By Anson Fong, posted Apr 5, 2011 at 1:10 PM, 582 views,

China’s Baidu Shuts Down Its E-commerce Platform

Baidu, China’s largest online search provider, has decided to shut down its underperforming Youa.baidu.com, an e-commerce platform it launched not more than three years ago.

Just in case this is the first time you heard about Youa — Baidu launched Youa on 18th October 2007, claiming that it could surpass Taobao to become China’s largest C2C e-commerce platform within three years. That seems to be a wild dream since most businesses are selling their products and services at Alibaba-registered stores, only few of them choose to sell their products through Youa.

With Alibaba and Taobao dominating the Chinese e-commerce market, Baidu has no choice to shut down Youa. All Youa product posting, store editing, account management, posting, and transaction functionality will be shut down in one month’s time from now. Merchants on Youa are also given one month to transfer to Baidu’s partners, Yaodian100.com (operated by Baidu with Daphne and Qiming Ventures) and Rakuten China (operated by Baidu in partnership with Japanese e-commerce company Rakuten). And Baidu will transfer e-commerce operations to Rakuten, Yaodian100, and other partners.

Interestingly, the move of Baidu was reported by Reuters and WSJ in two different moods.

From Reuters:

“Youa failed to gain traction with the majority of online users who preferred to use Taobao to buy and sell goods online. Based on gross merchandise value, Taobao commands more than 70 percent of China’s e-commerce market.”

Reuters wrote that Youa’s shut down highlighted Alibaba’s Taobao leadership position in the market.

From WSJ:

“The move comes as Baidu, China’s biggest search engine by revenue, continues to look for new ways to fuel growth beyond its normal web search services. Baidu will also launch a new e-commerce product, Baidu spokeswoman Ms. Betty Tian said, but declined to describe the product or give a time frame.”

WSJ, on the other hand, wrote that the shift was more of a strategic move.

Taobao.com, the online shopping platform under the aegis of Alibaba Group, has dominated more than 80% of the C2C market in China, according to statistics from Analysys International. It even reported more than 370 million registered users as of the end of 2010 and currently hosts more than 800 million product listings. Analysts believe Taobao’s turnover exceeded 400 billion RMB in 2010 and revenues surpassed 5 billion RMB. Without doubt, Taobao would take a dim view of Groupon and make a push in the business-to-consumer (B2C) segment for a larger slice of the e-commerce market.

It is surprising, yet understandable for Baidu to move to a so-called adjustment for its consumer-to-consumer (C2C) business, since Youa.baidu.com has been giving an unsatisfactory performance in face of the huge competition from Taobao.com. It is practical for Baidu to hand over its B2C operation to Rakuten.com.cn and Yaodian100.com, said Wang Fang, deputy director for the industry research department of iResearch Consulting Group, noting that the company will find it difficult to lure business partners for its C2C platform because of a lack of user base. Meanwhile, China is the world’s largest internet market with more than 450 million users. Web commerce in China has been booming within recent years as buyers switch to the internet for better deals from more reliable suppliers and reasonable price.

Source: TNW Asia