Taobao.com, China's most popular auction site, will launch a new platform for eligible major domestic and overseas consumer product makers and retailers to sell directly to Chinese buyers.

The new system - to complement the existing public site - has been established to win customers from offline store chains such as Wal-Mart and B&Q.

The Taobao Shopping Mall, to be online in March, will charge retailers based on their transaction volume. The Website, which has beat eBay Inc in China for its free service, is trying to be profitable and pave the way for going public.

"We want to make it a source of quality products for buyers of good taste, like traditional department stores, with guaranteed quality, good compensation policies and more convenient payment methods," an official with Taobao said yesterday.

The Hangzhou, eastern Zhejiang Province-based Website has experienced problems dealing with its huge traffic flow and received complaints about shoddy goods provided by individual sellers.

Consumer-to-consumer (C2C) trading accounted for most of its 15.7 billion yuan (US$2 billion) turnover in the first half last year, triple the volume compared with the same period last year.

Taobao officials are touring the country to promote the new platform and are arranging meetings with authorized brand agents interested in selling electric appliances, clothing, foods and digital gadgets.

The target is to have about 700 stores available to buyers for the launch of mall.taobao.com, which will be parallel to Taobao's C2C business that is still free to all users.

Companies have to pay five percent of their transaction value to Taobao if their outlet fails to sell more than one million yuan (US$133,333) a year. Discounted commission is provided for bigger sellers.

In addition, they have to pay a 5,000 to 15,000 yuan one-time deposit for Taobao to compensate shoppers in case of complaints. The companies may have their stores shut down if they rank last by sales in their product category.

The new platform is an upgrade of Taobao's brand and shopping mall channel, also a business-to-consumer (B2C) platform - the difference lies in higher entrance thresholds.

(Shanghai Daily January 15, 2008)