Baidu Shuts E-commerce Site and Builds a New One

Both Reuters and WSJ reported that Baidu, China’s largest search engine, is shutting down Youa, its e-commerce subsidiary. Existing merchants have one month to migrate to either Rakuten China or Yaodian 100.

The reports were different in mood, though. Reuters wrote that Youa’s shut down highlighted Alibaba’s Taobao leadership position in the market. The report went on to explain how Taobao is bashing up its competitors. WSJ, on the other hand, wrote that the shift was more of a strategic move. Baidu is believed to be secretly building a new e-commerce platform which will better leverage its search engine technology. No further details were revealed.

Baidu’s move was triggered by the need to expand its business portfolio beyond search. Google would understand its Chinese counterpart’s struggle as it also went through a similar journey to expand to other services beyond search. In fact, Google did actually try to venture into e-commerce through its search engine (at least in my opinion).

Last November, I wrote about Google’s Product Ads whereby advertisers can place product ads right on its search result page. These product ads are different from Google’s normal text ads as it is accompanied by image and price. The key isn’t about the ads though. What’s important is that advertisers need not incur any cost until someone actually purchased the product. Below was what I wrote:

“With the new cost-per-action (CPA) model, even the most skeptical merchandiser would find Google’s Product Ads irresistible. It doesn’t hurt to try out Product Ads since unit sales covers the unit selling cost. It’s a beautiful plan for merchandisers and Google. Think about it. If Product Ads were to catch on, Google could be a huge marketplace for any product. The future of ecommerce could be “Google and buy”. I wonder if that is Google’s grand plan.”

Similarly, Baidu could do the same. But the question is whether Chinese users will log on to Baidu or Taobao as first destination when looking to purchase a product. What do you think?