Analysys International said Alibaba's Taobao.com leads the consumer-to-consumer (C2C) market in China in terms of transactions, and it will likely surpass eBay in terms of subscribers in 8 months. Analysys International published the results in a report called, "Quarterly Tracker on China's C2C Market 2005-Q3."

The Analysys International report said China's total C2C market size in the first three quarters of 2005 reached RMB8.77 billion, which is almost twice that of the annual turnover of 2004. (RMB is China's paper currency.) So far this year, Taobao.com leads the market with a 57.1 percent share in terms of transaction handled, with its turnover in Q1 at RMB1.02 billion, Q2 at 1.67 billion and Q3 at 2.32 billion.

According to the study, China had 15.08 million C2C subscribers in 2004, and 29.84 million by the end of Q3 2005, almost doubling in 9 months. The report said eBay had 15.10 million subscribers with Taobao.com close behind, and it said the number of Taobao subscribers will surpass those of eBay within 8 months.

Taobao's strategy has been to make its site free for consumers and sellers to use, while eBay's site charges sellers fees. Two months ago, Taobao called on eBay to make its site free and committed to leaving Taobao free for three more years (http://auctionbytes.com/cab/abn/y05/m10/i20/s01).

"Taobao's strategy to attract users by free service had effectively driven its subscriber booming, but they still face the challenges ahead on how to capitalize its huge subscriber base built," said Sun Lilin, senior analyst from Analysys International. "Meanwhile, when we scan the Internet market as whole, there are no clear borderlines between the business models of various Internet areas. Those seemingly different business models such as portals, search engine and net games tend to converge with each other. But one thing for sure, the traffic and stickness of that traffic are the fundamental elements for any Internet business who want be succeed in China's Internet market."

Alibaba took over Yahoo properties in China, including Yahoo China portal, Yahoo Search Technology, and the 3721 keyword search service, when Yahoo acquired a 40 percent stake in Alibaba in August (http://auctionbytes.com/cab/abn/y05/m08/i11/s00).

This subject is being discussed today along with other key industry issues at the TMT (technology, media and telecom) Industry Annual Summit held by Analysys International on Dec. 9, 2005, in Beijing.

Additional information is available in Analysys International's data report, "Quarterly Tracker on China's C2C Market 2005-Q3," available in Analysys International's website: http://english.analysys.com.cn .

Analysys International is a leading TMT (Technology Media Telecom) market research firm in Asia Pacific Rim and was established in 1999.

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