Online sellers look at new sites to make business click(2)

Taobao, which was founded in 2003, did not confirm the number of online retailers on its platform nor its revenue, but industry experts estimated the site has at least 8 million shops.

The huge number of e-retailers and their vast number of products could, ironically, pose headaches not just for stores but also for shoppers.

"More and more online shoppers prefer business-to-customer (B2C) platforms rather than C2C platforms such as Taobao due to the former's better product quality and better services. So the shrinking C2C market is another reason for Taobao's e-retailers to move to other platforms," said Wu Sheng, an analyst with the Beijing-based Internet consultancy Analysys International.

He said that with Alibaba choosing to list its shares in the US, the company will further crack down on fake goods on Taobao, which will hit some e-retailers.

Statistics from iResearch, an Internet consultancy, showed that the C2C market accounted for 64.9 percent of China's 1.85 trillion yuan online retail market in 2013 but the growth momentum of B2C was more than twice of C2C market's growth of 30.9 percent in the same year.

The size of China's B2C market is going to overtake the size of C2C's in 2017, iResearch predicted.

Kelland Willis, an associate analyst with Forrester Research, a US-based consultancy, said that the C2C landscape in China has been inflated as a result of a lack of other appealing online offerings.

"We see that consumers are starting to understand and appreciate the value that other B2C websites, like Tmall, JD and the brand's own direct approach to consumer sites offer. This isn't a result of Taobao performing poorly, but a result of more competition entering a space where there wasn't any for a long time," said Willis.

Alibaba, which built its business empire upon e-commerce, is clearly aware of the changing landscape. The company officially named its B2C site Tmall in January 2012 after it was spun off in June 2011 from Taobao.

Some e-retailers on Taobao are upset that Alibaba has been paying more attention to Tmall, which helped the company sell 35 billion yuan worth of goods in 24 hours on Nov 11 last year, the annual key online shopping day in China.

"For example, we all like to be involved in group-buying events because such events can usually help retailers sell a lot of products within a relatively short period of time. But you need to pay 60,000 yuan to be involved in those events no matter whether you can make money out of it or not," said He Yijia, a Sichuan province-based retailer who has been selling shoes on Taobao since 2010.

He, a young mother, said the threshold is too high. "It is an unwritten rule that only big boys on Tmall can do group-buying events," she said.

According to He, the profit margin of group-buying events is usually low.

"If I make 5 yuan of profit for each pair of the shoes, I need to sell a total of 12,000 to break even. You can imagine how hard that can be," she said, adding she opened up a shop on Mogujie.com late last year to avoid putting all her eggs in one basket

Apart from its sister platform Tmall, Taobao is also facing competition from other emerging B2C sites. Alibaba's rival Tencent Holdings Ltd is leading the revolt by connecting its popular messaging app WeChat with JD, China's No 2 e-commerce player.

Despite all the challenges, Willis of Forrester said that selling on Taobao still has big advantages for small businesses, especially the large volume of traffic.

He Yijia, who has already set up a store on other site, said she will not shut her store on Taobao.

"I put all my people to work for my new store in Mogujie on Nov 11. Despite the fact that no one took care of my Taobao store on that day, more than 1,000 pair of shoes were still ordered by customers over a 24-hour period. No website can compete with this kind of traffic at the moment," she said.