Alibaba's Taobao (A) – Key Vocabulary

Vocabulary flashcards covering major terms, entities, strategies, and tools discussed in the Alibaba’s Taobao (A) case, designed to reinforce key concepts for exam preparation.

Alibaba Group

Hangzhou-based conglomerate operating China’s leading online marketplaces, including Alibaba.com (B2B) and Taobao (C2C/B2C).

Taobao (淘宝)

Alibaba’s C2C/B2C platform launched in 2003 that became China’s largest consumer e-commerce marketplace, famous for its free-to-use policy and localised design.

Alibaba.com

International B2B marketplace helping Chinese SMEs find overseas partners; main revenue generator for Alibaba through premium storefront subscriptions.

Alibaba.com.cn

Domestic B2B site for trade within China, larger in users than Alibaba.com but lower in revenue per subscriber.

Jack Ma

Founder of Alibaba Group who championed free services to gain critical mass and localised features to beat eBay in China.

Zhao Cai Jin Bao (招财进宝)

Taobao’s 2006 pay-for-performance keyword-bidding service designed to monetise search result placement.

Alipay (支付宝)

Escrow-based online payment service created by Alibaba in 2004 to remove settlement risk between Taobao buyers and sellers.

Wangwang

Taobao’s embedded instant-messaging tool that lets buyers haggle and communicate with sellers in real time.

TrustPass

Verification program on Alibaba’s B2B sites where third parties confirm members’ registration and banking details to build credibility.

Premium Subscriber

Company that pays annual fees (e.g., RMB 50,000 on Alibaba.com) for enhanced storefronts and promotional tools on Alibaba marketplaces.

Gross Merchandise Volume (GMV)

Total value of goods traded on a marketplace; Taobao reached RMB 43 billion in 2007.

C2C (Consumer-to-Consumer)

E-commerce segment where individual consumers sell directly to other consumers, core focus of Taobao.

B2B (Business-to-Business)

Online trade between businesses; primary model of Alibaba.com connecting Chinese SMEs with buyers.

B2C (Business-to-Consumer)

E-commerce where businesses sell to consumers; Taobao also facilitates these transactions.

eBay EachNet

Result of eBay’s acquisition of Chinese auction leader EachNet; eventually lost market leadership to Taobao.

PayPal (China)

eBay’s global online payment system introduced to China in 2005 to speed transaction closure on eBay EachNet.

Paipai

Free C2C platform launched by Tencent in 2005, integrated with its QQ instant-messaging user base.

Tencent QQ

China’s most popular instant-messaging service with 170 million active accounts, leveraged to promote Paipai.

Tom Online

Hong-Kong-based partner in eBay’s 2006 joint venture after shutting down eBay EachNet site.

International Expansion Strategy (eBay)

Approach of entering high-penetration Internet markets via start-ups, acquisitions, or partnerships using the same fee-based model.

Free-to-Use Strategy

Taobao’s decision to charge no listing or transaction fees to attract wary Chinese consumers and merchants during early e-commerce adoption.

Localised Web Design

Taobao’s colourful, link-dense interface tailored to Chinese shoppers’ preference, contrasting with eBay’s sparse Western look.

Affect- vs Cognition-Based Trust

Concept that Chinese business relationships blend emotional (affect) and rational (cognition) trust, influencing Taobao’s emphasis on social tools.

Internet Penetration in China

Growth from 4.6% (59 m users) in 2002 to 16% (210 m users) in 2007, expanding the potential e-commerce customer base.

Market Share (C2C China 2007)

Taobao 84%, eBay/TOM 7%, Paipai 9%—illustrates Taobao’s dominance after defeating eBay.

Escrow Service

Payment mechanism where funds are held by a trusted third party (e.g., Alipay) until buyer confirms receipt of goods.

Keyword Auction

Pricing model where sellers bid on search terms to rank higher in results; basis of Taobao’s Zhao Cai Jin Bao monetisation.

“Buy It Now” on Taobao

Negotiated fixed-price purchases (99% of 2007 transactions) replacing auction format common on early eBay.

Critical Mass Strategy

Jack Ma’s belief that building a large, active user base before monetisation is essential for platform success.

SME (Small and Medium-Sized Enterprise)

Primary customers of Alibaba’s B2B marketplaces seeking broader market access and trust verification.