Competent product of Alibaba
In the wake of technology and Internet development, many Chinese e-commerce business is benefited and they rapidly grow to be giant customers and achieve success. Alibaba, as the largest e-commerce business in China can be said to be the most successful e-commerce in the past 10 years and its found Jack Ma was ranked to be the Chinese wealthiest people in 2019 Forbs fortune 500 ranking. Its online business platform Taobao is the most competent product, its success is attributed to its effective and efficient digital business model. In this blog, I will elaborate how digital business mode of Taobao contribute to its success.
The Business Model
Taobao literally means “search for treasure” in Chinese and it is growing to be the largest online shopping website in China since its foundation in 2003. The business model of Taobao is business to customers and consumers to consumers. it places hundreds of millions’ products from business suppliers no matter they are big or small (Blystone, 2018). A biggest advantage of Taobao over the other online platform is that Taobao does not charge its business service fee, making it retain millions of business in Taobao.
Digital platforms can be categorized into digitalizing service, digital platform and crowdsourcing. Taobao is the digital platform and and it provides a market place to bring sellers and buyers of digital products. This business model is an innovative model for the market because traditionally people purchase goods from offline stores and they have to spend too much time. Taobao is creative to allows people to purchase goods online without going outside. Taobao takes advantage of Internet development it contributes to their success. The success secrete behind Taobao is that it focuses on small business and individual to sell their online products. Small business has large presence in China and they are inferior when competing with big companies because they do not have brand effects and they have little presence in distribution and shopping model.
SMAC
According to Heilig (2017), the modern digital transformation in online business is summarized by SMAC including social, mobile, analytics and cloud. Taobao is doing a great job in these areas to achieve advantages. In 2019, Taobao announced that it would establish a social online platform called “Tao Xiao Pu”, which is founded on the base of market trend and merchant feedbacks. Tao Xiaopu is a platform targeting the social business market. It is an innovative business model called “S2B2C”, and this platform is to serve customers by offering them with data driven service. Under this platform, customers will close to their customers. Taobao also offers them real time customer feedback and customization analysis.
Besides social, Taobao is a cloud computation base platform. Taobao takes use of the cloud service provided by Alibaba. Alibaba clouding is the world leading clouding and based on clouding, Taobao can have advantages in fast data process and customer analysis. For example, Taobao created the double 11 festival, in which day customers can purchased discount goods. In 2019 double 11 festival, Taobao achieved more than 25 billion RMB sales in single night. Clouding service supports its efficient customers information process (Emma, 2020). Meanwhile Taobao uses big data technique to analyze its customers, understanding their needs. Then Taobao can optimize its supply chain. Taobao is a big database and it uses big data technology and clouding to analyze data and understand customers.
source from https://www.youtube.com/watch?v=XWt_7rr2_hk
The Digital Model
The digital model of Taobao is supported by its advanced software and algorithm. Taobao team is very famous and they know how to use algorithm to guide customers and understand their consumption behavior. For example, Taobao use “recommendation” technique to provide customers with the goods that they used to search for. This can increase customers satisfaction rate and help them quickly identify their desired goods, Taobao therefore increases its sales.
The success of Taobao is dispensable from its presence in mobile applications. Taobao used to a web-base platform for customers to purchases good while now it is developing into a mobile phone base application because customers are shifting to mobile applications. Mobile phone penetration rate in China reached 51.8%, meaning that over 700 million populations are using smartphone. 60% of populations in China under 30 are users of Taobao (Perkin, 2017).
Overall the effective digital business model contributes to success of Taobao. Taobao is an innovator in using digitalization, big data and clouding techniques to understand its customers and deliver them with good service. Taobao focuses on small business and allows them to compete with big companies, gaining their favor and support. Meanwhile Taobao starts to shift its business to socialization, increasing more customers base.
Reference List
Blystone, D. (2018). Understanding the Alibaba business model, Investopedia, retrieve from https://www.investopedia.com/articles/investing/062315/understanding-alibabas-business-model.asp
Emma, L. (2020). Brief: Taobao Testing social e-commerce platform, Tech-node, retrieve from https://technode.com/2019/04/29/briefing-taobao-testing-social-e-commerce-platform-taoxiaopu/
Ebrun, (2020), Briefing: Taobao testing social e-commerce platform, retrieve from https://technode.com/2019/04/29/briefing-taobao-testing-social-e-commerce-platform-taoxiaopu/
Heilig, L., Schwarze, S., & Voß, S. (2017). An analysis of digital transformation in the history and future of modern ports.
Perkin, N., & Abraham, P. (2017). Building the agile business through digital transformation. Kogan Page Publishers.
Why People Spent $25 Billion On A Fake Holiday Called ‘Singles’ Day’. (2020). Retrieved 5 March 2020, from https://www.youtube.com/watch?v=XWt_7rr2_hk
Joyce Q 
Hi, Joyce! I think your blog about the success factors of Taobao provides many useful information. The rapid development of Taobao is closely related to the support of advanced Alibaba Cloud and big data technology. In addition, you mentioned that Taobao provides a platform for small companies to compete with large companies, which provides customers a lot of choices and also motivates every merchant to strive to be the best. After I came to study in the UK, I used Amazon and Ebay. Compared to Taobao, these two e-commerce giants have many shortcomings in user experience. For example, I cannot easily communicate directly with merchants through the Amazon app. Product descriptions are often just a few pictures and a paragraph of text. Taobao has a convenient app chat function, and the product details are often with a lot of detailed pictures, videos and so on. In addition, Amazon has many fake shipping merchants, but the platform does not manage them. I can’t help thinking that when every company is using the e-commerce model at the same time, is the real success factor not a technology, but a business attitude?
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Previous comment makes me wanna comparing Taobao and EachNet which can be called Chinese Ebay，At the time this was the only company that could compete with Taobao in China.
Alipay’s secured transaction model has completely dispelled Chinese users’ suspicions and distrust of online shopping.
EachNet is trying to prevent sellers and buyers from communicating and trading privately to ensure that commissions are not lost, while Taobao encourages bargaining between sellers and buyers, allowing Taobao to fully market its trade.
EachNet adheres to the C2C line of eBay, but China has no tradition of buying and selling second-hand goods in the United States. Taobao follows the Small B2C route that brings small businesses to the Internet. This is a market with a huge user base in China.
At a critical moment when competing with Taobao, eBay decided to lead eBay with professional managers
But this is like an army without soul.
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Hi Jing
I agree with you point. Taobao, without doubt, is the largest and most successful e-commerce business platform in China. I believe that no one there has not use Taobao. It shows that the convenience and close to people’s life. Taobao which provides a market place to bring sellers and buyers of digital products is an innovative model for the market. Taobao is brilliant at utilizing digital business model to establish the platform. Moreover, it uses big data technology and clouding to analyse the consuming habits and popularity of the customers. Besides, Taobao is dispensable from its presence in mobile applications. As smartphone is the necessary item for current people, the mobile applications make us addicted to them because we always see and use them with a finger. I can see the change of Taobao to uncertainty as well. As a result, Taobao is good at developing its business by take advantage of the digital business model.
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Hello Joyce
I noticed that you mentioned the success of taobao in the first place with it provides a new business model for small and medium-sized enterprises. It creates new and successful links between customers and businesses and the products they sell. This gives smes an advantage in the competition with large enterprises or enterprises with social reputation.
At the same time, you mentioned that big data analysis brings great advantages to customer preference analysis. This is one of the reasons for taobao’s success. This is relevant to an example I mentioned in my blog about how American retailers recommend products for different pregnancies by tracking and analyzing the pregnancy of pregnant women. The only difference is that not only small and medium-sized enterprises, taobao has been developed so far, many large enterprises have also joined taobao based on the advantages of taobao, such as the huge user base and big data technology. Can it be understood that this advantage that small and medium-sized enterprises provide in the competition no longer exists? Looking forward to your reply.
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