The Chinese e-Maket Overview

I.                Taobao platform

Taobao- A Success Story

China has the largest online population in the world: 538 million users by end of 2012 versus 141 million people in the USA.

 E-tailing in China has generated 190 billion dollars in 2012 and e-tailing industry increased by 120% since 2003, birth year of the most important e-tailing platform in China, but also in the world: Taobao, which means “finding a treasure” in Chinese.

Taobao is owned by Alibaba group, the most important Chinese e-commerce giant.  The main objective of Taobao is to foster a comprehensive e-commerce system which will provide an online user experience. Unlike eBay, whose strategy was to duplicate the American system to the Chinese market, Taobao was able to respond to market specificities.

Chinese online consumers’ expectations are very different from occidental ones that is why the commercial strategy must be adapted. For example, for Chinese people, trust between seller and buyer is of the utmost importance. As such, Taobao allows buyers and sellers to communicate via “ALiWangWang”, Alibaba’s chat tool and proposes mostly fixed prices and only few auctions. Indeed, the bargaining is a part of the trust building between seller and buyer in Chinese culture. Auctions are an individualist way to buy or sell and are inappropriate in collectivist countries like China.

Moreover, people pay as they receive their item, mainly by cash on delivery. Indeed, the most usual way of payment in China is cash, and cash on delivery is like checking goods before buying, in retail shops.

Taobao’s website interface is adapted to Chinese customers. Taobao’s colours are red and orange, which symbolize festivity and prosperity in Chinese culture, a very positive message for online customers. In China, unlike the occidental world, symbolic is very important for doing business

Finally, Taobao offers a free listing as well as a local and efficient customer service which is operational 24/24.

Thus, Taobao is totally adapted to the Chinese market, and thus achieve a big success.

Today, Taobao represents:

  • 80% of the C2C online Market
  • 500 million registered users
  • 60 million of regular visitors per day
  • More than 800 million types of items
  • Almost 100 billion dollars turnover
  • One of the world’s top 20 visited websites ( 11th rank in April 2013) *

 

Who consume on Taobao?

taobao's customers

 

Taobao users are mostly between 25-35 years old. They are more and more interested in buying high technology products on internet and spend a lot of time to compare prices.

Taobao opportunity:

Taobao is a powerful tool for small and medium sized enterprises:

  • It doesn’t need to invest a lot of money, instead, you can create your online presence for free
  • Being the biggest online selling platform in China, Taobao allows you to have a high visibility on the Chinese e-tailing market
  • According to a Mckingsey Institute survey, e-tailing will expand continuously in China: online sales could reach 650 billion dollars by 2020
  • E-tailing have  strong incremental effect on private consumption
  • Taobao allows you to sell in small cities (few million people still), where there are neither good ways of distribution, nor a big choice of products.

How SAOS can help you

We propose tailor-made solutions to help you launch your e-tailing shop.

  • Set up basic shop on Taobao with brand logo and colours
  • Products delivery to hand customers
  • Import and Chinese tax management
  • Client retains ownership of stocks for any purpose

Optionally:

  • Import license
  • Brand registration
  • Full logistic and manufacturing
    • Provide warehousing and logistic service specific for small size product
    • Customer care (complaint and return goods)
    • Taobao promotions
    • Advanced design

(*) According to Alexa site ranking.

II.Tmall

 

A question of trust

Tmall is an extension of Taobao. This platform is focused on B2C e-selling while still visible from Taobao website. Unlike Taobao, which has the reputation to offer everything you want to buy for the lowest price, Tmall offers to sell brand products of good quality. The price is not the argument of Tmall. Tmall’s targeting customers are trust of and the safety of brands against counterfeit.

Customers are ensured to not buy counterfeit and thus are confident on the hosted online shops, and companies for which brand is a marketing key can control their image and reputation.

 

Tmall shop 1 Tmall shop2

 

Tmall opportunity

Opening a Tmall e-shop is very interesting for many reasons:

  • Created in 2008, Tmall represents 50% of B2C e-market already
  • B2C e-commerce evolved +130% from 2010 to 2012
  • Your customers are protected against counterfeit, thus they would buy your product more easily because they would trust your e-shop

But, opening a Tmall e-shop is an investment and a bit complicated for foreign companies, that’s why it should be dedicated to long term entry on the Chinese market.

To open an e-shop on Tmall, you must:

  • Have your company registered in China
  • Have your own brand and trademark registered
  • Take an online exam operated by Tmall to understand their rules
  • Present some official documents

Pay about 160000 RMB* (about 3000 USD) as a security deposit (not involved in SAOS’ fees)

* Amount based on Tmall rules, various rate could apply, consult us for confirmation.

 

How SAOS can help you

SAOS offers an all-in-one solution to you:

  • Before creating your shop, SAOS can help you to register your company in China. Please contact us if you need further information.
  • Online shop design based on corporate branding
  • Separate independent website for company presentation, promotion and branding
  • Monthly operation and reporting
  • Logistic, fulfilment and inventory management
  • Marketing strategy
  • SEO, online marketing and social medias
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