Chinese Shopping Revolution: “Add to shopping cart” makes shopping without leaving home.

Chinese Shopping Revolution: “Add to shopping cart” makes shopping without leaving home.


Image: Mediamodifier, Pixabay, CC0 Creative Commons

By Evie Huang

 

In China, perhaps the most dialogues you heard is “have you had meals?” and “This is what I bought from Tao Bao. “Taobao relies on its own understanding of the Chinese market, design and launch a series of functions from consumers and they are more conform with the online transactions of domestic users, and then quickly occupy half on the e-commerce market and make trading with the use of network technology and telecommunication. (Zuoqing, 2016)To a certain extent, TaoBao not only changed the explicit shopping culture, but also changed the Chinese people’s lone-term hidden concept of entrepreneurship and career choice.

This essay will be divided into four sections. Firstly, the overview and introduction of TaoBao will be provided. After that, section two will explore and analyze the historical development and the form of its business model, the internet ecology and external element such as regulation will also be examined in section three. In section four, it will discuss and analysis the transformative effects of Taobao and counterviews as well.

 

What is Taobao ?

Taobao is the most popular online shopping retail platform in China, also is the largest online marketplace in the Asia Pacific region,(The Economist,2015) it is a subsidiary of the great Alibaba. People can buy everything on TaoBao, it covers a wide range of commodities, such as cosmetics, fashion, snacks from various places, daily necessities, and even the good products in other countries. Taobao will be delivered with three days after you place your order. Furthermore, the products on Taobao have cheap prices and most products are discounted on the November 11 each year. Now, Taobao has 634 million mobile monthly active user and 576 million mobile annual active shoppers. (Craig S,2018) Alibaba CEO claimed that the strategy of Taobao’s future have three directions: community, content, and local life.(Yong Z,2016)

TaoBao website and APP on smartphone.
Image: Nopparat Khokthong / Shutterstock. inc
Tao Bao website logo.
Image: TaoBao website logo, CC BY-SA 3.0

 

 

 

 

 

 

 

Brief historical development and business model.

In 1999, Jack ma, the founder of Taobao resign the previous job and went to Hangzhou establish Alibaba website. At the beginning of creating, Jack Ma and his 18 friends chipped 500 thousands as a starting fund. Alibaba got the high investment in 2000 and Taobao is created in 2003. In 2005, Taobao exceed all of competitors at that period, include ebay. Up to now Taobao become one of the largest market in China, even world.

The business model of Taobao have two main models: C2C and B2C. C2C is refers to customer to customer and B2C is business to customer. C2C is to realize the relationship between sellers and buyers. This mode can make products compete with each other and consumer can get benefit from the competition for products and find the products which is hard to find easily.(Andrea R,2018) eBay also is an example of C2C. Taobao’s leading position in the C2C field has not yet been shaken.

B2C means business sell to consumers, B2C focus on direct sales of products and services. B2C e-commerce website consists of three basic parts: a mall website, a system of distribution of products and recognition for the confirmation of customer identity and payment settlement.

Taobao’s internet ecology

Internet ecosystem refers to the organization and communities that make internet development and work.“These organizations share common values for the open development of the Internet.”(Kathryn C,2014)Free e-commerce, fast payment(Alipay),convenient logistics, “want want”(online communication),community forums, These internet products used to be the strategies that were once born to promote Taobao are finally turned into several trillions of markets and become new in China, also become an indispensable infrastructure in the business system. The unique business model makes Taobao has its unique internet ecology.

 

Owner and regulators

Taobao is one of the branches of Alibaba Group, it also is the most popular and most profitable companies. The owner and founder is Jack Ma and his 18 people’s group, the CEO of Alibaba is Daniel Zhang. However, Jack Ma said that he would no longer serve as the chairman of the group’s board of directors in 2019 and Daniel Zhang will take over.(Cate &Adam,2018)

The regulators of Taobao is a confusing part because most of Chinese don’t know who is the regulators of Taobao. As a leading enterprise, very few people report or appeal to it, not because it is perfect. Taobao also have a lot of problems such as selling fakes,system bugs, in general, government departments should be the most effective regulators, but sometimes it is useless. So the consumer who have lose will be post his/her situation on the social media to let public know so that public pressure will form. People’s words will suppress to website and limit them. Government regulator mostly would like to limit some big issues such as monopoly.

 

Alibaba Group logo Image: Leon Lee, Flickr, some rights reserved

 

Competitors

Jingdong mall, Red, PDD, are competitors of Taobao in China, especially jingdong mall, this website used to focus on selling the electronic products which with brands but it turns to sell other things in recent years, a lot of people more trust Jingdong mall because most of things in it have brands and this website is reliable. Taobao is comprised by individual shops and most of shops’ products are the brand of themselves, consumers are worry of fakes. So Jingdong become the largest competitors of Taobao in China.

eBay and Amazon are the competitors, too. When jack ma founded Taobao, eBay completed the overall acquisition of Chinese version eBay. However, eBay still keep its consistent business strategy,at the same time, Taobao launched a strategy for the local situation. In 2005, Taobao surpassed eBay to become the industry’s number one. “At the time the key challenge for online retail growth in China was trust, something eBay didn’t tackle at all.”(marketpulse,2017) Since then, eBay’s market share has been shrinking until it completely withdraws from China. Taobao want to be the world shopping website now and develop to other countries,although eBay is no longer the competitor of Taobao in China, but it would be a strong competitor in international. Taobao want to be the world shopping website. As Jack Ma said “eBay may be a shark in the ocean, but I am a crocodile in the Yangtze River. If we fight in the ocean, we lose, but if we fight in the river, we win.”(Lili k,2012) Taobao was in the river now but it will be into ocean in the future. So eBay, amazon will be the strong competitors.

 

The market share of Taobao and eBay in china from 2002-2007 Image: Yannic Pininelli, slide share, cannot use for business.

 

Partners suppliers and users

As an online shopping, express delivery companies undoubtedly are the core partners of Taobao, delivery industries and online shopping have indispensable relations and reciprocity. Online shopping make delivery companies has guaranteed orders and they can recruit plenty of couriers to make sure the orders from Taobao can be delivered in three days. In other aspects, the express delivery is effective so that people are willing to use cheap price and quick delivery from online shopping instead of purchasing the things in the physical stores. So express delivery companies such as SF express, YTO express and Taobao as partners are complement each other.

The users of TaoBao are consumers and individual shops. These business shops also be the suppliers of the products of Taobao. Most shops are focus on a kind of products, for example, a lot of girls would like to sell fashion clothes and they will go to factory and design their clothes by themselves or go find the wholesaler to replenish stocks. These individual business make the goods are full of varieties.

 

Below is a diagram of Taobao’s internet ecosystem.

 

Taobao Ecosystem

 

 

 

The transformational impacts of Taobao

The transformational impacts of Taobao have two sides. It benefits plenty of people, in particular for consumers. However, For the other businesses, they are detest Taobao.

For consumers, they can buy the same goods of supermarkets online with a cheaper prices, they also can find the clothe which is too expensive in stores to buy in Taobao and that cloth is labeled an affordable price. It brings too many benefit to consumers. Consumer also can see the comment of the products so that they can avoid to buy some useless things which they want to buy before. There is a function in Taobao that you can search the photo of products and it will be list all of same products to you so that you can compare the quality and prices to choose one of products to buy. It is not like the way used to be, people don’t need to go a lot of places and stores to ask for the prices and nobody will tell you how about this products. Taobao also brings plenty of job opportunities and paying high taxes. According to The Beijing News, Alibaba paid more than 7,000,000,000 yuan in taxes last years. (Angela M,2014)

However, for physical stores, it is not a good thing because the consumers are reduced by the attraction of online shopping. large number of physical store owners cannot keep maintain the business, they have to close down the store, and the closure of the physical store has caused difficulties in real estate industry,which led to a chain reaction. This has caused secondary damage to the economy. The real economy and shops are all weak, there is no good program of investment, the people who have the money will no longer invest in China, they will only invest abroad that will lead to a large outflow of assets. In the long run, the entire economy of the country will suffer. Because of this, Chinese government also plan to combate e-commerce.Since 2006,Taobao has begun to build a service system for content entrepreneurs, whether in graphic form, short video form or live broadcast form, full media coverage content creation. People can use video to describe and show the products in products detail. This development has spawned a large number of new occupations such as Tao girl, fashion buyer, internet celebrity etc.

Taobao internet celebrity video effections

Screeshot from Youtube

 

Conclusion

Overall, it is undeniable that Taobao is a great invention of internet. At the beginning of the birth of Taobao, it positioning itself as the online commodity market, and now it become the largest e-commerce platform, Taobao create the upsurge of starting up own businesses and break out of the traditional shopping mode. Taobao has opened up a new shopping era and made huge contribution for internet transformation.

 

 

 

 

 

 

 

 

Reference

Zuoqing Zhang,(2016)‘3.2 Key concepts explained’ inFACTORS INFLUENCING THE DEVELOPMENT OF CHINESE ONLINE RETAILERS,Latin University, page 8,viewed 7 November 2018.

Craig Smith (2018) (26 amazing Taobao statics and facts (September 2018)[online] Taobao statics, Available from: https://expandedramblings.com/index.php/taobao-statistics/

The economist(Jun 4th 2015) The everything creditor. Available from:

https://www.economist.com/china/2015/06/04/the-everything-creditor

Taobao Italia(Aug 10,2018)Taobao Italia.Available from: https://www.taobaoitalia.com

Kathryn C. Brown(March 7,2014 ) Internet Ecosystem, ‘The Internet Ecosystem’ page 6,Available from:https://www.internetsociety.org/wp-content/uploads/2017/09/ISOC-Internet-Ecosystem.pdf

Marketplace pulse(May 24,2017) why Amazon and eBay lost in China.Available from:

 https://www.marketplacepulse.com/articles/why-amazon-and-ebay-lost-in-china

Kyle Spencer(Sep. 30, 2014)eBay’s PayPal Spin-Off Points To An Alibaba Takeover.Available from:

https://seekingalpha.com/article/2532585-ebays-paypal-spin-off-points-to-an-alibaba-takeover

Cate Cadell, Adam Jourdan(Sep10, 2018),Spotlight on Alibaba CEO Zhang as Jack Ma starts retirement countdown.Available from:

https://www.reuters.com/article/us-alibaba-management-zhang/spotlight-on-alibaba-ceo-zhang-as-jack-ma-starts-retirement-countdown-idUSKCN1LQ13E

Lily kuo(Nov 2, 2012) eBay tries to win over China… again,Available from:

https://qz.com/23083/ebay-tries-to-win-over-china-again/

Bert Hofman(October 29, 2016), The Taobao Villages as an Instrument for Poverty Reduction and Shared Prosperity.Available from:

http://www.worldbank.org/en/news/speech/2016/10/29/the-taobao-villages-as-an-instrument-for-poverty-reduction-and-shared-prosperity

Angela Meng(21 January, 2014)Alibaba’s 7 billion yuan tax bill among Jack Ma’s ‘proudest moments’ of 2013.Available from:

https://www.scmp.com/business/companies/article/1410260/alibabas-7-billion-yuan-tax-bill-among-jack-mas-proudest-moments

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