(CRIENGLISH.com)
Updated: 2008-03-26 16:53

Miss Bao in her 30s has a well-paid job that many people dream of. With a laptop that can go online anytime, anywhere, Miss Bao can go to any place during her work time. And this doesn't stop her from making over 10,000 yuan (or about 1410 USD) a month.

Bao's job is selling women's clothing on Taobao.com, China's largest CtoC (customer to customer) website. Her customers are a group of young girls she has never met but they have known each other through the Internet for a long time. Bao's sister, who is running a clothing store in their hometown, works as her supplier.

Miss Bao is just one of the 53 million registered members of Taobao.com. In 2007, the 53 million registered members brought the website a huge trade volume of 4.33 billion RMB, equaling the total sales volume of Wal-Mart and Carrefour in China last year.

Up to now, Miss Bao hasn't needed to pay Taobao.com any fee for her online business. The website doesn't share the profit brought by the online sales directly, however, the frequent selling and buying of its registered members can give Taobao.com over 100-million RMB of cash flow a day and its widely-used online payment system (Alipay) has also helped it make more.

The large trade volume of Taobao.com gave inspirations to many other domestic enterprises that hope to explore the online business area. A large number of B2C (business to customer) retailers are among them. Different from Taobao.com, which acts as a platform for sellers and buyers, B2C retailers hope to sell their own products online.

Websites Dangdang and Joyo are the representatives of first-generation B2C retailers, who survived when many of the first-generation retailers suffered from the lack of efficient payment system and logistic system.

After them, the second-generation retailers, represented by PPG (a T-shirt store), Redbaby (a children's products store), DHC (a beauty and cosmetic dealer) and 139shop.com (a mobile phone shop), are growing rapidly. Compared with the previous generation, these retailers have more diversified products and can earn more gross profits from their online business.

The second-G retailers mainly operate a single predominant merchandise line and make profit from it, such as clothing, underwear, jewelry and cosmetics.

Compared with them, Taobao.com is more like a traditional department store, which specializes in selling a wide range of products. Retailers like PPG and Redbaby are like specialized franchised stores that own a single product line but try hard to make it bigger.

Second-G retailers are making more profit than its previous generation. People always thought the online business doesn't need to find a physical location as its store and thus saving them high rental payments. As a result, they can charge lower prices for their products while maintaining a high profit.

Storage and distribution are other factors that eat up profits of traditional retailers. But online retailers don't need to worry about it. They hire express companies to help them arrange payments and they settle accounts with the express companies every month. At the same time, traditional retailers who sell their products in department stores can only get their payments three months after the goods are sold. The efficient cash flow turnover gives online retailers more space to lower their prices and increases their competitiveness. Meanwhile, increasingly popularity of online payment systems, such as PayPal and Alipay, are helping online retailers speed up their cash flow cycle.