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Will Etao Be China's Answer to Ecommerce Search?

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Alibaba Groups's Etao, a vertical shopping search engine in China, made headlines when it launched last October by using Microsoft's Bing as its search provider.

The partnership created much speculation that Bing will grab a portion of the search market as Google's continue to slide in the country.

However, Bing is now no longer a search partner with Etao, although it continues to have presence under MSN's portal in China.

Etao provides online consumers with three options to choose from its general search function -- Etao, Sogou, Sohu Internet company's search engine, and Netease's Youdao, a product search channel featuring price comparison of more than 6 million products from local shopping sites.

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Etao, which is still in beta, is experimenting with various search providers in China, an Alibaba spokeswoman said.

She emphasized that the search algorithm on Etao does not give preference to Taobao Mall products (Part of Alibaba Group's B2C platform launched in 2008) and its organic search ranking will be based on timing of product listings, brand, price, and product reviews.

Etao's goal is to become the go to shopping search destination or a "dedicated vertical shopping search engine" for Chinese consumers.

As Kun Tang, head of business development at SEO agency The Egg China noted, Etao has officially indexed some major B2C e-commerce websites, such as 360Buy, Vancl, and Dangdang, in March this year. Other sites include Joyo Amazon and brands like Gap.cn and Lining (one of China's largest sports apparel brand).

Although Etao says it won't favor Taobao's listings in its organic search results, the ecommerce search engine will have to convince marketers like Tang that all brands have a fair go on its site.

And because Etao currently doesn't have any paid search product offering, it's low on other media agencies' radar. Etao asserts that its priority at the moment is to get the user experience right so it hasn't monetized by selling paid search ads.

One example is integrating user comments on Etao to allow Internet users search from discussions on local BBS (Bulletin Board System)/forums as well as on its Q&A platform that are mainly incorporated from Soso, Sogou, and Taobao. But comments from local social networking and microblogging sites aren't integrated and Etao didn't give a clear indication if it has any future plans for this.

In addition to price comparison, Etao also provides image search. For instance, when "Gap" is typed into the search box, there are 579 results under the image category.

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Indeed, the potential for ecommerce in China is enormous. Ecommerce market size was estimated to be worth $70 billion in 2010 for China and it's forecast to increase to $311 billion in 2015, which will be potentially larger than the U.S. market by that time, according to Credit Suisse and iResearch estimates.

While Baidu is the market leader for general search in China, Taobao, part of the Alibaba group where Yahoo owns 40 percent stake in the company, is China's largest e-commerce firm representing close to 80 percent of the sector.

Established in 2003 as a consumer auction site, Taobao now claims to have more than 370 million users.

Last November, the Chinese e-commerce firm invested close to $30 million to advertise Taobao Mall and now features more than 30,000 international and domestic brands to online consumers.

Taobao offers pay for performance advertising called ZhiTongChe. ClickZ Asia columnist Sara Ye, head of GroupM China Search, explains that copy and bidding for Taobao advertising is similar to Baidu and Google except that it uses image for the ad format.

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So where does Baidu fit into the picture?

Baidu introduced Youa, an ecommerce store to go head to head with Taobao in October 2008. In retaliation, Taobao blocked Baidu's search spiders as it alleged the move would protect its consumers from fraud. This means Chinese Internet users have been bypassing the country's search giant when shopping online.

Reuters reported in March that Baidu would shut Youa and migrate its users to Rakuten China and Yaodian100 as the search engine works on a new ecommerce platform for the market.

But what would hurt more is if big ecommerce brands, such as online bookstore Dangdang and electronics store 360Buy, drop their search investments with Baidu due to inflation of CPC rates and concern in maximizing ROI since brand awareness for individual brands are strong.

With Baidu failing to gain a strong foothold in e-commerce, will Etao be China's answer to e-commerce search? Etao will either need to attract a massive number of online consumers or start offering advertising before it becomes a game changer in the market.

What are your thoughts?


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