Taobao Mall Becomes Tianmao: IPO Coming?

By newsdoug on January 12, 2012

Taobao Mall: China's new e-commerce cat The e-commerce world is buzzing this morning about the new cat in town, a website called Tianmao, translating to “Sky Cat,” which is the new Internet domain where Alibaba Group’s industry leading Taobao Mall will set up its new shop. (Chinese article) The move is the latest in a series designed to separate the highly popular online shopping mall from its roots in Alibaba’s broader Taobao family of companies catering to consumer buyers, and looks like the latest step in the march towards an IPO for the unit, probably sometime later this year. Alibaba started Taobao about a decade ago as a specialist in the then-popular online auctions business, also known as C2C, where it fought a high-profile battle with global industry leader eBay (Nasdaq: EBAY) that ultimately saw the US giant largely withdraw from the domestic Chinese market. Since then, however, Alibaba’s online auctions business has been a lackluster performer, in part because it refuses to charge for most services; instead, Taobao has found more success in its Taobao Mall, an online shopping mall, known in the industry as a B2C site, populated by third-party retailers that are generally quite large and are more than happy to pay handsome fees for the privilege of renting a space on the site. Alibaba formally split off Taobao Mall from the rest of Taobao in a reorganization last year (previous post), and has been quietly building it up as a separate stand-alone business. The new company experienced a bit of controversy last fall when it announced a sharp price hike for smaller merchants, prompting them to rise up and create widespread disruption, saying the move was aimed at kicking them off the site. (previous post) Stakeholders of Alibaba, whose only listed unit is its B2B site, Alibaba.com (HKEx: 1688), have repeatedly pressed founder Jack Ma to do more IPOs for his company’s other units to let them get more money back from their investments; but Ma has countered by saying Taobao will never make an IPO. This latest name change for Taobao Mall looks like a clever way for Ma to keep his promise, while moving ahead with an IPO for this successful unit that could raise several billion dollars or more if and when it comes later this year.

Bottom line: Alibaba’s renaming of its popular Taobao Mall as Tianmao is the latest step in the march towards a multibillion-dollar IPO that could come later this year.

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