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2  Founded by Alibaba Group in 2003 Chinese website for online shopping  Undisputed market leader in China Giant of retail platform in Asia  Facilitates B2C and C2C retail Consumers from Mainland China, HK, Macau, Taiwan  In June 2011, Alibaba CEO Ma Yun revealed that Taobao would be split into 3 different companies: eTao (shopping searches), Tmall (a B2C platform), and Taobao Marketplace(a C2C platform)

 IT Infrastructure  Database Management System  Customer Community  Security System  ……  E-Commerce 3

 Taobao Marketplace  Tmall  eTao  Alipay  AliWangWang  Happy Taobao  Others 4

 Ubiquity  Global reach  Universal standards  Richness  Interactivity  Information density  Personalization/Customization  Social technology 5

 Ubiquity Internet/Web technology available everywhere: work, home, etc., and anytime  Information density Vast increases in information density – the total amount and quality of information available to all market participants

Promotion : Micro blog Renren station Web portals EDM ( Direct Marketing)

A large number of advertisement outside : Underground Video Bus shelter Source:

 Customers and potential customers can get the up-to-date news and information  Understand more about the products and sellers as well as suppliers  To be known by more and more people  Use different kinds of promotion like EDM

Increasing growth in the Search volume in Google as well as in the reports. Source: ends/?q=taobao

Vast increase in information density: Amount Quality Mushroom Street Tmall

 Customers can get a lot of information in Taobao  Can quickly determine if a product is good or defective  Increase the quality and selling amount of products

Source: Own a large share of market A big amount of trades Higher efficiency of deals

 Modules for setting up online marketplaces is the same for all sellers – easy for new sellers to enter and lower entrance cost  Design cost is also lower because of the build-in model of Taobao and can be easy modified to meet customer’s needs  More seller will choose Taobao as the platform of doing business

 Modules for searching, scanning and purchasing the goods is the same for all shops opened in Taobao  Easier to find desired goods and more convenient to buy things  More Internet Users will use Taobao to purchase things online

 Innovate its products with core business unchanged  Introduction of new features “group purchase” and T-mall  In conclusion:  Larger customer base  Increase in profit

 Interaction between seller and customer  Customization of goods enabled  Interaction between customers helps customers to better identify the quality of the products  Frequent information exchange with limited time

 “ALIWANGWANG” for general users and sellers  The instant messenger provided by Taobao  Built-in with the whole system of Taobao  Enable detail and informal communication  Long-term seller-customer relationship

 Low communication cost with high efficiency in customization and information screening  More Customer Welfare  Larger Customer Base  Higher Profit

1. logistic issue (common for B2C & C2C)  Logistics is the fundamental guarantee to realize e-commerce.  Although e-commerce rises up in China, logistics could not respond relatively at the same speed. Source:

1. logistics issue (cont.)  Inadequate logistics infrastructure in China e.g. may take longer time to get access to small cities– may limit market reach.  Inefficient and unprofessional delivery e.g. Goods broken during delivery– consumers’ complain; Serious block during prime period (golden week, 11.11) – consumers dissatisfaction! Source:

1. logistics issue (cont.) Since Taobao does not have its own distribution channel  Bargaining power from logistics companies– may push up the price of goods sold on Taobao  Lose control of service level

 2. Credibility of online vendors (especially for C2C) e.g. Rating and so-called discounts may be misleading; large amount of goods disappointing consumers Source:

 2. Credibility of online vendors _especially for C2C (cont.) Possible reasons:  The nature of E-commerce: lack of touch and feel; higher risk in customers’ perception  Large amount of online shops– hard to ensure a high level of credibility

 3. Conflict between online shops and Taobao_ especially for B2C in Taobao mall e.g. “Anti-Taobao” Source:

 3. Conflict between online shops and Taobao_ especially for B2C in Taobao mall Possible reason:  Improve service quality and credibility? -- How to deal with those middle and small sized shops?

1. Logistic Issue  A. Set up a logistic credit rating system * base on the consumers’ satisfaction  Monitor the performances of the logistic companies 28 Source:

1. Logistic Issue  B. Integrate the logistic system * Centre management and control: Taobao can collect all the goods to a large store and transport them  Reduce the sellers’ operation cost 29 Source:

2. Credibility of online vendors -especially for C2C  Return the unsatisfied goods within a period of time without any extra cost  Rely on the feedback mechanism: * Heavy penalty for selling faked goods 30

3. Conflict between online shops and Taobao-especially for B2C in Taobao mall  The third party should involve (e.g. SAIC) *negotiate to both parties *enact or modify the related rules and regulations on E-commerce in China 31 Source:

3.Conflict between online shops and Taobao- especially for B2C in Taobao mall  Rather than raising the operation cost for the sellers: * Increase credibility and quality +improve credit rating system +encouragement - refund part of the annual fee for the technical 32 Source:

 Introduction- Market leader in China  Features of E-Commerce in Taobao * Ubiquity *Information Density * Universal Standard *Interactivity  Bring many advantages  The problems Taobao faces  The suggested solutions related to those problems 33

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