A must-know overview of Alibaba’s main business lines

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Sep. 10 2014, Updated 12:57 a.m. ET

Alibaba’s Taobao and Tmall are the largest marketplaces in China

In the previous part of this series, we discussed the challenges facing China’s physical retail industry due to the less-developed retail infrastructure and distribution system in China. We also discussed how these challenges are actually a big opportunity for the e-commerce industry in China. Alibaba, which is the biggest e-commerce player in China, is the chief beneficiary of this trend.

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Alibaba has a number of platforms for third parties to sell their products. It operates Taobao Marketplace, which is China’s largest online shopping destination, similar to eBay (EBAY) in the U.S. It also operates Tmall, which is the largest third-party platform for brands and retailers. Then we have Juhuasuan, which is a group buying marketplace operated by Alibaba.

In addition to these marketplaces, Alibaba also operates Alibaba.com—a global wholesale marketplace, 1688.com—China’s wholesale marketplace, and AliExpress—a global consumer marketplace. Alibaba also provides cloud computing services, similar to the Amazon Web Services provided by Amazon (AMZN).

Taobao and Tmall are showing rapid growth

According to Alibaba and as the chart above shows, both Taobao and Tmall have shown strong growth in the last few years in terms of gross merchandise volume (or GMV). Tmall has been showing year-over-year growth upwards of 80%, mainly due to the increasing number of Western brands that sell on its platform. Some of these popular brands are Apple (AAPL), Nike (NKE), and Gap (GPS).

Although Taobao’s and Tmall’s growth has been rapid, some brands have complained that unauthorized sellers sell gray market and counterfeit goods on these platforms. Alibaba has taken some corrective measures in this regard to revive its platform’s image.

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