INTERNET: Baidu Adds Foreign Flavor in New E-Commerce Drive

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Bottom line: Baidu’s new upscale online shopping mall looks more focused and well designed than its earlier e-commerce initiatives, but could have a difficult time finding an audience due to stiff competition.

Baidu tries e-commerce again with upscale mall

Online search leader Baidu (Nasdaq: BIDU) is hoping the third time is the charm for its drive into e-commerce, with the formal launch of its new online mall with a distinctly foreign flavor targeting high-end shoppers. I’ve followed Baidu for a long time now, and the company certainly has a poor track record in e-commerce and more broadly for homegrown initiatives like this latest one called Baidu Mall.

But that said, the company has found more success recently by buying assets outside its core online search area, and then giving them access to its own vast cash and other resources to help them quickly gain market share. Perhaps it’s hoping to use that strategy as well for the newly launched Baidu Mall, even though the platform itself seems to be Baidu’s own creation rather than an acquisition.

In a separate headline that looks slightly related, media are also reporting that Baidu took part in a recent $30 million fund-raising round for Bolome, operator of an e-commerce app that targets buyers of imported goods. The message from these headlines seems to be that Baidu is focusing on the upper end of the e-commerce market, with special attention to imported goods.

Baidu certainly isn’t the first to take this approach. Sector leaders Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD) are making similar moves, including JD’s recent opening of a series of online stores specifically devoted to products imported from specific countries. Global giant Amazon (Nasdaq: AMZN) is also trying to capitalize on the trend through a recent initiative to make goods from its flagship US online store easily available to Chinese shoppers.

With all that competition, it’s far from clear if Baidu will be able to find success with either its own Baidu Mall or Bolome. The company certainly has a big advantage with its dominant search engine, which it can use to help drive customers to its online stores. But Baidu also had that advantage in its previous 2 big e-commerce endeavors, both of which ended as high-profile flops.

Low-Key Launch

All that said, let’s look more closely at Baidu Mall, which recently went live at the site mall.baidu.com. (English article) It’s somewhat noteworthy that Baidu kept this latest launch rather low-key, without any major announcements or events that I could see in media reports. Perhaps that’s because the company was in bigger headlines earlier this week when it engineered a major equity tie-up for its Qunar (Nasdaq: QUNR) online travel service with former arch-rival Ctrip (Nasdaq: CTRP). (previous post)

Baidu certainly has reason to keep this latest launch low-key. Its first 2 e-commerce endeavors ended as big disappointments, including its own initiative and a later one with Japanese e-commerce leader Rakuten (Tokyo: 4755). (previous post) While both of those efforts focused on mainstream e-commerce, this newest one is squarely aimed at buyers of more upscale goods, many of those imported.

I’ve checked out the site, and it actually looks quite clean and attractive, and features a wide range of foreign names that are decidedly upscale but not really luxury products, such as ice cream maker Haagen Dazs and audio products maker Beats. That’s probably a shrewd move, as it would be difficult to directly challenge the current dominance of more mainstream players like Alibaba and JD.com. The low-key but highly profitable Vipshop (NYSE: VIPS) has found similar success as a niche player, though its focus has come at the discount products end of the market.

The Bolome news looks unrelated but similar, and has Baidu as part of a group that invested the $30 million in the e-commerce company’s second funding round. (Chinese article) I visited Bolome’s site also, and the company looks squarely focused on mobile app users and imported products, with Japan as one of its first import markets.

At the end of the day, Baidu really can’t afford to ignore China’s huge e-commerce market, which is the driving force behind these latest endeavors. I commend the company for trying to take a more targeted approach this time, and also for its lower key roll out of Baidu Mall to lower expectations. But that said, the company will face stiff competition and it isn’t clear it will have any big advantages over its rivals, which means that Baidu Mall could face an uphill climb to find an audience.

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