The Success Of Taobao.com
Taobao.com has become one of the most popular online trading web sites in China.Shoppers are simply amazed by the variety of products and huge number of choices available.However it is also blamed by some overseas manufacturers as selling fake and counterfeit products.Can it survive?
Established in 2003 by the Alibaba group, Taobao has become the largest online retail web site in Asia.It is estimated that Taobao has over 80% market share of online selling in China.And one-third of home express delivery services are attributed to Taobao transactions.
Online transactions are inherently dangerous: the buyer cannot see the real product and neither does he have face to face contact with the seller.All he knows about the product are just some descriptions and at best a photo of the real thing.He will not know the quality until he receives the product.The seller is also at risk: he has to send the product with the fear that the buyer may run away and do not pay for it, or that the buyer simply claims that the product is lost in post.No internet bidding web site can succeed without user confidence in the safety of the transactions.Taobao has made up for this deficiency by encouraging users to comment after each transaction has completed, and also let the buyer and seller rate each other.This has proven to be effective: both buyers and sellers behave responsibly in order to gain credibility for future transactions.
Moreover Taobao as a middleman also plays an important role here.When a buyer pays for a transaction, he is only paying into Taobao’s payment system.The seller will not receive the money until the buyer confirms having received the product in good condition.To avoid the buyer forgetting about the transaction after the product has been sent, the seller will be paid automatically if there is no response from the buyer after 10 days.These 10 days allow the logistics to be completed as normally express delivery takes 3-5 days to complete within China.
Further, buyers will not keep returning to Taobao if the physical stores in the neighborhood offers wider and cheaper choices.Now this is crucial to the success of Taobao.China is widely code-named as the manufacturer of the world.The countless variety of products manufactured in China, and these subsequently flow to Taobao, is the underlying factor for Taobao’s success.From child toys to household furniture, office supplies to lingerie, hotel rooms to food items, you name it and you can possibly find it in Taobao.And the number of choices for popular products is almost unlimited.Choices are no longer limited by what an individual ship-owner choose to sell: the buyer can now choose from every seller of the same product in China.The only worry the buyer may have is the delivery cost, which decreases per product if you buy more from the same store.This also effectively encourages the buyer to buy more.
As such, Taobao has attracted many overseas buyers and sellers.Consequently, the many restrictions in RMB transactions and costs of cross-border shipping has given rise to a number of third-party peripheral services, including account charging, collective shipping etc, as well as a number of copycat web sites.These will be analyzed in another article.
One possible threat to the continued success of Taobao is China’s reputation for supplying counterfeit and fake products, and Taobao is no exception.Taobao was requested by Apple and Gucci to remove fake products, and in a recent case it was sued by Omega for selling fake watches.Taobao’s response is that Chinese users selling fake products will have their accounts permanently terminated.
The effectiveness of Taobao’s measure is yet unknown.However shoppers still enjoy purchasing on Taobao and sellers thrive with the ability to reach buyers from all over China as well as overseas Chinese.With mobile Internet becoming affordable and people able to surf the Net anywhere anytime, shopping habit has also changed: instead of physically walking to the store and checking the product at shop hours, they will look in Taobao for whatever they need, whenever they like, and check the seller’s credibility and product quality through comments left by previous buyers.It looks like the trend of Taobao shopping is irreversible.
Reference site:
www.taobao.com