Internet product market: Taobao and Baidu

Cheng This article "Taobao Shield PK Baidu Spear" write well. Taobao and Baidu profit model similar, mainly rely on search ads, and Taobao growth rate of more than Baidu (100% vs. 60%). But the investment bank gives the PE is different, to Baidu 60 times times, but only to Taobao 50 times times. Through the ratio of P/E to Growth rate (PEG), the difference is more obvious, Baidu is 1, Taobao is 0.5.

Cheng that this is caused by two reasons: 1. Baidu is the search concept, Taobao is the concept of E-commerce, the former is a stable and mature concept, the latter face different types of e-commerce across the risk; 2. Baidu is the concept of the whole network, Taobao is the concept of the station, Baidu is open, Taobao is a fence garden.

I have some objections to Cheng's opinion.

First of all I think Taobao is also a search concept, not e-commerce concept. Taobao never earns a living by collecting transaction fees (although Taobao mall includes commissions), so essentially it doesn't care where the transaction takes place (compare Taobao with ebay, Amazon, you'll see it clearly). So who is the concept of e-commerce? Jing Dong is, every guest is, all want to get the user from Taobao is all. Taobao efforts to make their own online shopping synonymous, not to charge more transaction fees, but in order to collect more promotional fees, this model with Baidu is not essential difference.

Through payment, logistics, cloud computing, data analysis and other E-commerce support system, Taobao more and more do not need to all the businesses in their own garden. And the history of business also tells us that c2c market model, just the initial stage of business, is extensive business, it will certainly develop into a more advanced large shopping malls mode, supermarket mode, chain stores mode, and so on. No matter how the future business model evolves, Taobao has the very core of things--the consumers that hold the currency to buy, and the most perfect e-commerce infrastructure.

Second, I think, Taobao sooner or later will all the E-commerce information, all into their own search scope. Taobao certainly want to create such a recognition for users: Search "Yan Zhao door", please go to Baidu, search "Canon EOS 5D", please come to Taobao. When all involved in shopping, trading search, more than 90% in Taobao occurred, Baidu's future commercial foundation was hollowed out. E-commerce in the high-speed growth stage, Baidu and Taobao can benefit, but sooner or later, the relationship between the two sides will be the elimination of the long.

Google has benefited from the development of E-commerce, or e-commerce maturity, to provide Google with a steady stream of promotional customers, ebay and Amazon are among the biggest. And Taobao do not want the development of E-commerce ultimately let Baidu benefit, so it most want to do is to intercept Baidu, E-commerce promotion customers to introduce their own water system. Therefore, Taobao search, the future is shopping search, and will not be Taobao site search. In favor of consumers, it must also benefit Taobao. The core of all of Taobao's business is to keep consumers in order to make businesses.

Investment banks are now valuing Taobao at $11 billion trillion, and I think the valuations are too conservative. 2010 is Taobao with the force of a year, the income will be more rapid growth than the previous two years, and this year, MA did not say no Taobao to make money. In fact, Taobao listing needs a beautiful performance for support, this year is to do the performance of the year. It's not surprising that when Taobao comes on the market, its market capitalisation reaches $20 billion trillion or more.