Alibaba restructures Taobao to meet growing challenges

The restructuring will see Taobao Marketplace, Taobao Mall and eTao operate as individual entities as part of a strategy to enable a more diverse shopping experience.

Taobao Mall will act as the main platform for brands to sell directly to consumers; Tabao Marketplace will connect individual buyers and sellers; while eTao will offer search for products and services across websites in China.

In a statement, Alibaba founder and chief executive Jack Ma said the move was designed to keep abreast of changing trends in the market. Taobao currently faces a number of challenges, including competition from the likes of Vancl, and a poor image in the shadow of Ma’s ongoing dispute with Yahoo.

Shaun Rein, managing director of China Market Research Group (CMR), said he did not expect the restructure to have much impact.

“Aside from Gap, most brands don’t like Taobao,” Rein said, pointing to the platform’s insistence on using its own format and on offering discounts. “We are seeing stronger brands shying away from Taobao going forward.”

Rein added that a sizable number of consumers were gravitating towards more recently established domestic e-commerce platforms. He said he expected Taobao to continue to fare relatively well, but predicted that it would increasingly be forced to sell “cheap trinkets rather than high-margin products”.

Separately, Taobao faces the same talent issues as all major Chinese companies in the online space, which are plagued by annual staff turnover of up to 30 per cent. However, Rein noted that Taobao’s problems were heightened by the recent fall in Ma’s "personal brand”.

Ma remains embroiled in a public dispute with investors Yahoo and Softbank over the ownership transfer of Alibaba’s Alipay payment services unit.