Travel is one area where China’s dominant e-commerce company, Alibaba Group Holding Ltd., has jumped ahead of such Western competitors as Amazon.com Inc. and eBay Inc.
Alibaba’s travel service, called Taobao Travel, offers 2 million travel products, including airline tickets from 800 companies and 130,000 hotel rooms from companies selling on Trip.Taobao.com and Trip.Tmall.com. Those are identical sites, one on the larger Taobao marketplace and the other on Tmall, a more exclusive shopping portal designed for larger brands.
Some 500 million Chinese consumers have purchased products through Taobao Travel since Alibaba launched it in 2010 and daily visits surpass 10 million, says Zhou Zheng, senior manager of Taobao Travel. And just as sales soar on the Alibaba marketplaces each year on Nov. 11, a big online sales promotion known as Singles Day, so do travel sales, Zhou says. “Last year consumers placed 170,000 orders in a 24-hour Singles Day’s promotion,” he says.
With middle-class incomes steadily rising, more Chinese consumers are booking air travel, hotels and rental cars online. Online travel in China grew 29.0% to 220.5 billion yuan ($36 billion) in 2013, according to Chinese research firm iResearch.
Alibaba dominates e-commerce generally in China, accounting for 81% of online retail sales in China in 2013. That helped propel Alibaba to a record initial offering of stock last month, raising $25 billion on the New York Stock Exchange. Alibaba does not disclose its revenue from travel services.
To expand its sales, Taobao Travel is working more closely with resorts and operators of such attractions as theme parks. For example, Alibaba is promoting an electronic pass that lets consumers with QR codes on their mobile phones more quickly enter tourist attractions
“The Internet has had a huge impact on our business,” says Liu Jinlong, director of the Song Dynasty Town theme park chain operated by Hangzhou Songcheng Group Holding Co. Ltd. “More and more people prefer to buy the electronic ticket online. Working with Alibaba, we can accept an electronic pass and it helps consumers access our services more easily.” He says his company has opened a storefront on Taobao Travel to offer hotel room reservations and local food specialties. On May 1, a national holiday in China, online sales in the Song Dynasty Town store on Alibaba increased 300% from a year before, the company says.
Like Song Dynasty Town, about 170,000 operators of resorts and attractions have opened their stores on Trip.Taobao.com, according to Alibaba.
Alibaba has not broken out the sales of Taobao Travel. But in a video available on Tmall.com an executive says one-third of Tmall’s mobile sales are of virtual goods, including travel as well as lottery tickets.
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