Closer Look: Taobao's Straight Flush

Back in 2003 when Jack Ma established retail website Taobao.com, the company's ace-in-the-hole business strategy was the zero fees for vendors posting products on the site. But during its eight years of growth, Ma has never given up his attempts for charging fees, though often in a not-so-obvious manner.

Ma, founder and CEO of China's largest e-commerce firm Alibaba Group, promised in May 2003 that for three years, Taobao would host vendors free of charge. And in October 2005, Taobao renewed the promise for another three years to come. Meanwhile, parent company Alibaba announced an additional 1 billion yuan investment in Taobao to create 1 million jobs over three years via the B2C and C2C platform.

But in May 2006, Ma began to introduce a value-added service meant to seek revenue from over 400,000 shops on Taobao. It was an auction for Taobao's vendor rankings, under which, shops could have their goods appear ahead on Taobao's search results based on paid-for keywords.