Started as an online auction marketplace similar to eBay, Taobao is the most popular online shopping and e-commerce platform in China with total annual transactions of over trillion yuan., owned by Alibaba Group.
Tmall started as an extention of Taobao and now runs as a separate e-commerce platform. It’s integrated with Taobao and Tmall products can be found in Taobao search results pages.
Now auctions only make up a small percentage of transactions. The majority of the products are new merchandise sold at fixed prices. Buyers can assess seller backgrounds by the information available on the platform, including ratings, comments, and complaints.
Taobao’s main competitors include JD and Pinduoduo.
Taobao Business Strategy
On March 29, 2016, the CEO of Alibaba group, Daniel Zhang, pointed out the three directions of the future development goals for Taobao: more community-based, more content-enabled, and local adapted in the 2016 annual customer conference held in Hangzhou.
Taobao extensively uses shopping strategies such as data personalizing, customer loyalties, video live streaming, and the focused demand of a single community to build stages for sellers to display their commodities.
It is strictly constructing a new ecosystem from content creation, to content propagating, and content consumption with Alibaba’s cooperating internet platforms like Youku, Weibo, Alimama, and Alifilms.
Except for using centralized and demand-matching supplies depending on the need of users to form a self-operational system of content producing and consuming transmission, Taobao also improved the quality of the commodity and its services towards the consumers.
One of the key drivers of Alibaba’s acquisition of new users and consumers in less developed areas is Taobao Deals, its marketplace for value-conscious consumers.
Alibaba focused on developing differentiated product supplies for Taobao Deals by onboarding export-oriented enterprises and merchants from industrial belts and 1688.com, its domestic wholesale marketplace.
Taobao Deals recorded over 70 million MAUs in September 2020 (it reported 40 million MAU in the previous quarter financial results).
Consumers who use both Taobao app and Taobao Deals app to make purchases showed faster growth in purchase frequency and average spending compared to consumers who only use the Taobao app.
Taobao Live, its live streaming portal, has become an essential marketing and distribution tool for merchants, brands, KOLs (key opinion leaders), and its own businesses, such as Juhuasuan, enabling them to engage directly with users and customers.
GMV generated by Taobao Live exceeded RMB350 billion for the 12 months ended September 30, 2020. Alibaba redesigned the Taobao Live portal to make it easier for users to discover new products and brands.
Upon its launch in 2003 by Jack Ma and his associates, Taobao offered free listings to sellers and introduced interactive website features such as instant messaging for buyer-seller communications and an escrow-based payment tool, Alipay, now owned by Ant Financial and affiliated with Alibaba.
Taobao became mainland China’s online shopping market leader within two years. Its market share surged from 8% to 59% between 2003 and 2005, while eBay China plunged from 79% to 36%.
Taobao.com achieved 43.3 billion yuan (over US$6 billion) total online sales with 53 million users in year 2007. It started offering 7 days money-back guarantee, no question asked; a more broad and cheaper selection of brand products.
In April 2008, Taobao introduced a dedicated B2C platform called Taobao Mall to complement its C2C marketplace. Taobao Mall established itself as the destination for quality brand name products for Chinese consumers and was hosted at Tmall.com in November 2010 and renamed to Tian Mao (Tmall) in January 2012.
From 2012, Taobao began to accept international Visa and MasterCard credit and debit cards.
China’s e-commerce companies rely on a lot of festival marketing campaigns throughout the year. Top ones include Chinese New Year, 3-8 (Women’s Day), Tmall 618, 99 (or Double Nine on 9 Sep), Double 11 in November, and Double 12 in December.
The biggest ones are Taobao 618 and Taobao Double 11.