In 1999, after leaving his government job, Ma founded Alibaba to facilitate international trade for small and medium ventures based in China. In the early days of internet, it was not easy to move traditional business models to online and Alibaba struggled.
In 2003, still unprofitable with Alibaba, Ma and his team launched an online auction site named “Taobao.com.” Taobao charged zero commission, aiming to take on multinational e-commerce giant eBay, which already had the lion’s share of the Chinese online auction market.
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Determined to win against eBay, Taobao remained commission-free for millions of online traders, putting the fledgling Alibaba under further financial strain. To stay afloat while maintaining the platform’s commission-free policy, Ma offered peripheral value-added support services (such as custom webpages) for a small fee. Taobao eventually gained traction in the Chinese market, and eBay subsequently withdrew from China.
Ma reflected on this challenging period later on, suggesting that “if eBay are the sharks in the ocean, we are the crocodiles in the Yangtze River.”
Taobao was the first successful subsidiary of Alibaba, with many additional offshoots to follow in subsequent years.