C/MAonline,whatisthefirst,thesecondandthethirdwebsitesyoulogin?MAProductsOthers18%Amazon5%JD32%Tmall25%Taobao20%15%JD33%Tmall21%Taobao13%Others6%Amazon5%Gome7%Suning2015MaySAProductsHome&Furniture20%TaobaoOthers2%DangdangSuning6%Amazon30%JD25%TmallGrocery33%Taobao

Others5%Dangdang2%Amazon

3%IKEAonline3%JD20%Tmall34%4%7%OthersAmazon

16%2%13%Yihaodian

DangdangJDTmall29%Taobao

29%Historically,wesee:1)JDkeepsstrengtheningitsinherentadvantagesin3C,MA,andSA,andfurtherimprovingitspresenceintheothercategories…2937%2%SAJun201237%39%1%4%1%MAJun201250%15%2%15%5%3CJun201242%OthersGomeSuningDangdangAmazonYihaodian

WeidianVIPSTmallTaobaoJDMar201333%38%5%1%Mar201343%19%1%10%5%2%Mar201333%34%5%1%Dec201340%25%1%2%5%1%Dec201336%22%1%12%4%Dec201342%25%3%2%Jun201443%24%4%2%Jun201450%16%13%3%Jun201445%24%1%3%2%Dec20141%31%35%6%2%Dec201443%15%2%8%3%Dec201442%26%1%2%2%Whenyoubuy3C,MA,andSAproductsonline,whatistheFIRSTwebsiteyoulogonto?Source:BDAsurveyMay201541%27%6%1%May201550%14%2%12%3%May201544%24%3%2%…and2)TaobaohavefallenbehindinallcategoriesandTmallhasbeencannibalizingTaobao’sshare30Healthand

beautyJun201248%10%0%6%3%HousewaresJun201257%5%GroceriesJun201258%7%Apparel2%0%Jun201269%5%1%OthersLefengJumeiIkeaOnlineDangdangAmazonWeidianYihaodian

VIPSJDTmallTaobao1%11%5%Mar201357%1%1%Mar201352%7%0%2%Mar201364%10%11%0%4%2%Mar201337%33%11%8%5%Dec201350%Dec2013Dec201347%10%0%10%Dec201352%5%2%2%6%2%Jun201437%13%2%Jun201441%11%0%Jun201454%10%2%5%6%Jun201427%15%3%Dec201450%6%4%2%25%14%5%7%4%2%Dec201438%20%2%Dec201438%0%2%Dec201411%Whenyoubuyapparel,groceries,housewares,andhealth-and-beautyproductsonline,whatistheFIRSTwebsiteyoulogonto?Source:BDAsurveyMay201527%14%8%13%3%2%May201543%20%2%May201537%14%0%2%52%7%5%3%3%May201531TableofContentsHistoricalPerformanceAlibaba’sCustomerAcquisitionStrategyTaobaoMarketplace/Tmall’sCompetitiveEdgeAlibaba’sMerchantStrategyAlibaba’sNewBusinessModelMerchantRatingSystem:designedtoquantifysellers’ratingswithevaluationsofcompletedtransactionsonproductsandthemerchantbybuyers,thusprovidingreferencesforbuyerstoensureproductqualityAlipay:introducedasaguaranteedpaymenttoensurequalityofproductsbypromisingnomoneylossifthere’sanyproblemwithanitemTmallModel:Tmallbuiltupscalebyinvolvingmajorlocalandglobalbrands,aimingtoevolveintoaB2Cplatformwithhigh-qualityproductsTocatchuponqualitycontrol,Alibabalauncheditsownmerchantratingsystem,introducedAlipayandalsobuiltTmallasahighqualityB2Cmodel;inaddition,Alibabaalsoimproveditscategorymanagementtoensureselectionandlowprices32Alibaba’sStrategyandActionsKPCofOnlineShoppingN=1,605CategoryManagementImprovement:originatedasamarketplacewithavariedselectionandcontinuouslyintroducesnewmerchantsandproductstoprovidemorechoicesforbuyers,suchaspackagedfood&beverage,freshfood,andpharmaceuticals,etc.,thusmakingitspricesmorecompetitiveCSN:CSNwassetupin2013toimprovedeliveryexperienceonAlibaba,includingbothinformationsystemintegrationandfulfillmentoptimization;underCSN,AlibabaimprovedwarehousemanagementanddeliveryspeedintermsofHA&3CandsupermarketcategoriesSource:BDAsurveys(May2015),BDAResearchandAnalysisQ16.Overall,pleaseratethefollowingwebsitesaccordingtotheirperformanceineachofthesesevenaspects.1isthemostunsatisfactory,5themostsatisfactory(Score)Tagline右邊內(nèi)容QualitySelection&PriceDeliverySelectionQualityInterfaceDeliveryPricePaymentReturnsPolicyJDTmallTaobaoMarketplace33TableofContentsHistoricalPerformanceAlibaba’sCustomerAcquisitionStrategyQualityImprovementAlibaba’sMerchantStrategyAlibaba’sNewBusinessModelQualityofgoods/serviceServiceattitudeDeliveryspeedofmerchantsDeliveryspeedoflogistics1(Worst)→5(Best)Alibaba’smerchantratingsystemallowsuserstoevaluateboththeirindividualtransactionsandthemerchant’sservice;merchantscanalsobuildahighratingtoattractmorecustomers34ProductEvaluationMerchantEvaluationSource:BDAResearchandAnalysisEvaluationTimeThemerchantratingsystemwasestablishedatthebirthofTaobaoandwasdesignedtoquantifysellers’ratingthroughevaluationsofcompletedtransactionsonproductsandmerchantsfrombuyersForbuyers:providesareferencewhenselectingproductsandmerchantsForsellers:affectstheirrankinginsearchresultsandanypreferentialtermsgrantedbyTaobaoEvaluationSubjectEvaluationContentWithin15daysaftertransaction

iscompletedWithin15daysaftertransactioniscompletedBuyersBuyersRatingCommentsTransactionEvaluationAfter-salesEvaluationPositive(+1)Moderate(0)Negative(-1)PicturecommentsTextcommentsEvaluationDisplayOpentoallbuyersOpentoallbuyersCreditSystemAlibabaintroducedAlipayasa3rdpartyguaranteepaymentmethodtopreventcustomers’lossesfromqualityproblems;Alibabaledthisinnovationinpaymentmethodandenjoysthefirstmoveradvantage35AlipayisathirdpartypaymentplatformwhichmainlyprovidesaguaranteeforpaymentsforTaobao/TmallconsumersandmerchantsCustomersAlipayCustomers’BankAccountsMerchantsPayment12CustomerspayfortheproductsselectedonTaobao/Tmallinthebank’sback-endAftercustomerspayinthebank’sback-end,Alipaywillreceivethemoneysincethepartnerbank’sback-endisconnectedtoAlipayMerchantsendstheproducttothecustomerafterthepayment;andwhentheproductisreceivedandthetransactionendssuccessfully,AlipaywilltransferthemoneytothemerchantMerchantsneedtopay~0.5%commissionofGMVtoAlipayAlipayneedstopay~0.15%commissionofGMVtocertainbanksSignificanceofGuaranteePaymentCompetitiveEdgeMerchantsareencouragedtoimprovethequalityofproductsandservicetogetthepaymentearlyCustomersareensuredtherighttoreturnandenjoyotherafter-saleservicessincethepaymentwillonlybetransferredtothemerchantwhenthecustomerconfirmedtoreceivetheproductAlipayenjoysthefirstmoveredge,leadinginnovationinthrthird-partypaymentarenainChinaAlipaylearnedfromEbay’sPaypal(thirdpartypaymentplatformfoundedin1998)anddevelopedguaranteepaymentwhichrestoredadegreeoftrustbetweenbuyersandmerchantsBoththemerchantsandthecustomerswereeducatedbyAlipayMerchantsonTaobao/TmallsubjecttotheguaranteepaymentandhavetoconductcredittransactionsCustomerstrustthepaymentmodelandhavefewerconcernsaboutonlineshoppingAlipay’sGuaranteePaymentFlow345Commission12345Source:BDAinterviews,researchandanalysisAlipayThankstoAlibaba’seffortstoofferawidevarietyofmerchandiseanditsratingssystemandpaymentmethod,TaobaoMarketplacecametodominatetheC2Cmarket;AlibabathenintroducedTmalltobuiltahigh-qualitybrandandstartchargingacommission36MerchantMaintenanceCreditSystem-toincreasemerchants’transfercostAlipay-toeducatemerchantsandcustomersonpaymentStableC2CMerchantBaseMerchantshavenoincentivetochurnduetotheiraccumulatedratingsStableC2CUserBase-

customersarestuckonTaobaoduetotheunmatchedsafetyofpaymentandbroadselectionPainPointsforCustomersLowQuality-fiercecompetitionamongmerchantsintheearlystageresultedinlowpriceandlowqualityonTaobaoMarketplace,whichcan’tmeetcustomers’demandforhighqualityinthefollowingstageNoBranding-famousbrandshadnoincentivestogetinvolvedinthedisorderedmarketonTaobaoMarketplaceandcustomers’needforhigher-endproductswasn’tfulfilledPainPointsforTaobaoLackofMonetization-aftertheaccumulationofmerchantsandusersintheearlystagewithpreferentialpolicies,theplatformneedstomonetizewithcommissionfeesandothersourcesofrevenueTmallEmergedAccordinglyMerchantAcquirementTrafficAcquisitionBrandswithhigherqualityandcertainvolumewereselectedfromC2CtoTmallBrandsarewillingtocooperatewiththehigherlevelplatformToensurehigherqualityonTmallBrandswithaconsiderabletransactionvolumearenotshortofmoneyandaremorewillingtopayacommissiononTmallCommissionAcquisitionC2CplatformforwardedtraffictoTmallProductsonTmallhaveprioritizeddisplayinsearchresultsAdsoffAlibabacanacquiretrafficaswellSource:BDAinterviews,researchandanalysisWhenTmallfirstemerged,ittargetedtopstores(TaoBrandandspecialtystore)fromTaobaomarketplace;asTmallbuiltupscale,itstartedtoinvolvemajorlocalbrandsandglobalbrandsMainlybrandsselectedfromC2CTaobaoMarketplace:Liebo,Inman,Handuyisheetc.TaobaoheldmeetingswithselectedbrandsfromC2CandpersuadedthemonebyonetooperateonTmall37BrandsSelectedfromTaobaoMarketplaceLocalBrandsGlobalBrandsMainlylocalofflinebrands’distributorswithlowASPstartedtoenterTmallsincetheriseofe-commerceDistributorsweremorewillingtoobtainanotherdistributionchannelonlinethanbrandssodistributors’franchisedstorescontributedmoreMerchantsonTmallarediversifiedincludingflagshipstoresanddistributorsoflocalofflinebrands,globalbrandsandformerC2CbandsfromTaobaoMarketplaceBrandsparticipateactivelyine-commerceandTmallstarttoselectmerchantsandconductstandardizedmanagementFormerofflinebrandscontributednearly90%oftotalTmall’smerchants,includingbrandflagshipanddistributorsWhileformerC2Cbrands’contributionhasbeensqueezedtoonly11%201454%35%6%5%200620%0%40%40%Tmall’sMerchantMixTmall’sCooperativeMerchantSource:BDAinterviews,researchandanalysisOfflineBrandTPandDistributorOfflineBrandFlagshipFormerC2CBrandTPFormerC2CBrandFlagshipTaglineTohelpTmalltorampup,AlibabapassedonthehugetrafficfromTaobaoMarketplacetoTmallviaSEMandtrafficforwardingForwardedtrafficfromC2CdominatedintheearlystageOrganictrafficandtrafficfromTaobaokecontinuouslytookshareAfter2012,trafficmixkeptrelativelystable38InternalExternalTrafficForwardedfromTaobaoC2CSearchEngineMarketingAdvertisingTherearemultiplelinkstoTmallonthefrontpageofTaobaoMarketplaceSubchannelIndependententranceunderthesearchbarPrioritizingpositionsareprovidedforTmallonthesearchpageSubchannelPrioritizingdisplayedinsearchresultsMerchantsbuyadpackagesfromAlibabaandexternaladsarepurchasedinthenameofAlibabaExternaladscanbringtrafficbothtocertainstoresandtheAlibabaplatformingeneralAdpackagesaremuchcheaperthanpurchasingadsindividually201533%TaobaokeC2CForwardTrafficOrganicTraffic33%37%45%2008201225%30%33%34%30%Tmall’sTrafficMixTmall’sTrafficSourceSource:BDAinterviews,researchandanalysisOndesktop,TmallenjoysmultipleentrancesonTaobao’sfrontpageandsearchresults…39Tmall’sEntranceonTaobao’sFrontPageTmall’sEntranceonTaobao’sSearchEngineSubchannelofTmallunderthesearchbaronthesearchpagePrioritizeddisplayinthesearchingresults-thefirstthreeresultsareallproductsfromTmall