As a leader in e-commerce and online retail in the Asia-Pacific region, Taobao is very good at using the convenience provided by the Internet and the rise of sharing economy to attract people’s attention, so as to better position itself in the industry and become an inescapable part in the history of Internet transformation.
This essay will argue that Taobao upgraded the world through three specific aspects, which are people’s lifestyle, people’s way of making money and the degree to which the world is connected. There will be five sections deeply discussing and proving these arguments, including the definition of Taobao, its history of development, the ownership and business model, its ecosystem and how Taobao changes people’s lives.
What is Taobao?
Taobao is a free and comprehensive B2C online shopping platform transferred from C2C platform founded by Jack Ma, chairman and CEO of Alibaba, and his team in 2003 (So & Westland, 2010, p. 76). The meaning of the name, Taobao, is looking for treasure. It is very memorable and appealing to Chinese consumers. Recent years, Taobao has shifted its focus from computer websites to the mobile application and successfully become a B2C mainstream online shopping platform in Chinese market. The mobile application has the function to add friends and business customer service to communicate, a section named Micro-Tao to share short-videos, live streaming videos and photos, and also cooperate with other companies to be able to achieve real-time sharing of good things to various social media platforms like WeChat and Weibo. People who see what they want on other social media platforms can also directly click the link to go to the purchase page in Taobao. In order to gain more credibility, Alibaba even built an exclusive secure payment platform, Alipay, for Taobao (Nie, Xin & Zhang, 2009, p.30).
Below is a YouTube video explaining “What is Taobao?” in detail:
(Alibaba Group, 2020).
History of Development
By the year Taobao was founded, eBay had cornered the C2C market in China. Therefore, the purpose of Alibaba to create Taobao is to defense this situation (Nie, Xin & Zhang, 2009, p.28). In 2002, eBay entered China’s e-commerce market through the acquisition of EachNet, and quickly occupied about 90% of China’s C2C market share (Gemme, 2006). At this time, Alibaba had already stand firm in China’s B2B market (So & Westland, 2010, p. 171). In order to prevent eBay from always monopolizing the C2C market share in Chinese e-commerce and to meet the potential demand of customers, a seven-member team of Alibaba headed by Jack Ma secretly developed Taobao in 2003 (Osterwalder, et al., 2014). Within two years, Taobao’s market share in China had risen to 59%, while eBay’s had fallen to 36 %. And the latter closed its China operation in 2006 (The Economist, 2006). In 2012, Taobao began accepting international Visa and Master credit and debit cards and opened its international business named Tmall Global. In 2018, Taobao added AI technology to introduce a kind of new retail, combining the best of both online and offline retail (Alibaba Group, 2018). Following are two YouTube videos explain the global business of Taobao and Alibaba’s new retail.
Ownership of Taobao and Its Business Model
The ownership of Taobao should belongs to Alibaba Group. “Alibaba focus on maintaining an asset-light business model” (Luo, 2016). When Jack Ma founded Taobao, he had a clear goal, which was to occupy the market share of C2C rather than profit. It aims to increase its appeal, expand its user base and show sellers its powerful ability to help sell, thus charging them advertising fees rather than other fees like service charges and commissions. Therefore, it’s completely free. Moreover, Taobao is designed to provide services solely to meet the needs of consumers. All of its strategies are buyer centric. Therefore, the business model is to do whatever it takes to facilitate the buying process. For example, big data can be used to help buyers find what they want at the fastest speed, and make it easier for customers to judge the credibility of sellers (Nie, Xin & Zhang, 2009, p.30). In addition, the business model of Taobao is to provide users with a free online platform to get the shopping experience shared by others, so as to stimulate consumers to pay for goods and service. Taobao’s business model also allows sellers to communicate directly with buyers. This is because here comes its instant messaging tool “Taobao Wangwang”, launched in 2014. According to the standard, each merchant can only sign up for one Wangwang account, and they may want to pay for another Wangwang account. Taobao will also develop tools for market research and customer relationship management, as well as price analysis and market trend analysis, for which many sellers are very willing to pay for this kind of value-added services (Nie, Xin & Zhang, 2009, p. 36). Taobao successfully opened a new and stable revenue channel by grasping sellers’ desire to know more about customers and potential customers and market information so as to make more profits.
The Ecosystem of Taobao
Some of the entities mentioned above:
Taobao upgraded people’s lifestyle
There is no doubt that Taobao has successfully upgraded people’s lifestyle, which brings countless benefits and conveniences to people. It has opened the door for us to a new world of shopping online. Time and effort saving, variety of choices, low prices, easy access to all information, and personalized recommendations are all potential benefits of online shopping (Zhou, Dai & Zhang, 2007). To be more specific, firstly, Taobao has created the sustainable possibility for people to buy everything at any place at any time. For example, People can buy a coat on Taobao at 2. AM if they want. This means that Taobao has removed the time restrictions on traditional shopping models, as it is difficult for malls and clothing stores to stay open 24 hours a day. Secondly, besides time restrictions, Taobao also helped remove space constraints. Users can buy things in another city in their own city, even can buy things in another country in their own country. The logistics company will solve all the problems about distance. The third one is about optional types of goods. Before Taobao is arrive, when we talk about shopping, the common goods usually are like clothing, food, jewelry, household appliances, cosmetics, mother and baby products. However, Taobao has completely turned our perceptions upside down. People can trade services on Taobao, such as chatting service, visa agent service, billboard design service, medical examination items and membership of various software, and can even trade pets. In short, only then you cannot think, no Taobao can not do. It has greatly improved people’s living standards and efficiency, allowing people to follow their heart to choose the things they like and the services they need, and thus to accomplish the most things in the least amount of time.
Taobao Upgraded the way people making money
According to a report released by Renmin University of China on March 25, until 2018, Taobao has created about 15.58 million job opportunities for online retailers, as well as about 25.24 million job opportunities for departments related to online retail services (People’s Daily Online, 2019). These job opportunities include those that are directly related to Taobao owner, Taobao customer service, Taobao influencers, logistics personnel, the store web page designer, and so on. In China, Taobao villages have been created specifically to help a large number of farmers get out of poverty. Below is a video about how Taobao Villages in China show E-commerce’s transformational power:
(World Bank, 2018).
Before Taobao, most people always relied on traditional work patterns for income, such as working as a white-collar worker to get to work on time or as a porter to earn money by selling labor. After the emergence of Taobao, here come the above new occupations. These new occupations are quite different from the traditional ones. Taking Taobao Influencers as an example, their main work is to display their products in the livestream room and share their use experience, introducing all the features of the product while chatting with netizens so as to attract more people to buy it. Many of them are direct producers of products from remote and backward areas, such as fruit farmers, vegetable farmers and tea farmers. Most of these people are not well educated and have no good access to the world outside their hometowns. Now, Taobao makes use of the power of Internet transformation to enable them to be seen by more people via digital platforms. It also makes their pure natural high-quality products known and bought by more people, which successfully avoids the destruction of fresh agricultural products due to poor sales, increases the source of income for villagers, and promotes the economic growth of the whole backward area. Taobao also has the function of reselling idle items for money. It can better match the reselling objects through the Internet, reducing the abandonment of items and providing people with new ways of making money as well.
Taobao brings the world closer together and highlights Chinese culture
Taobao, China’s largest online retailer, has become a highly successful Internet business platform. It creates enormous value, and it continues to grow (Zeng, 2015, p. 27). Such a strong Chinese Internet empire would be hard not to attract companies from other countries. As a result, it is not hard to find out that Taobao has grown from only having brands in China to include almost all the international brands that can be named. Foreign users outside of China can use Taobao to buy things from China and get a first-hand look at China’s “teahouse culture”, the collision of ideas and real transactions that occur in sharing and communication. Users in China can also buy products from other countries on Taobao and then connect to other countries. Countries around the world have become more connected unconsciously through Taobao.
In conclusion, Taobao has successfully upgraded people’s lifestyle, provided people with new ways of making money, and made the whole world closer due to business cooperation.
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World Bank. (2018). Taobao Villages in China Show E-commerce’s Transformational Power. https://www.youtube.com/watch?v=X7hVzBzTg_g.
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