China's Baidu to Restructure its E-Commerce Services

Chinese search engine giant Baidu is adjusting its e-commerce business model to better compete with more established online shopping destinations.

The nation's largest online search provider said on Thursday that it will transfer all of the merchants from its Youa e-commerce store to other partner platforms, including Yaodian100.com and Rakuten China, a joint venture with Japan's Rakuten, which just launched in October.

"This should not be seen as Baidu withdrawing from the e-commerce scene," noted Baidu spokeswoman Betty Tian. "In fact, we are in research and development on a new e-commerce platform product which will suit users better."

Launched late in 2008, Youa has been a fairly disappointing venture for Baidu, garnering only a 0.1 percent share of the online retail market. In contrast, e-commerce behemoth Taobao accounts for more than 70 percent of the market, according to research firm Analysys (News - Alert) International.

Youa was unable to compete with Taobao, in part, because it came on the scene more than five years after the Alibaba Group's site was launched.

"Even with Baidu's investment in this area, it would have been very hard for them to see a major return," Cao Junbo, chief analyst at iResearch, told PC World.

While Baidu is relieving Youa of its e-commerce duties, the site will not be shut down. Youa will continue to provide other lifestyle services, including information and reviews on restaurants and other destinations.

The two new e-commerce sites, Yaodian100.com and Rakuten, will be expected to pick up the slack in the absence of Youa, at least until the online search site launches its new platform. Rakuten will offer a wide range of shopping services – similar to Taobao – while Yaodian100.com will concentrate on marketing women's products mostly, according to PC World. The migration of merchants to the new sites will take place over the next few weeks.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Janice McDuffee