In the rapidly globalizing world of e-commerce, tapping into China’s mammoth online marketplace, Taobao, presents an unparalleled opportunity for foreign brands to reach the world’s largest consumer market. With 875 million active users monthly, the Alibaba Group subsidiary is a global digital shopping powerhouse.
However, for many foreign brands, entering this intricate and highly competitive marketplace—boasting its unique digital ecosystem, local shopping cultures, and stringent regulatory landscape— often seems harder than it actually is. This article intends to simplify the journey of establishing a successful presence on Taobao for foreign brands, so let’s start!
Taobao – China’s largest online shopping platform
Taobao is China’s largest online consumer-to-consumer (C2C) marketplace and an integral part of Alibaba Group’s e-commerce empire. Established in 2003, Taobao provides a platform for small businesses and individual entrepreneurs to open online shops and directly sell to consumers.
As of 2023, Taobao boasted more than 875 million active users and over 60 million regular daily visitors, hosting millions of businesses. Its popularity and wide array of product offerings, ranging from apparel to electronics, make it a preferred shopping destination for Chinese netizens.
Moreover, its integration with Alipay, China’s prominent digital payment service, provides seamless transaction experiences, further strengthening its user base.
Why is Taobao so successful in China?
The unprecedented success of Taobao in China can be attributed to a number of strategic, cultural, and technological factors:
- Deep Understanding of Local Market: Taobao has a keen understanding of Chinese consumers’ habits, preferences, and needs. This deep market insight allows them to tailor their offerings to local tastes and trends, making them an appealing choice for a wide range of Chinese consumers.
- Wide Range of Products: This online shopping platform offers a vast array of products, from everyday household items to luxury goods. This breadth of offering attracts a large, diverse user base and ensures that most shoppers can find what they’re looking for.
- Robust and Reliable Infrastructure: Backed by the Alibaba Group, Taobao has a solid technological foundation. Its reliable platform provides a seamless and intuitive user experience, ensuring quick page loads, secure transactions, and an efficient search system.
- User-Friendly Interface and Features: Taobao’s interface caters to a mobile-first audience with easy navigation, personalized recommendations, and integrated social features like instant messaging and reviews. The integration of live-stream shopping adds a new, interactive dimension to the shopping experience.
- Integrated Payment System: The integration with Alipay, a widely accepted digital payment service in the Chinese market, offers a smooth, secure checkout process that boosts consumer confidence and increases transaction efficiency.
- Effective Dispute Resolution: Taobao has an effective dispute resolution system to protect both buyers and sellers. This fosters trust, encouraging more users to participate in the platform.
- Support for Small Businesses: Taobao empowers small businesses and individual sellers by providing them with a platform to reach a vast audience. This has created immense opportunities for entrepreneurship and business growth within China.
Taobao’s user demographics and shopping behavior
Taobao appeals to a wide audience, but it’s especially popular with young adults in their 20s and 30s. Both men and women use the platform, with a bit more usage among women. Most users live in big cities, but it’s also growing in smaller cities and rural areas. In general, it’s the most popular online shopping platform, so there are all kinds of consumers there.
As for how people shop on Taobao, many visit the site often, even daily, because of the wide variety of products and good prices. They usually shop on their mobile phones for convenience. Customers buy all sorts of things on Taobao, but domestically produced apparel, electronics, and household items are the most common purchases.
What are the best ways to sell on Taobao?
Selling on Taobao can be a profitable venture if done right. Here are some effective strategies for selling on Taobao:
Focus on the audience
Every successful selling strategy starts with an in-depth understanding of the target market. For Taobao, this involves analyzing the demographic and behavioral patterns of potential consumers. Are your products aimed at younger consumers in their 20s and 30s? Or are they better suited to an older demographic? Are they more appealing to urban dwellers or those living in smaller cities and rural areas?
Understanding the preferences, buying behaviors, and shopping patterns of your ideal customers will allow you to tailor your offerings, pricing, and marketing strategies to effectively reach and engage them. This could involve carrying out market research, customer surveys, and keeping a close eye on trending products and consumer feedback on the platform.
Provide quality product images and descriptions with the right keywords
In the realm of e-commerce, visual appeal is paramount. High-resolution, professionally-taken product images can significantly enhance your listings, drawing attention and inspiring confidence in potential buyers. Showing your products from multiple angles and in various settings can provide consumers with a comprehensive understanding of what they’re buying.
Alongside images, detailed and accurate product descriptions with the right keywords are crucial. These should clearly communicate the features, benefits, and usage of the product, answering any questions consumers might have. Providing this level of detail reduces uncertainty and builds trust, potentially leading to higher conversion rates and fewer returns.
Taobao live streaming
Taobao has been at the forefront of the live-streaming shopping trend in China. Taobao Live is a fairly new feature of Taobao that allows sellers to showcase their products in real-time, offering live demonstrations and interacting directly with potential customers.
Live-streaming sessions can create a sense of urgency and exclusivity, with flash deals and limited-time offers driving immediate purchases. They also build a sense of connection between the seller and consumer, which can foster loyalty and repeat business. Engaging a popular influencer or KOL (Key Opinion Leader) for your live-streaming sessions can further amplify your reach and credibility.
SEO on Taobao – pay attention to keywords
Online shoppers will use the search bar to find specific goods. It is important to define keywords for each product. Different buyers may search for the same product using different keywords. How can you get your Taobao business to appear on the first-page search results?
Keywords could be brand, model, product features, promotions, product characteristics, adjectives describing the product, shop name, and credit rate. These keywords can be combined with many combinations, such as store name + model + brand; Promotions + commodity attributes. This will require research on the most searched keywords in Taobao and insight from industry professionals.
Participate in Chinese shopping festivals
Taobao frequently hosts shopping festivals, like the famous Double 11 (Singles’ Day) event, which generates huge sales volumes. Participating in these festivals provides an opportunity to increase the visibility of your products and tap into the consumer excitement around these events.
To make the most of these festivals, plan ahead with sufficient stock and consider offering festival-exclusive deals or bundles. This strategy, while potentially lowering your profit margins in the short term, can attract a large influx of new customers and generate substantial sales volume.
Provide exceptional customer service
Customer service is key to building a successful business on Taobao in Mainland China. This involves responding promptly and politely to customer queries, resolving disputes efficiently, and handling returns professionally.
Providing an exceptional customer experience can lead to positive reviews and ratings on your own Taobao store, which play a significant role in influencing the purchasing decisions of other consumers. Remember, word of mouth is a powerful tool in the online world, and a stellar customer service reputation can significantly help you achieve high sales volumes on your Taobao account.
Collaborate with Key Opinion Leaders
Leveraging the influence of Chinese social media personalities and Key Opinion Leaders (KOLs) can be a highly effective strategy for foreign companies to enhance brand visibility and boost sales on Taobao. These influencers, trusted by their large followings, can showcase your products through blog posts, social media updates, or most significantly, live-streaming sessions on Taobao, a rising trend in e-commerce.
To ensure successful collaboration, it’s crucial to select KOLs whose audiences align with your target market and whose brand complements your products. Collaborations should be mutually beneficial, possibly offering KOLs exclusive product access, special follower discounts, or an affiliate marketing arrangement.
How to start selling on Taobao?
Almost every company is eligible to open a Taobao store and start selling products to Chinese internet users for a relatively small price (in comparison to Tmall or JD), but it’s only possible for those, that are registered in China and have a valid Chinese business license and a Chinese bank account.
Most foreign-owned companies that want to reach Taobao’s audience decide to start their own Chinese company, as it’s better than selling through third parties and distributors. If you don’t have a Chinese business license but would like to start your own Taobao shop, contact us!
A step-by-step guide to opening an online store on Taobao
Opening a Taobao store involves several steps, each with its own set of requirements. Here is a general step-by-step guide:
- Register Your Business: You’ll first need to register your business in China to get a Chinese business license. This is crucial as you’ll need to provide proof of a legitimate business operation to open a store on Taobao.
- Create an Alipay Account: Alipay is a payment platform owned by Alibaba Group. Creating an Alipay account is necessary because it’s one of the primary methods of payment on Taobao. Ensure your account is set up for international transactions.
- Register for a Taobao Account: Visit the Taobao website and register for an account. You will need to provide personal information and your Alipay account details.
- Apply for a Taobao Store: After successfully creating a Taobao account, you can apply to open a store. You’ll need to provide your business registration details, tax information, and other relevant documents.
- Set Up Your Store: Once your application is approved, you can set up your store. This involves choosing a store name, uploading a logo, setting up your store layout, and creating product listings. It’s crucial to ensure your store is appealing and easy to navigate. Product listings should include high-quality images, detailed descriptions, and competitive prices.
- Implement Payment and Shipping Solutions: Set up your payment and shipping solutions to cater to Chinese consumers. This could involve working with cross-border payment and logistics providers to ensure a smooth customer experience.
- Launch and Promote Your Store: After setting up your store, you can officially launch it. To attract customers, consider implementing promotional activities such as discounts, coupons, or free shipping for the first few orders.
Remember to comply with Taobao’s rules and regulations at all times and provide excellent customer service to build a positive reputation. This guide is a general overview and the exact process might vary based on your location and type of business. Always refer to the official Taobao website or consult with a professional for the most accurate and up-to-date information.
How much does it cost to open a Taobao store?
Taobao is definitely cheaper than Tmall and JD, but you still need to count in some expenses.
1000 RMB is the mandatory deposit for opening a store on the platform, but apart from that, you will also be charged for company registration, obtaining the necessary licenses, and logistics. Taobao will also take a commission from every sale, which usually is around 5%, but it will always depend on your products.
Taobao vs. Tmall – which platform is a better choice?
Taobao and Tmall are both owned by the Alibaba Group, but they serve different purposes and have different types of sellers.
Taobao is a consumer-to-consumer (C2C) online marketplace where individual sellers or small businesses can set up their own stores and sell products directly to consumers. It’s somewhat akin to eBay, allowing anyone to set up a shop, and is known for its vast variety of products and competitive prices. This platform is often used by smaller businesses and entrepreneurs who want to get started in online retail.
On the other hand, Tmall (formerly Taobao Mall) is a business-to-consumer (B2C) platform. It’s a virtual mall that hosts official brand stores, similar to Amazon, allowing larger businesses and established brands to sell their products directly to consumers. The sellers on Tmall are often larger local Chinese companies or international brands who want to sell in the Chinese market. Tmall is known for its quality assurance and is often trusted more by consumers for authentic branded products.
While both platforms are part of the Alibaba ecosystem and offer opportunities to reach Chinese consumers, Taobao is more focused on smaller businesses and individual sellers, while Tmall is designed for larger, more established brands. The choice between the two depends on the size of your business, the type of products you sell, and the consumer trust you aim to establish.
We can help you register and set up your Taobao shop!
Establishing a successful Taobao store requires an understanding of the Chinese e-commerce landscape, which is where Gentlemen Marketing Agency can be of immense help.
We guide you through every step, from setting up your Taobao store to creating standout product listings. We provide tailored marketing strategies based on data-driven insights about your target audience’s shopping habits, offering services like product bundling and strategic discounting.
Our localization services adapt your brand messaging to resonate with Chinese consumers, taking into account cultural nuances and local market dynamics. We also facilitate collaborations with Key Opinion Leaders (KOLs) and influencers to enhance your brand’s visibility.
With GMA, you’re setting your brand up for success in one of the world’s most dynamic e-commerce markets. Contact us today!