Taobao is the largest online marketplace or online retail store in China today, controlling over three-quarters of the domestic C2C and B2C markets. Paipai, the second largest online marketplace in China, controls less than 10% of the market.
Taobao is sometimes referred to as China's eBay, but it has become a critical e-commerce platform for businesses as well. Since the company was formed in 2004, it has managed to overcome formidable challenges from global incumbents such as eBay and Amazon.
The success of Taobao (and consequently that of Alipay, its payment processor) is in large part due its innovative escrow service, which provides users with an extra layer of security. This has proven to be a particularly important issue in China, given the relative immaturity of the e-commerce market and a lack of consumer trust in buying online. The escrow service allows a buyer to withhold payment until they have received the product from the seller.
Taobao is a subsidiary of the Alibaba Group, which also controls China's largest payment provider, Alipay, and China's largest online B2B platform, Alibaba.com. The Alibaba Group, therefore, is a major force in China's e-commerce market today, controlling both the largest online retailer and online payment provider, dwarfing all other players currently in the market.
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