TaoBao’s Internet Platforms and What It Reveals.

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The online business platform of TaoBao reveals many future trends about the Internet and related business models, and indicates how greatly it can affect local economy, traditional ways of business, and change people’s lives. The first major change that Internet business platforms can bring that TaoBao reveals, is that for the local economy, online business platforms can create challenges and changes on major scales. This phenomenon can be seen and understood in the theory of platformization and datafication. The second major change TaoBao reveals is the increase in online customer-to-customer exchange and transaction rates. This in turn causes great impact on local and real life stores and small businesses, being outcompeted by the rise of the online business platforms.


TaoBao is an online trading and business platform owned by the Alibaba Corporation, based in Hangzhou. It is launched in 2003 in China, and focuses on creating a platform that allows transactions between individual consumers and individual producers, as well as other suppliers including wholesalers, retailers, online store owners and etc. (TaoBao, 2021) The company’s mission, as stated on their website, is to “foster a comprehensive e-commerce ecosystem that will provide partners and consumers with the best user experience possible.”(TaoBao, 2021)


This online platform business has achieved great success and influence, as can be seen from data gathered on their website. To start off, it is the biggest online trading platform in China. Taobao currently has more than 800 million product listings at any given time and serves more than 370 million registered users. It receives more than 50 million unique visitors daily and is one of the top 20 most visited websites in the world. (TaoBao, 2021)


Taobao generates its revenue mainly by offering advertisement opportunities to it’s users who are determined on outcompeting the other 8 million sellers and 1 billion products that are constantly on offer at the TaoBao online business platform. (Cuofano, 2021) This platformization strategy may seem to create little income by only taking fees for advertisement, but the revenue this creates is huge, based on the always-increasing sellers pouring into the platform seeking business opportunities. To further increase their revenue, the company created a tool called Alipay, an online payment platform created in 2004. (Cuofano, 2021) It increases revenue through its operational strategies, holding the seller’s money until the buyer has received the item and given a satisfactory feedback. (Cuofano, 2021) A 0.1 percent interest rate is charged in this process, being much cheaper than it’s opponents in the market such as PayPal. (Cuofano, 2021) The different preferences of consumers are collected as well as the many information that suppliers post onto the platform, and are quickly sorted by the system in a datafication process, supplying each customer with the most potentially useful information.


TaoBao, along with it’s affiliated platforms including Alipay; reveal that online business platforms, through strategies including platformization and datafication, can cause major impacts and changes on local economies. Social infrastructures can be changed due to the rise and increase of online platforms such as TaoBao and Alipay. Alipay’s social credit paying system, as well as it’s convenient and commonly used nature, has quickly rendered the Chinese government’s paper bank notes into an almost outdated and obsolete banking system. (de Kloet, 2019) Although online platforms were initially celebrated as vehicles of the “participatory society” and the “sharing economy,” they quickly proved less emancipatory than they first appeared. Rather than simply facilitating citizen participation and entrepreneurialism, they enable the “datafication” and “commodification” of all social relations by collecting, algorithmically processing, circulating, and selling user data. (de Kloet, 2019) This ability to quickly gather data, to supply convenience and speed to the online consumers and the ability to increase datafication, is what makes online platforms so powerful in creating change. Similarly, WechatPay is showing the exact same results, outcompeting the traditional methods of payment and business making, further showing how much influence platforms like TaoBao and Alipay can have. (Plantin, de Seta, 2019)


Another platform showing even greater evidence of influence on economics is the HuaBei platform, owned and funded by the same people who started the TaoBao online platform and the Alibaba Corporations. HuaBei, a platform that acts very similarly to a loaning program, allows the shopper to first borrow anywhere from 500 to 50000 Yuan to spend and then gradually paying it back according to dates. (CIW, 2019) It too creates revenue from transaction fees and any late penalty charges. (CIW, 2019) Driving consumer finance onwards, the HuaBei platform had quickly become popular in student bodies, including Over 45 million post-90s users in China signed up Alipay’s Huabei or Just Spend for online shopping payment according to a recent report by Alipay. This payment option serves as a virtual credit card for Chinese online shoppers on Alibaba’s Tmall and Taobao e-commerce sites. (CIW, 2019) This has caused people born in the 90s and later to be involved in loaning, financial investment and online commerce over 10 years earlier than their parent generations, (CIW, 2019) showing just how much these apps can influence consumers and the economy. These online business platforms create social, cultural and economical changes with the priority of bringing benefits to themselves above everything else, (Plantin, de Seta, 2019) and in the past two years, HuaBei has underwent several government inspections and reformations, as it was becoming such a strong influence on the economy.


The second point that TaoBao reveals about the powers of online business platforms is that it shows how these platforms have advantages over physical businesses. Taobao gained its great success not only through its payment convenience and security such as Alipay, but also through it’s familiarity in the consumer-to-consumer market, through its adept datafication abilities and instant advertisement supplies. (Zhang, Li, Tang, Chen and Kai. 2007) Shopping has been made much more convenient and speedy through such online business platforms, and under the combined pressure from the constant pandemic lockdowns, real life stores and small businesses are put under greater threat. Through it’s ability in datafication and platformization, online business platforms cover a huge target audience, seen in the following study, looking at China’s brand apparel products. Three-quarters of shopping journeys for branded apparel start online and 40 percent of visitors to physical stores have first researched products online. The online channel dominates consumer research and comparison, accounting for two-thirds of engagements (Exhibit 1). Online and offline activities are now highly connected at the decision-making stage, so most shopping journeys have more than one stop. (Wyman, 2021) Combined with the still growing consumer and user numbers of TaoBao, it can be concluded that the fast reacting and convenience of the online shopping platforms has given them an advantage over physical stores, drawing in attention faster and easier. Under recent pandemic pressures, many local physical stores in China, take Beijing for example, are going out of business. Yet, the online shopping platform of TaoBao remains steadfast, and holds the position as the largest consumer-to-consumer online market.


In conclusion, Taobao’s online business platform is a consumer-to-consumer based trading platform that has gained enormous success in the market, using affiliated payment platforms such as Alipay and HuaBei to increase it’s revenue. Taobao’s online platform shows firstly, how an online business platform can use datafication and platformization to increase it’s revenues, benefit it and even to change the economy that created it. Secondly, Taobao shows that online platforms can have advantages over physical stores, challenging them in the new social circumstances and holding the leading position in the consumer-to-consumer market.




















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