Alibaba quietly unveiled Aliyun Search, a product developed by the Chinese e-commerce giant’s cloud unit recently, a move that could have huge implications for Baidu and e-commerce in the country.
China is forecast to surpass Japan as the world’s second largest B2C e-commerce market valued at US$181 billion this year, according to eMarketer.
The country already has the highest number of digital buyers worldwide with close to 220 million people buying goods online in 2012. That figure is estimated to grow to more than 270 million online buyers this year.
Aliyun’s search engine would come in handy for these burgeoning millions of users that will be researching various brands and products, which could potentially influence their buying decisions.
If Alibaba takes Yahoo’s search algorithm and combines it with purchasing insights from Taobao and ETao to create Aliyun as a “best of breed” engine for searching, it will be a serious threat to traditional search players like Baidu and Google, said Lawrence Wan, managing director at iProspect.
Aliyun’s keyword suggestions seem to be based on buying behavior with a strong e-commerce slant to its results, he added.
For example, when I searched for Nokia, Aliyun’s SERP delivered links to product reviews on the Finnish handset brand in its top results. (Image below)
Using the same keywords on Baidu showed Nokia has bought Brand Zone, an ad format featuring brand logo, deep links, and images that dominate above the fold.
While Alibaba did not share more details on Aliyun search except that it is a product developed and maintained by its cloud computing business unit under the group, it is worth noting that the division also specializes in data management from e-commerce data mining, processing to customization.
This is not the first time the e-commerce giant made its foray into the search business in China.
When Baidu introduced Youa, an e-commerce store to go head to head with Taobao marketplace in 2008, Alibaba has since blocked the search leader from indexing its Taobao and Tmall (B2C) sites.
In 2011, Alibaba rolled out ETao, a comparison shopping engine that is said to have more than a billion product listings and over 5,000 business-to-consumer and group buying websites.
Meanwhile, Baidu does not seem to have much success extending its search service to e-commerce.
It had to shut down Youa in May 2011 and migrated merchants to its joint venture with Japan’s Rakuten and Yaodian 100.
A year later, Rakuten ended its partnership with Baidu on the “Lekutian” shopping website, citing sluggish sales.
Despite up-and-coming search players such as Qihoo 360 grabbing 10 percent of search traffic share in China, Baidu remains a leader in the space.
Baidu also has a monopoly over the paid search market in China with its Brand Zone ad format that is known for its high conversion rates aimed at established brands. Because of its strong market share, advertisers have to bear with the year-on-year massive inflation for the ad product.
If Aliyun becomes the default engine for online buyers to research products and services, it will own data on the converting brand and product terms and could drive customers directly to its Taobao and ETao sites that could have huge implication in the market, Wan noted.
Looks like China’s search market is shaping up to quite an interesting start in 2013 as local players make their move to topple the status quo.
In the meantime, Will Tao, an iResearch executive, said Aliyun wouldn’t impact the [China search] market in the short term.