Alimama, Taobao Merger Points To E-commerce, Search Battle

Alibaba has announced plans to consolidate two of its subsidiaries into one company. Alimama is the company’s ad network for Chinese SMBs, and Taobao is the company’s auction platform, which is best known for dramatically driving eBay China out of the China market after eBay bought Eachnet.

This is likely a measure to counter Baidu’s plans to enter the e-commerce market. According to this report from Keso, Taobao has blocked Baidu’s spiders from crawling Alibaba. Spiders from other search engines are not blocked. It is very unusual to hear of one search engine’s spiders being singled out for blocking; I have never heard of this until now.

Can you say hardball?

Spiders are software programs used by search engines to crawl other websites; they detect changes in websites and report changes back to the mothership search engine which are used to update the search engine’s search index.

According to Keso’s report, Jack Ma of Alibaba believes that Alibaba’s SMB e-commerce platform represent the family jewels, and he already has enough users to allow him to make such a dramatic parting of way’s with Baidu. Baidu is currently China’s largest search engine player, with more than 60% market share.

For Baidu, losing the capability to crawl Alibaba’s sites represents a huge loss, and puts more pressure on their nascent e-commerce platform to succeed. Otherwise Baidu’s e-commerce search results will look very weak, just as e-commerce is showing signs of takeoff.

Now, Google China is the wild card which might benefit from the Alibaba/Baidu faceoff. Significantly, Google China’s spiders are not blocked from crawling Alibaba’s sites. Jack Ma has three options:

  • Build his own search engine team which would build its own search engine to crawl Alibaba sites;
  • Make the default search engine for Alibaba and its subsidiary companys;
  • Go to Google China and propose a joint venture company which would have a separate search engine to crawl Alibaba sites. Search advertising revenue would be split between the two companies.

From a technology perspective, search engines are more challenging to build. Specifically, they need to continuously update their search index, although if the search engine is only pointed at the Alibaba community, it would not be as difficult. Search engines need to be continuously updated and modified to get accurate search results, although optimization on organic and paid search are very different in how they are updated and modified.

From the SMB users’ perspective, the key to success is providing a smooth and transparent transition between search advertising and online business transactions. Bad user experience has led to the downfall of many a business, most recently eBay in the US, which has continuously raised fees on its auction platform, driving away its originally fanatical loyal user base, and forcing it into a retail model which competes on unfavorable terms with Amazon, the online retail ecommerce leader in the US.

Things are getting interesting…

3 Responses to “Alimama, Taobao Merger Points To E-commerce, Search Battle”

  1. […] Cette fois-ci la guerre est sino-chinoise, le champ de bataille se situe en Chine et le domaine est l’e-commerce. Tout à commencé lorsque Baidu a annoncé sa venu dans l’e-commerce. S’est suivi par son messagerie instantanée BaiduHi et maintenant par la venue de baifubao, le paypal de Baidu. Quand à Alibaba, il a déjà ses plateformes de commerce en ligne (taobao) et son système de payement (paypay). Sentant la menace arriver à grand pas, il a récemment fermé la porte de taobao aux robots de Baidu. Il a même annoncé le mariage d’alimama (le google adsence d’alibaba) et de taobao. […]

  2. Great post. At first the merger of Alimama and Taobao into a single company seemed odd to me (imagine an Ebay and Adsense merger), but when a third party search engine enters the picture this actually makes sense. I think Baidu has the capabilities to become a formidable competitor to Alibaba, they are also homegrown and if they have been able to surpass Google, which Microsoft or Yahoo were unable to do, then they must be making something right.

  3. […] Ultimately, it depends on Robin Li, Baidu’s CEO, and how he chooses to handle Baidu’s salesforce, who have aggressively brought in the bacon so that Baidu would look good for its investors and Wall St. The big question for Robin Li is: “How can he reign in his salesforce just when he needs them the most?” The Baidu salesforce is the main differentiator for the Baidu; it has been able to sell keywords to China’s SMEs, getting it far greater penetration than Google in the Chinese tier 2 and 3 cities and in the countryside. Can you imagine Robin calling in his salesforce and telling them to do business and background checks on customers? That would be a very good way to get your salesforce to rebel in a split-second! Can he afford such a rebellion just when global economies and markets are tanking and Chinese are cutting back on spending, and when Baidu is expanding aggressively into e-commerce and other fields? […]