The story. Taobao.com was founded in 2003 by Alibaba, the Chinese e-commerce company, as a defensive move against its US rival Ebay, which had set up in China the previous year.
The challenge. When Ebay launched in China it had global revenues of more than $2bn. As a young, domestic entity, Taobao was taking on a huge rival while also fending off many similar small competitors in the sector, where barriers to entry were low.
The strategic response. Noting that Ebay in China was charging users to list products and services, Taobao allowed them to list for free in order to build a big cohort of sellers and buyers. Critical mass would eventually attract revenue-generating activities, such as online advertisements.
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