Every seller on Taobao knows that conversion rate is very important, but how important is it? How it affects traffic? We are going to unveil the secrets behind Taobao conversion rate.
Taobao conversion rate, which is the proportion of visits to the store who purchase products.
Sales=traffic * conversion rate * average per consumer transaction
In the formula above, the three parameters are in proportional to sales, which means if one parameter increases with the other two stay unchanged would lead to the increase of sales. Our question remains: Is conversion rate simply in linear proportional to sales? This article discusses about conversion rate and traffic, as it turns out, conversion rate is even more important than we supposed.
Traffic is divided into two, free traffic and paid traffic. We will start with paid traffic.
Zhitongche & P4P
Zhitongche, Taobao paid search ranking system, is the most popular traffic driving method. It is paid per click, and higher conversion rate leads to higher sales. However, higher conversion rate requires higher impression, and higher impression requires higher quality score.
This chart above shows that quality score is directly related to Zhitongche cost and ranking. Quality score is defined by category relevance and property relevance and other factors. Other factors include keyword bids, transaction, collected items and CTR. Ranking is in proportional to conversion rate, so that means Zhitongche cost is proportional to the square of conversion rate. High conversion rate makes high impression and transaction, however, if conversion rate is low, your impression would not be too high even with pay per click.
Taobaoke & Ruyitou
Taobaoke is a promotion method paid by commission fee in proportion to transaction. Ruyitou is a special promotion method which belongs to Alimama.
Taobaoke is a network where qualified people could help sellers to promote their products. These people are scattered on the whole site, they would choose sellers based on conversion rate and transaction. Some products with low sales volume have no attraction. For sellers in this stage, they could choose a new promotion method called Ruyitou.
Ruyitou allows sellers to display their products to buyers from other sites. The chart below shows the influence of conversion rate in Ruyitou.
We can tell from the chart that product composite quality score is calculated on conversion rate and other factors. Ruyitou cost is proportional to the square of conversion rate.
Taobao search results are determined by category relevance, store rating, product quality and product popularity, etc. Product quality score is directly related to conversion rate. Product popularity is indirectly related to conversion rate.
Product information is indirectly related to conversion rate. When some consumers search uncommon keywords, when the titles don’t match for the keywords, search engine would crawl the words in product descriptions. Comprehensive product information would help increase ranking in search results and conversion rate.
New Taobao Sellers
Many Taobao Sellers may face the difficulty of promoting new products, and many new Taobao sellers also face the same situation. New products mean no sales volume and zero conversion rate, so how to break this dilemma?
Acctually, Taobao has large daily free traffic, as high as millions. But the problem is Taobao has 6 million sellers and 1 billion products. When it comes to a single product, free traffic seems rather less. What these sellers could do is to try to make the few free traffic buy your products, be attractive and offer coupons, discounts and whatever means to keep these visitors. Gradually, more and more traffic will be attracted to your store.