Taobao, an E-commerce success and its causes

Do you know Taobao.com?



Here it goes, China's largest consumer to consumer (C2C) e-commerce company, miracle Taobao!

• Background :

Taobao is a subsidiary of Alibaba Group in China. This online trade giant launched in 2003, provides a marketplace and chance to young and educated entrepreneurs to establish their own business. Surprisingly, Taobao is now the most successful online auction company in China and even eBay was kicked out from the market in December 2006. In the past five years, Taobao dominated about 80% of the online-shopping market share. (Information from iResearch) Guess how much is the sales figures last year? It was RMB99.9 billion (RM 54 billion) ! More than double of the sales volume in 2007!

• How?

I am 100% sure that success will not come to you but you must find your ways to achieve it. According to the Chief Operating Officer (COO) of Taobao.com, Zhang Yong, certainly there are some secrets.


* AliPay

This unique online payment system serves as a middleman between the seller in Taobao and the consumer. When the customer decides to buy a particular item, the money will be transferred to his AliPay account. The money will go to the seller from AliPay account only when the customer receives and is satisfied with the merchandise.



* Customer Protection Program

People always are less confident for the quality of online products due to they cannot test, see as well as touch them. Taobao has come up with a solution called 'customer protection program'. Every seller must pay a sum of deposit to Taobao as a compensation to customers if any of them claim a loss. This will secure the consumers and they are more willing to purchase from Taobao.



* Credit Rating System

This is a system that most of the online shopping websites have.
Customers who have dealt with the sellers will comment on the sellers. The credit rating is open to everyone so those who are interested to buy will have a look at the track record before they make any decision.
The system indirectly encourages buyers to purchase online.


* Cheaper Price

Last but not least, customers can enjoy cheaper price at online shopping than buying at brick and mortar. Smart consumer will choose to buy online since they can have same product with lesser price. Multinational companies such as Dell and P&G have also opened an online store at Taobao to attract more loyal customers.

So what are you waiting for?
You can be a success also.
Just go ahead!


Reference:

1. Interview with COO of Taobao, Zhang Yong