Alibaba Group gets into search with the launch of Etao.com

Etao.com piggy backs on the Taobao brand and debuts over the weekend in beta phase. Etao currently works as a search option for e-commerce, and also conducts comprehensive search using Microsoft's Bing search technology.

Etao’s search results are prioritised by images and product pricing, links to related online forums, then informational websites and web search results.

Jimmy Poon, CEO for China at Mediabrands Ventures comments: "Alibaba has e-Commerce in its DNA, so building a search engine with such an inherent factor can advance the growth of e-Commerce in China, which in turn will fuel the growth of the rest of the online ecosystem."

Baidu currently holds 70 per cent of the Chinese search market share by advertising revenue, according to Analysys International.

Philip Kuai, director of product and strategy at AdChina is also not surprised by Alibaba’s new move. He explains that traffic is the number one priority for e-commerce. Etao is a move to defend Taobao’s ground in the online search world. “Due to competition, some major search engine blocked Taobao’s items from search results, and Taobao needs to fight back."

Alibaba is no amateur in search. Yahoo China is currently a major stakeholder (39 per cent) in Alibaba. In return for the stake, Yahoo handed control to Alibaba in 2005 along with $1 billion for the Chinese market.

However tension is building, according to South China Morning Post, due to Yahoo Hong Kong further extending into the mainland China market. Yahoo Hong Kong secured more than 60 new Shenzhen-based online advertisers this year and is gaining SME businesses in Guangdong.

While it is seen as a natural development of Yahoo’s Hong Kong operation to move further into the Chinese market, it becomes a potential competitor to Alibaba.

“Basically, China is undergoing a process like the US did in late 90s, with many new search engines opening up each month.  Eventually, it will undergo a period of consolidation and a few superior ones will survive,” said Antony Yiu, MD for search engine marketing shop iProspect Hong Kong and regional director of iProspect in North Asia.

What does this all contribute to the supply and demand of search in China? Laker Chen, MD of iProspect China said: "The consumer will have more options to make their search while the businesses have either. The bidding will be less intensive since the business could put ads on cheaper bidding markets when they found the original bidding market is too crowded."

Chen said the search market is not saturated yet. "Even 3 big players is still not enough," he said.