Alibaba.com announced that its Taobao.com Chinese-language consumer auction site will remain free for buyers and sellers for three more years and called on eBay to join Taobao in making its services free for Chinese users.
"We call on eBay to do what's right for this phase of China's ecommerce development and make your services free for buyers and sellers in China," said Jack Ma, CEO of Alibaba.com. "Cutting prices is not enough - it's time to make your services free and affordable for all of China's entrepreneurs and consumers."
Ma continued, "Taobao.com is a business, and like any serious business we have a solid plan for profitability. With Alibaba and Taobao, our theory has always been, only after our members make money using our marketplaces should we make money."
Although eBay rarely responds to competitors' taunts, it issued a statement on Wednesday in response to Taobao's challenge, stating that free is not a business model and that "It speaks volumes about the strength of eBay's business in China that Taobao today announced that it is unable to charge for its products for the next three years."
Taobao.com also said it posted strong growth on all key metrics in the third quarter of 2005, with transaction volume (GMV) for the third quarter reaching US $289 million. Alibaba.com also said it would invest US $120 million to further grow Taobao.com's ecommerce marketplace with the goal of creating one million jobs for entrepreneurs in China.
eBay Powersellers source product from China through Alibaba's site, and the two companies seemed to coexist peacefully. But since the Spring, the two companies have been waging a fierce battle, including a war of words like the one waged yesterday through press statements. It's not known for sure whether or not eBay was bidding against Yahoo for Alibaba's business. Yahoo entered into a long-term strategic partnership with Alibaba over the summer.
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