Taobao's mall heats up rivalry

A computer screen displays various furniture items with their selling prices while Chinese shop inside the newlyopened Taobao Mall in Beijing. Taobao launched a five-story home furnishings showroom on Friday for customers to try out sofas, tables and other big-ticket items before placing an order online. [Shanghai Daily]

China's e-commerce giant is stepping up its heated rivalry with bricks-and-mortar retailers with the launch of a five-story home furnishings showroom in Beijing.

Alibaba Group's Taobao, an Internet platform through which an estimated 3 percent of all retail sales in China pass, opened the showroom on Friday for customers to try out sofas, tables and other big-ticket items before placing an order online.

The mall is a new intrusion into the territory of China's real-world retailers by e-commerce rivals.

Taobao says its Beijing mall is aimed at overcoming a hurdle hampering the growth of China's Internet commerce even though online retailers offer significantly lower prices: customers don't like to buy furniture and other major items without examining them in person.

"It's hard for people to shop for home furnishings if they haven't seen them," said Justine Chao, an Alibaba spokeswoman.

Analysts expect China's online commerce to grow at annual rates of 30 to 40 percent in coming years, defying early fears it might be hurt by low rates of credit card use and rudimentary delivery services.

A key part of e-commerce's appeal is lower prices. With no need for an expensive chain of storefronts, web merchants charge 30 to 50 percent less than traditional retailers.

Sales through Taobao alone totaled an estimated 400 billion yuan (US$60 billion) last year, according to analysts. Taobao does not disclose its revenues from fees charged to retailers.

Taobao says its 25,000-square-meter Beijing mall will display 22,000 items from some 300 suppliers. Orders and payment will only take place online. Taobao says it plans to open similar showrooms in other major Chinese cities.

On opening day last Friday, shoppers at the Taobao Mall on the Chinese capital's east side were test-sitting sofas and flipping through channels on big-screen TVs.

"Compared with photos on the web, I can really touch the things, so I can put more trust in them," said Yu Jingyuan, a costomer who was looking at a stall displaying kitchenwares.