Taobao's Success

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Taobao’s Success 1

Taobao’s Success
The most successful C2C E-business platform in China

Chenlei Shi

IT IS 600
Professor Robert Testa, Jr.
September, 18, 2010
Taobao’s Success 2

With the great speed of economic globalization, E-Business is developing in a surprising speed through the wide-spread of information technology. Nowadays, there are a lot of big E-business corporations such as Amazon, E-bay focus on different E-business model and field. However when these international companies carving up the global market, some local enterprises also growing up and want to share this big cake. Taobao (, a Chinese-based company which is a leading platform for C2C personal transactions, was founded in 2003 by the 450 million investment from world’s best B2B company——Alibaba. Taobao is a typical example of China E-business style. Taobao paid a lot of efforts in order to China and Asia’s market dominance, during a lot of difficulties and challenges especially in the competition with E-bay. But some problems still exist in Taobao’ credit system and logistics model. These tough problems also exist in each E-business companies. Hence, how to fix these problems still needs development of information technology.

Taobao’s Success 3

Taobao’s background and business model
In May 10, 2003, Taobao was founded by Alibaba Group and specialized in C2C e-commerce (Consumer to Consumer Model). Alibaba was founded in Hangzhou in 1999, after nearly a decade of development, has grown into the world's largest online trading exchange market and the business community. Up to now, Taobao is the biggest Internet retail and business district in Asia, own more than 200 million registered users, accounting for 80% of online shopping market in China. Merely in 2009, transactions amounted to 50 billion dollar. However, if the Taobao’s success only attribute to its excellent “pedigree”, it would be ridiculous. Today’s Taobao E-business is more than just buying and selling of products and services through the means of digital media, E-business encompasses e-commerce and a whole lot more. For example, its E-business includes both front and back-office applications that from engine for modern business. Unlike some other corporate entities-based business, Taobao is redefining old business models through the aid of technology. Their business are the use of Internet and other networks and information technologies to support electronic commerce, enterprise communications and collaboration, and Web-enabled business processes both within an internetworked enterprise, and with its customers and business partners.

Taobao’s Success 4

The competition with E-bay
E-Bay is another famous C2C business platform, and in Sept. 27, 1999, e-Bay established in order to the expansion in China market. EBay-Each establishment was even earlier than the establishment of Taobao(May, 2004). Thus, at first, Taobao had to face that they lost not only the opportunities and but also a great part of flow market. But in 2004, merely after Taobao’s establishment one years, Taobao surpassed and been the first C2C platform in China. Then in 2006, it became the biggest shopping online website in Asia. So let us make some comparison between Taobao and Each in several aspects. First, in business strategy, both eBay and Taobao choose free business at first. But gave up this attractive business strategy and began charging to the virtual shop. However, when eBay-Each found they were losing their customer rapidly, they return to their former strategy to avoid more losing. Taobao always adhere free charge so that absorbing more customers and virtual shop. Second, Taobao was the first platform which use third-party payment platform——Alipay. That means Taobao pay attention to safety problem. With the introduction of the real-name authentication system, Taobao made distinguish between...
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