Taobao Business Model: E-Commerce Technologies

Taobao Marketplace

Taobao is an online shopping website that is operated by Alibaba Group in China. It was founded in 2003 and provides a platform for businesses and entrepreneurs to open online markets that serve consumers in the Chinese-speaking regions. As of March 2103, Taobao Marketplace was one of the top ten most visited websites in the world with around 760 million product listings.

Business

The Taobao business acts as a mediator since it connects buyers and sellers and facilitates transactions between the two parties. To sell products on Taobao, merchants do not pay. In fact, a free model makes it the most appealing marketing website in China and other related regions. In actual fact, merchants pay Alibaba for advertising and other services. Most of sellers using Taobao are small-scale businesspersons because it offers an easier and faster service than other providers. Taobao is a business-to-consumer e-commerce market; hence, it has online stores belonging to small businesses and individuals. Buyers can also ask merchants direct questions on their products through the Alibaba Group’s instant messenger software (Barboza).

Sector

As a business, Taobao is made up of several companies, which run different activities though their services are the same. Each company targets a discrete portion of the e-commerce market. It is split into Taobao Mall, Taobao Marketplace, and eTao. Taobao Mall is a shopping website that allows chief retailers and worldwide known brands to sell directly to Chinese customers. On the other hand, Taobao Marketplace is geared towards smaller transactions such as consumer-to-consumer or small retailers-to-consumers. eTao is a specialized search engine that allows buyers to search the Internet at large for products and services. These sectors help to expand consumer traffic, since there are three entry points instead of one. In addition, they help buyers to experience diversified shopping. The expansion of the company and the availability of many sectors with specified objectives contribute to maintaining Taobao’s agility and innovativeness.

Sales Model

Although both fixed and auction sales are available, most items in the Taobao market are sold through predetermined prices with very a small percentage of auction sales. Information on sellers and their background is available on the site, and so are their ratings, comments, and complaints against them. Therefore, before proceeding with a transaction, buyers can check the product and make an informed decision. Sellers open online stores in Taobao, where they can showcase their goods and services, as well as provide information on their products and prices. On the website, buyers can see showcased goods and decide on whether to purchase or not. Once a decision has been made, products can be shipped and delivered to consumers as per the agreement (Lu, Wang, and Yu 406).

Marketing and Merchandising

Taobao has enabled its users to list their items on the site for free. To market their products, sellers at first have to create an account, and then they are provided with an online store platform that can be customized to be attractive. Afterwards, one mentions items for sale. Sellers can advertise their products for fee through the website, and this attracts consumers. Traders who have accounts on Taobao can list their merchandise in their online stores for consumers to see. The website can also advertise merchants for effectiveness. Once a buyer is interested in merchandise, one can order the product from the store. Since there are many merchants from all over the world, listings of merchandise on the website are very broad meeting needs of different customers (“Taobao, Taobao Suppliers and Manufacturers”).

Omni-Channel

Taobao has unveiled new Omni-channel retail plans that give consumers access to products, prices, delivery options, and membership benefits online. With the aim of achieving full incorporation of digital and physical commerce, Taobao works with brands and retailers to facilitate the same. Through this, consumers will receive a message notification of participation and involvement and the delivery of products after the order. Buyers will get offers on the same products online and offline. What is more, goods are at discounted prices. With this channel, consumers will enjoy convenient after-sale services from related nearby stores (Zhao et al. 363). Members of the website with accounts enjoy the same benefits both online and offline. Customers of a certain brand can enjoy its services buying goods through the website or offline.

Technology

Underlying Technology

Since Taobao is a website for e-commerce, it requires a great deal of technology to function and thrive. Since it started, the company’s technology has revolutionized into becoming what it is today. Taobao conducts trainings, where it tutors its employees on the use of technology in managing the website. Technological advancements have played a great role in shaping the new business. At the beginning, its objectives were to become the best and top e-commerce website all over the globe. This goal has been achieved because of the adoption of well-laid-out strategies on technology use (Williamson and Jingji 8). The technology is used in managing online stores, advertisements, and transactions between buyers and sellers.

Data Center

Alibaba has developed cloud data centers that work through cloud computing in managing online sales. They have been created in various areas, such as the USA, Hong Kong, and Silicon Valley. These centers facilitate sales and connections between buyers and sellers. Their launch is a result of Taobao opening shopping sites in several regions. The data centers provide free data analytic tools for small vendors to better their products to online shoppers. They also help merchants to develop unique markets and grow on the online market platform. Expanding the website means the development of several data centers in different areas, even in the countryside.

Cloud Devices and Security

Taobao uses a cloud storage system in the storage of information collected based on stores, profiles, and products in its websites. Data have multiple copies to maintain the reliability of the info. Taobao keeps the information on transactions and accounts on the websites secure from any breach. Although there have been attempts to hack accounts, Taobao has developed software that keeps off cyber security. The system tries to block any access by non-account owners and maintain the safety of users’ accounts.

Core E-Commerce Technologies

Taobao has improved and changed the meaning of e-commerce in China with its improvements in the technology used for online markets. Accounts can be customized by users and are more appealing than before (Wang). Such customization can be used as an effective marketing strategy of goods. One can also read bar codes on products and compare with normal goods available. Through the advancement in technology, it is possible to detect whether products are genuine even before being sold to the consumer. Traders are connected throughout the world via the online market website, making goods from other countries accessible to the buyer.

Software Management

Taobao aims to develop software applications for Apple, Iphone, Ipad, and Ipod users to connect buyers and sellers in different regions. It also strengthens the relation between its branches in different areas. Such connection brings about reliability.

Payment and Order Management

Orders on the Taobao website are processed after making the first payment, which is done before long after making out an order. Customers pay via Paypal, Webmoney, and Western Union. After payment, the order is processed, and its status on the account is pending. Orders can be canceled or reduced online. Replacements can also be submitted if orders are wrongly placed to help consumers get what they need. The rest of the payment is made during the receiving period, after the confirmation of the correct product.

Supply Chain, Shipping, Fulfillment, and Logistics Distribution

In case of shipping goods internationally, charges are different depending on the country and its distance from China. Shipping charges are calculated on the weight of goods and the distance between the two servers. The chain of supply of products depends on the accessibility of the nearest Taobao Mall and Taobao Marketplace. Although there have been some complaints, most customers are fulfilled with the services offered by the company striving.

Call Center

To contact Taobao sellers, there are few ways available. Alipay is offered completely in Chinese; one needs to open an Alipay account and learn how to use it to contact buyers with the same account. Aliwangwang is also an available option that is suitable for PC users in contacting Taobao buyers available on the website. It contains updates and information on what is on offer in Taobao. The Taobao app is an alternative to contact and gain information on products and sellers available in Taobao. This app works on the same level as others and is accessible to buyers. Users can buy on the website any times and any place.

Conclusion

As an online market, Taobao has initiated ways and improved technologies to access buyers and sellers from all over the globe. It has a platform that caters to all products and people, maintaining its extensive use. Taobao has created a market for itself, and its success is an illustration of the expanding e-commerce world.