China's Taobao Expects Explosive Growth in Mobile Shopping

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E-commerce sites run by Chinese Internet giant Alibaba Group expect the country's mobile shopping market will explode in size over the next two years as more users turn to their smartphones and tablets to buy products online.

Taobao Marketplace and Taobao Mall, two of China's leading online shopping sites with more than 400 million users, report a growing amount of merchandise being bought through the company's apps and mobile Internet sites. In 2011, the gross merchandise value from the companies' mobile purchases reached 11.8 billion yuan (US$1.86 billion), up more than six times from 1.8 billion yuan generated in the previous year.

The Taobao companies project the gross merchandise value from mobile purchases will be even higher in 2012, reaching 50 billion yuan, because of growing smartphone and tablet adoption in China.

In the past, Taobao's mobile users were mainly purchasing intangible and virtual products, said Alibaba Group spokeswoman Florence Shih. But now the companies have seen a "huge surge" in the number of mobile users buying physical products on the sites, with the change attributed to better usability of the company's apps and mobile sites, she said.

Alibaba's e-commerce businesses have been working to tap the mobile shopping market, going as far as to create a mobile operating system called Aliyun. On Monday, Taobao Mall started pre-orders for the newest smartphone to feature the mobile OS, which offers apps to connect to its Internet services.

"The mobile shopping market is growing very fast," said Su Huiyan, an analyst with technology consultancy firm iResearch, who noted that companies including Alibaba Group have been pushing for its development.

Total transaction volume in China's mobile shopping market reached 11.4 billion yuan in 2011, a five fold increase from 2.2 billion in the previous year, according to iResearch. By 2015, the market is projected to reach 304.9 billion yuan.

"There's not as much smartphone penetration in China, and the mobile shopping habits are not there yet," Su said. But that will change in the next three to five years, as smartphones become more widespread among the Chinese population, she added.

China now has 1 billion mobile phone subscriptions in the country, according to official government estimates. But only about 14 percent of those subscriptions are with mobile phones operating on China's faster 3G networks.

On March 21, Alibaba's Taobao sites reached more than 100 million unique visitors cumulatively coming via the company's apps and mobile Internet sites. By the end of the year, the companies expect the figure to reach 200 million unique visitors.

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