During the late 1990s and early 2000s, the Internet had not yet become too popular in China. By the end of the first year in business, Alibaba had become the largest online global trading website in Asia. In March 2000, when the dotcom bubble 38 burst, a number of dotcom and e-commerce companies filed for bankruptcy. To deal with the dotcom crash, Alibaba reformulated its strategies: "Back to China", "Back to Central" and "Back to the Coast". In July 2000, Alibaba started selling its advertising space. Then, Alibaba started offering a customized online marketplace for its members called "Alibabies" for a premium. Additionally, Alibaba began charging its members for its services. Next, Alibaba's members had touched the one million mark. Alibaba was launched at a time when the Chinese Internet industry was in sunrise. Considering the growth potential of the budding e-commerce market, other players were expected to intensify competition in the emerging B2B market. For gaining a strong foothold in the B2B market, Ma announced that Alibaba would not charge any transaction fees. Ma launched Taobao as a wholly-owned subsidiary of Alibaba. Taobao aimed to create an online trading platform for both B2C and C2C models. Taobao differentiated itself from rival eBay by allowing free listings on its website. The growth in the Chinese e-commerce market was hampered due to the absence of the trust factor between buyers and sellers while trading online. To counter this problem, Alibaba launched an online payment platform called "AliPay" based on the lines of eBay's payment system in 2004. Taobao advertised itself online by placing ads on the websites and through billboards at major city centers.
All these promotional strategies were ignored by eBay EachNet. In May 2006, Ma announced the launch of B2C services on Taobao. Alibaba's B2C platform, TMall, was also ahead of all competitors in the Chinese B2C market.Industry observers opined that foreign companies failed to make a mark in China because of Jack’s understanding of the language and culture. Alibaba aimed to enter the Chinese online search market in 2005 and struck a deal to acquire the operations of Yahoo! in China. Alibaba acquired Yahoo! China's main website and search engines. Ma developed a simple search page in order to make it the number one search engine in China. However, this looked an uphill task as it continued to lose market. Contrary to Ma's beliefs, this acquisition cannot help Alibaba gain a larger portion of the pie in the web search market since it was already dominated by strong players such as Baidu and Google. In order to gain a strong foothold in the rapidly growing Chinese web search market, Alibaba bought a 16% stake in Sogou.com in August 2010. In October 2011, Alibaba launched an online shopping search engine called eTao. This was a bid to combat competition from Baidu and also to maintain Alibaba's control in the lucrative B2C market in China.
In October 2007, AJibaba Group's Chinese website, Alibaba.com, went public on the Hong Kong stock exchange by launching an IPO.In June 2011, Ma expressed his desire to raise an IPO for the Alibaba Group. Alibaba also announced its plans to spin off and raise an IPO for its Internet application service provider, HiChina Group Ltd. With the growth in revenues and paying members, Alibaba was touted to be one of the biggest Internet companies in China in 2011. However, its image took a beating when the company reported a series of frauds that took place through its e-commerce site. As of November 2011, the company was also making efforts to increase the revenue per user by planning to offer value-added services such as extra ways to advertise on the site. Industry experts felt that with the acquisition of 40% of Yahoo! 's stake in Alibaba, Ma would take the company forward.