People wait for the opening of Taobao's new mall in Beijing on Friday. The mall is a new excursion into the territory of China's real-world retailers by e-commerce rivals, which are growing so fast some suggest they could become the country's leading retail force. [Photo/China Daily]

Mall allows consumers to see items before making online purchases

BEIJING - One of China's e-commerce giants has stepped up its heated rivalry with brick-and-mortar retailers by launching a five-story home furnishings showroom in Beijing.

Alibaba Group's Taobao.com, an Internet platform through which an estimated 3 percent of all retail sales in China pass, opened the showroom on Friday. Customers can try out sofas, tables and other big-ticket items before placing an order online with one of Taobao's merchants.

The mall is a new excursion into the territory of China's real-world retailers by e-commerce rivals, which are growing so fast some suggest they could become the country's leading retail force.

"The dominant retailer in China someday may be an online retailer," said Morgan Stanley analyst Richard Ji.

Related readings:  Taobao talks tough about counterfeits  Taobao all-nighter whips e-shoppers into buying frenzy  Taobao expects business to keep growing  Alibaba develops logistics platform

Taobao said its Beijing mall is aimed at overcoming a hurdle hampering the growth of China's Internet commerce even though online retailers offer significantly lower prices: Customers don't like to buy furniture and other major items without examining them in person.

"It's hard for people to shop for home furnishings if they haven't seen them," said Justine Chao, an Alibaba spokeswoman.

Alibaba Group also includes Alibaba.com, a giant business-to-business Internet commerce platform. The company, in which Yahoo Inc owns a 43 percent stake, operates Yahoo's Chinese arm.

Global e-commerce outfits have struggled to gain a foothold in China in the face of aggressive local competition. Amazon.com Inc operates through a local partner, Joyo.com.

The Chinese industry has produced success stories including the bookseller E-commerce China Dangdang Inc, which trades on the New York Stock Exchange, the consumer electronics retailer 360buy.com and Vancl.com, a clothing outlet.

Industry analysts expect China's online commerce to grow at explosive annual rates of between 30 and 40 percent in the coming years, defying early fears it might be hurt by low rates of credit card use and underdeveloped delivery services.

With no need for an expensive chain of storefronts, Web merchants charge between 30 and 50 percent less than traditional retailers.

Sales through Taobao alone totaled an estimated 400 billion yuan ($60 billion) last year, according to analysts. Taobao does not disclose its revenues from fees charged to retailers and other income.

Its platform has led to the emergence of a cottage industry of small retailers, many of them lone traders working from home, who sell clothes, shoes, toys, costume jewelry and other goods to a nationwide market.

Taobao said its 25,000-square-meter Beijing mall will display 22,000 items from some 300 suppliers. Orders and payment will only take place online. Taobao says it plans to open similar showrooms in other major Chinese cities.

Other Internet retailers such as the jewelry seller Zbird.com have also opened showrooms to encourage customers to buy higher-priced items online.

Such outlets could help e-commerce sites to compete even more aggressively with traditional retailers by boosting consumer confidence in a market where online sellers have an uneven reputation, said Ji. "By having a display room, it clearly will help raise the seller's credibility," he said.