Transaction Volume Doubles In 2006
Mobile Phones Top Item Bought Online

Hangzhou, China, 17 January 2007 - Taobao, China's leading consumer e-commerce website and a division of the Alibaba Group, announced today that its transaction volume, or gross merchandise volume (GMV), surged 110 per cent in 2006 to over US$2.18 billion (RMB16.9 billion).

Taobao's number of registered users rose to over 30 million by the end of 2006, a 116 per cent increase from 2005 and accounting for nearly all Internet users in China who say they shop online. According to iResearch, regular consumer e-commerce users in China in 2006 surpassed 30 million. Average annual expenditure of Taobao users was US$72 (RMB563) in 2006.

To give an indication of the scale of online shopping in China, Taobao's GMV in 2006 exceeded the 2005 turnover of the popular Yi Chu Lianhua supermarket chain (RMB10 billion) and that of Wal-mart China (RMB9.93 billion).

Toto Sun, President of Taobao, said, "Online shopping is growing rapidly in China but consumer e-commerce is still in its infancy. The market has matured thanks to Alibaba's online payment system, Alipay, and improved logistic services tailored to online purchases but the real potential is yet to be tapped."

The top 10 selling products on Taobao in 2006 by transaction volume were mobile phones and other communication equipment, cosmetics, notebook computers, online game merchandise, computer hardware, digital cameras, jewelry, exercise equipment, mobile phone recharge cards and IP cards, and mobile accessories.

While the top 10 selling products in terms of number of transactions were perfume and cosmetics with 40 million items sold, telephone recharge cards (20 million), health care commodities (20 million), books (9.4 million), shoes (4.5 million pairs), lighters (4.3 million), underwear (2.3 million pairs), and mobile phones (2.2 million).

A 2005 AC Nielsen China online shopping research study found that books were the most popular online commodity, followed by music CDs and DVDs, clothes, and shoes and cap accessories. Contrary to this, Taobao's 2006 rankings indicated a change towards higher value items, such as cosmetics and mobile phones. For example, the transaction volume of mobile phones and accessories on Taobao in 2006 was approximately US$682 million (RMB5.3 billion), which is close to the annual turnover of China's largest mobile phone chain store, Dixintong.

Taobao users are predominantly young people with good education levels. In a decade, these online shoppers will become mainstream consumers who will influence the buying habits of the whole country.

Supporting Data

Table 1: Small but growing percentage of sales occurring online Year Total commodity sales in China (RMB)* Online shopping sales in China (RMB)** Online sales as a percentage of total sales

2002	4,091 billion	1.78 billion	0.04%
2003	4,584 billion	3.91 billion	0.09%
2004	5,395 billion	8.09 billion	0.15%
2005	6,718 billion	19.31 billion	0.29%

* Source: China's National Bureau of Statistics
** Source: iResearch

Table 2: Online shopping growing much faster than overall commodity sales Year Total commodity sales in China (RMB)* Online shopping sales in China (RMB)**

2002	13.3%	197%
2003	9.2%	120%
2004	14.5%	107%
2005	12.9%	139%

* Source: China's National Bureau of Statistics
** Source: iResearch

Table 3: Steady increase in percentage of internet users who shop online Year Total commodity sales in China (RMB)* Online shopping sales in China (RMB)** Online sales as a percentage of total sales

2002	45.80 billion	5.02 billion	10.9%
2003	68 billion	10.14 billion	14.99%
2004	87 billion	14.08 billion	16.2%
2005	103 billion	18.55 billion	18%
2006	123 billion	Over 30 billion	24.3%

* Source: China Internet Network Information Center (CNNIC)
** Source: iResearch