Over the last 10 years, China’s growth was unprecedented, becoming the second economy in the world after the U.S and attracting international companies from the four corners of the world. Following its digitalization, China is more than ever an eldorado for companies wanting to sell their products to a wide audience. However, entering the Chinese market is not an easy task, especially for smaller-scale companies. Even though Tmall and JD.com are the most popular e-commerce platforms in China, there’s also plenty of other platforms that are also very competitive and lucrative, such as Taobao. This article will explain the main features of Taobao and will give you some tips and advice to sell your products on this platform.
Taobao: One of the most popular e-commerce platforms in China
Many of you might already have heard of the giant e-commerce platform Alibaba, established in 1999 by the famous billionaire Jack Ma. However, it is also important to mention that it has also two famous e-commerce platforms: Tmall and Taobao. Nevertheless, it can be quite complicated and time-consuming for smaller companies to sell their products on Tmall, as their rules are strict and the fees pretty much expensive. Thankfully, there’s another solution that is less strict in terms of rules and more appropriate for smaller companies: Taobao.
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What is Taobao?
Launched in 2003 by the Chinese giant Alibaba, Taobao (淘宝网) is one of the most popular online shopping platforms, specialized in both B2C and C2C transactions, as well as the most popular online entrepreneurship platform, enabling thousands of young entrepreneurs to be successful. It has hundreds of millions of products and service listings, which are really appreciated by Chinese consumers. As of 2019, it has 300 million daily active users and 668 million mobile monthly active users. Taobao accounts for nearly 60% of the total e-commerce sales in China.
If we look at the top websites by traffic, we can see that Taobao.com is ranked 5th, even before JD.com (7th). Since its creation and development over the years, Taobao is now able to leverage its consumer insights and product, offering a wide diversity of products with an engaging and personalized shopping experience. Taobao is mainly known for its domestically produced apparel, jewelry, accessories, etc.
Fact: Taobao (淘宝网) literally means “search for treasure” in Chinese.
What has made the success of Taobao in China?
You might think that Taobao is like any other e-commerce platform such as Tmall and JD.com. However, Taobao’s main asset is the price of its products that are less expensive than other websites on top of other functionalities that are extremely useful for both merchants and consumers:
- Wide variety of products: hundreds of millions of products/service listings, from mainstream products to hard-to-find items, virtual and local services, etc.
- User participation: consumers are encouraged to leave a review about the product to help other potential buyers make smart purchasing decisions. Moreover, it is also a way to make the platform more interactive.
- Secure payments: Merchants receive the money through Alipay’s secure service once the buyers have confirmed the product’s receipt.
- Personalization: Customized products and storefront recommendations based on users’ profile and activities.
- Consumer protection: A refund service if the order does not arrive within the promised timeframe or if it is not the same as described.
- Quick delivery: Various delivery options provided by Cainao Network’s logistics partners, with online package tracking.
This statistic shows Taobao’s gross merchandise volume from 2015 to 2020. In 2020, the GMV transacted on Taobao reached approximately 3.39 trillion yuan. This explains why it is one of the most promising e-commerce platforms in China.
What has made the success of Taobao is its simple and easy-to-use platform, enabling both consumers to purchase products cheaper than anywhere else, and merchants to sell their goods at a lower-cost. This strategy is indeed at the core of Jack Ma’s philosophy.
Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology. We fight for the little guy. Since our founding in 1999, we have helped millions of small businesses to achieve a brighter future, and we hope to do this for at least 102 years, thus spanning our company’s life over at least three centuries.Jack Ma, founder of Alibaba
Moreover, it is also worth mentioning that like other e-commerce platforms, Taobao has benefited from Chinese consumers’ shift in consumption to online shopping and the growth of their purchasing power. As of 2020, the number of online shoppers in China was estimated at 782.41 million and is expected to skyrocket before the end of 2021, following the Covid-19 pandemic.
Following China’s rapid digitalization, the majority of the Chinese population has a smartphone with direct access to the internet. Thus, shopping online has been democratized, and almost everyone uses e-commerce platforms. However, you will also have to take into account that 60% of Taobao’s users are under 30. Their open Taobao on average 7 times per day, looking at 19 items.
Taobao is also popular for its variety of products, including fresh food products that are delivered in a short amount of time directly at your doorstep.
Alibaba: Taobao vs Tmall
As mentioned earlier, both Tmall and Taobao are under Alibaba and are able to attract millions of consumers every day. However, even though they share some similarities, they have also some differences in terms of prices, rules, merchants, and services.
What are the main differences between Taobao and Tmall?
In terms of subscription, it is more expensive to run an online store on Tmall. Moreover, Tmall tends to accept only companies that are already established in China and that have an online presence. Thus, it is easier for small companies to sell their products on Taobao. You will have access to a wide audience and it will be easier to set up your business.
In fact, setting up a basic store on Taobao is easier than operating a full-fledged store. In terms of design, Taobao has democratized access for everyone with its simple and easy-to-use functionalities. In general, merchants will give the best price on Taobao than on Tmall. Tmall is considered by some as Taobao’s premium platform, with high-quality products that respect strict rules and regulations, whereas Taobao is freer.
Thus, due to its lower entry barriers, Taobao is also known as a low-quality platform, enabling merchants to sell fake products and do counterfeiting. This is why when it comes to luxury products a high-quality and famous brands’ products, people tend to be more cautious on Taobao, and some may even purchase it on Tmall of JD.com. However, you will also be able to find some luxury brands on Taobao’s app because Tmall is also linked to Taobao.
Finally, it is important to know that Taobao is more about domestic products than Tmall, with its international platform Tmall Global. Thus, you have to be registered in China to be able to sell your products on Taobao, whereas foreign companies that are not in China can easily sell their products through Tmall Global.
To put it in a nutshell, despite its issues in terms of authentic products, Taobao still remains the choice of many consumers thanks to its affordable and wide variety of products.
Selling on Taobao
Selling on Taobao is accessible to almost everyone, thanks to its simple, quick, and easy process. Not only you will be able to reach a wide audience, but you will also be able to promote your products through the platform thanks to its multiple and various services. Moreover, Taobao’s instant messaging which is available directly within the app can be a powerful tool to grow your business and communicate with customers. Because Taobao is more about domestic sales, if you are already in China and want to get started in e-commerce in China, then Taobao is the place to go. Taobao has relatively low start-up costs and with some initial input and effective marketing, sellers can achieve high sales volumes.
Don’t forget that Tmall is also accessible directly from Taobao’s app. So you can easily create two stores if you want (one on Tmall and one on Taobao).
Is it possible to sell cross-border products on Taobao?
No, you won’t be able to open a Taobao.com store without establishing your company in China. However, you will be able to open a Taobao store and sell some products (according to their categories) if you register a company in China.
How to sell products on Taobao?
To begin with, if you want to sell your products or services on Taobao, you will first need to register as a seller on Taobao’s platform. Then, you will be able to open an online store directly on Taobao, customized it, ad your products, and then advertise them.
8 steps to open a store on Taobao
- 1 – Set up a company in China
You have to set up a company in China is you want to sell your products on Taobao. To do so, you will need a business license application, an office rental contract, copies of your passport, and a bank account registered in Mainland China.
- 2 – Connect your Taobao account to Alipay
Alipay (which is also from Alibaba) is the main payment used by consumers on Taobao. Thus, you will need to link your Taobao account to your Alipay.
- 3 – Complete identification authentication
You will just have to complete some documents as required in order to prove who you are and that you have a business.
- 4 – Create your store, connect the plugins and set up Ali Wang Wang (for Customer Service)
You will have to set up everything in order to have the best user experience as possible. But, don’t worry, you will have some guidelines when creating your store online.
- 5 – Design your store
The first thing consumers will see is the design and appearance of your store. Thus, you will have to find the appropriate colors to design effectively your store.
- 6 – Upload products (referred to as “babies”)
Don’t forget to upload your products with some pictures (3-5 pictures per product) as well as a detailed and concise description written in Mandarin Chinese.
- 7 – Promote your store and advertise your products
The best way to attract consumers and stand out amongst your competitors is to promote your store through innovative and creative advertising campaigns.
- 8 – Carefully check your store
You have to be sure that everything is going to run smoothly before launching your online store (description, pictures, design, price, delivery, etc).
Promoting your store and products
The Chinese market is one of the most competitive in the world. Thus you will have to be creative both in your marketing and advertising strategies in order to stand out amongst your competitors. For example, you can create some interactive ads.
Live streaming on Taobao
Live streaming is the best way to sell and promote your brand and products on Taobao. Moreover, Taobao has its own live streaming tool, which is extremely useful for consumers who just have to click on the link to purchase your products.
In 2019, the live streaming commerce generated 200 billion yuan just on Taobao. Taobao’s GMV from live streaming reached 500 billion yuan in 2020. This phenomenon can be explained by the fact that products sold during live streaming are cheaper than in brick-and-mortar stores on online platforms for examples.
Build a strong e-reputation
In China, brand reputation is an important criterion. You have to do everything you can to always have a good image for Chinese customers. If you lose your reputation, you will lose everything.
You need to make sure that you get good comments on your online store, social media, and other websites. Chinese consumers only trust brands that have good comments and recommendations from friends or family and on media platforms. Don’t hesitate to engage a digital marketing agency that can help you to keep a good image and avoid all bad comments about your brand.
KOL’s to promote your brand
To gain visibility and e-reputation, it is crucial to encourage positive word-of-mouth as it is the main way of brand’s discovery in China. In fact, Key Opinion Leaders (KOL) are social media users who succeeded to make a lot of traffic on their accounts and became famous. Chinese consumers idolize KOLs, trust them more than brands. Some KOLs have millions of fans. They are really good to influence the mass population. Thanks to their popularity, you will be able to reach higher sales.
At GMA, we help both small companies and larger ones entering the Chinese market. Over our almost 10 years of experience, we have had several successful collaborations that have motivated us to do even better. So, if you want to know more about Taobao, or if you have any other questions about selling your goods in China, do not hesitate to contact us and we will get in touch with you within 24 hours.
Our E-commerce Services
- Shop management & customers acquisition
Get good traffic and spend your money efficiently. We provide ROI-oriented solutions. Our main goal: Get your store traffic that converts. Generally speaking, Baidu and Chinese social networks are the best places to drive traffic to your online store. Apps like Weibo & Douyin are the absolute winners when it comes to paid advertising and profitability.
- Content & Marketing Campaigns
Your Shop is going to need frequent updates to rank on the platform you chose (Taobao SEO for instance) and keep potential customers interested. Our creative copywriting team takes care of this: product upload, banners, etc. A healthy store in China needs to be able to keep up with the various shopping festivals that take place during the year.
- Step Forward: Store e-reputation
In China more than anywhere else, strong brand awareness is necessary. Without a smart multichannel marketing strategy, you might get traffic on your store but zero conversion. Be everywhere Chinese consumers are looking for you and answers all their questions before they can even ask!