Taobao term project

Topics: Electronic commerce, Online shopping, China Pages: 5 (2436 words) Published: May 19, 2014
Part 2
Taobao is China's largest Internet retail website and one-stop platform for shopping, socializing and information sharing. It was found by Alibaba Group on May10, 2003, Taobao ( is the largest Internet retail Web site in China with 84 percent of the Chinese-domestic online consumer market. Taobao Marketplace facilitates consumer-to-consumer (C2C) retail by providing a platform for small businesses and individual entrepreneurs to open online retail stores that mainly cater to consumers in China, Hong Kong, Macau and Taiwan. With around 760 million product listings as of March 2013, Taobao Marketplace is one of the world’s top 10 most visited websites according to Alexa. For the year ended March 31, 2013, the combined gross merchandise volume (GMV) of Taobao Marketplace and exceeded 1 trillion Yuan. Sellers are able to post new and used goods for sale or resale on the Taobao Marketplace either through a fixed price or by auction. It provides the most comprehensive product offering ranging from collectibles and hard-to-find items to mainstream retail categories such as consumer electronics, clothing and accessories, sporting goods and household products. Buyers can assess seller backgrounds by information available on the site, including ratings, comments and complaints. Strengths

1. Leading position in China’s online shopping market
Taobao is an acknowledged leader in both B2C and C2C online shopping market in China. Taobao had more than 500 million registered users. The company is well thought of by customers, which gives Taobao more advantages in competition. 2. Effective combination of diversified offerings

Taobao combines its three segment businesses effectively to enlarge its customer base. Take Alipay as an example, it is a third-party online payment platform, provides a simpler, efficient and safe payment service for both customers and sellers. This service not only ensures the transaction security but also reduces the transaction risk for online consumers, as it enables buyers to confirm the quality of goods before releasing funds to sellers. This service helps Taobao to attract more customers. Weaknesses

1. Limiting itself to local market
The design of Taobao website and other supporting services were based on China’s local market. This localisation strategy made Taobao grow fast at the beginning. However, with the development of the website, this strategy limits Taobao to the Chinese market, therefore resulting in a lack of presence in the global market. 2. Insufficient screen process to control counterfeits products Although Taobao has taken some measures to control the sale of fake goods, such as rating the sellers by credit value, the result was not as expected. Because of the free strategy that Taobao used, individuals can establish an online shop easily without charge and requirement. This makes it even hard to monitor and select sellers that commit fraud. Lack of effective screening processes to control the sale of counterfeit products has had a negative influence on customers’ confidence in Taobao. It could also affect Taobao’s brand image and sales. Opportunities

1. Growing demand for online shopping in China
More people in China prefer to buy products online because of convenience and various choices. The increasingly growing demand for online shopping contributed to the growth of Taobao. 2. Safer payment systems for online transactions

The third-party online payment system ensures the security of transactions and enables customers to get their refunds easily. A simpler and safer payment for online transactions attracts more customers. Threats

1. Low entry barrier leads to fierce competition
Because of the low entry barrier and fast growing market, Taobao meets many challenges, particularly in the face of increased competition from new market entrants. In addition, without many technical difficulties, it is easy for other competitors to copy...
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