As the world’s largest e-commerce market, China presents a significant opportunity for businesses looking to expand their reach. Platforms like Taobao and Tmall have made it possible for foreign businesses to enter the Chinese market and sell to Chinese consumers. Taobao is Asia’s largest network retail business. Founded by Alibaba Group in 2003, the Chinese online shopping platform includes both C2C and B2C transactions. Tmall, formerly Taobao Mall, is a spinoff from Taobao as a dedicated B2C online retail platform. Today, Taobao and Tmall have become the most used online entrepreneurship platforms. The following is a business guide on how to sell on Tmall and Taobao to effectively penetrate the Chinese market.
Why foreign brands should consider selling on Tmall and Taobao?
China has a huge number of online shoppers
According to China Internet Network Information Center (CNNIC), the number of Chinese internet users reached 1067.1 million in June 2022. It shows an increase of 56 million new Internet users from the same month in 2021. The Internet penetration rate in China also increased to 74.4 percent in June 2022, compared to 59.6 percent in 2018.
China’s e-commerce market has experienced rapid growth, driven by increasing internet penetration, rising disposable incomes, and a shift towards online shopping among consumers. According to a report by eMarketer, online retail sales in China reached $1.94 trillion in 2020, representing a growth of 27.5 percent compared to the previous year. Looking ahead, the trend is expected to continue, and online sales growth in China is projected to remain robust over the next few years. By 2023, eMarketer estimates that online retail sales in China will reach $3.33 trillion, representing a compound annual growth rate (CAGR) of 16.0% between 2018 and 2023.
Why sell on Taobao? Low cost and low operating risk
Starting a business on Taobao offers several benefits that can help new sellers overcome traditional business obstacles. Since sellers do not need to operate physical stores to gain new customers, there are fewer space limitations, management risks, and inventory pressure issues. Sellers can conduct their business operations without the logistical complexities of storing and managing physical inventory within a confined space. With Taobao’s logistics program, vendors have the liberty to store their products in any location of their choice and ship the goods to a central warehouse upon sale. Additionally, selling on Taobao eliminates the need to pay for traditional business expenses such as rent, storage, and personnel management fees. As a result, the cost per product can be reduced, leading to lower prices for consumers.
Since product prices are a crucial factor in consumer buying decisions, Taobao has a clear advantage over traditional brick-and-mortar shops in terms of lower operating costs and risks, which translates to a lower price for the buyer. This advantage is likely to attract a large number of consumers quickly, making it a profitable market entry method for businesses.
Reduce strategic risks through customers’ feedback
For foreign brands looking to enter the Chinese market, Taobao can be an excellent platform to adapt their marketing strategies based on consumer feedback and market information. This can help reduce the risks of strategic mistakes and cultural misunderstandings that often come with entering a new market. One example of how opening a Taobao store can reduce the risks of strategic mistakes is through the use of customer feedback. For instance, if a foreign brand launches a new product in the Chinese market and begins selling it on Taobao, they can monitor customer reviews and ratings to determine how the product is being received. If the product receives positive feedback, the brand can increase their marketing efforts and expand their product line to meet the demand.
Additionally, Taobao provides foreign brands with a wealth of market information, such as data on consumer behavior and preferences, which can help inform their marketing strategies. This data can be used to identify trends in the market and adjust marketing strategies accordingly. For example, if a foreign brand notices that a particular product category is particularly popular on Taobao, they may choose to focus their marketing efforts on that category to better reach Chinese consumers.
Overall, by opening a Taobao store, foreign brands can leverage customer feedback and market information to make more informed marketing decisions and reduce the risks of strategic mistakes in the Chinese market.
Alipay, the secure payment system used on Taobao and Tmall
Like Taobao, Alipay is a service founded by Alibaba group. Alipay is a secure payment system provided by Alibaba Group and is used as the primary payment method on Taobao. It is a reliable third-party payment platform that offers a simple, safe, and fast solution for Chinese e-commerce online payment. If you want to know how to trade on Tmall, it is essential to understand how Alipay works. With Alipay, when a buyer purchases a product, the payment is held in escrow until the product is safely delivered. This feature provides a safety net for the customer, ensuring that their payment will not be released to the seller if there are any issues with the product.
The primary objective of Alipay is not only to ensure the safety of online payments. It also to foster mutual trust between buyers and sellers through the platform which reinforces Chinese business culture of trust and friendly relationships. Setting up a Taobao store is just the beginning—the next step is to focus on marketing to reach potential customers.
Developing a marketing strategy on Taobao and Tmall
Pay attention to the keywords
When searching for specific goods, online shoppers typically utilize the “search” bar, making the keywords you define for each product crucial. However, it’s paramount to note that each buyer may use varying keywords when searching for the same item.
So, how can your Taobao or Tmall business appear on the first page of search results? It’s essential to incorporate a range of relevant keywords, including the brand, model, product features, promotions, product characteristics, adjectives, shop name, and credit rating. Developing effective keyword combinations, such as store name + brand + model or promotions + commodity characteristics, requires research on the most frequently searched terms on Taobao, as well as insights from native Chinese speakers and industry experts.
Connect with the Taobao community
Effectively utilizing your community on Taobao can greatly benefit your business. As a platform connecting buyers and sellers, engaging with your audience can increase their loyalty and facilitate networking. By posting hot discussion topics, you can step up the attention rate, raise awareness for your shop, improve organic views and ultimately expand your business.
Additionally, popular discussion posts have the potential to go viral and can be ranked higher within the Taobao community as well as on external social media sites, resulting in increased visibility for your shop. Consistently creating quality content can establish your shop as professional and trustworthy in the eyes of buyers.
Launching timely and relevant promotions on Taobao and Tmall
Price value is still one of the most crucial factors in determining the demand for goods. Thus, discount promotion is one of the most effective ways to attract buyers. Taobao offers a specific solution for promotion activities through a specific page dedicated to showing the best promotion offered by the Taobao shops.
Taobao shop owners can also leverage festivals like Valentine’s Day, New Year’s Day, Spring Festival, and especially Single’s Day (Double 11) to promote their products, as these occasions hold significant importance for online shopping. These festivals are marked by a significant increase in online shopping among Chinese. Offering special promotions during these days can facilitate a foreign brand to market entry as well as demonstrate a good understanding of China’s culture and shopping customs.
Gain the confidence of your potential customers
Brand image is a critical factor to influence consumer behavior. In a virtual online mall, the brand’s image is even more crucial. Even if the low price and attractive communication can temporarily catch the eyes of the consumer, poor quality goods, services, and the publication of false information will contribute to losing customers. This is especially true in China where trust and safety are culturally paramount criteria of decision.
According to the marketing specialist from Double V. Consulting, having only positive product reviews can signal to consumers that your brand is buying fake reviews. To build a positive reputation and reinforce trust with customers, you need to encourage satisfied customers to leave positive feedback and ratings, which can help attract more customers to your store.
Additionally, you can participate in Taobao’s seller certification programs. Taobao offers various seller certification programs that can help build trust with customers. These programs include the Verified Seller program, the Good Faith Seller program, and the Super Seller program. By participating in these programs, sellers can demonstrate their commitment to providing high-quality products and excellent customer service.
Market your brand beyond Alibaba’s platform
Businesses willing to sell in China should not limit their marketing efforts to the platform they sell on. However, with a country so vast, one can wonder where to concentrate their marketing efforts and still promote their brand efficiently. The answer is social media.
According to China Internet Watch, 780 million Chinese netizens used WeChat Moments in 2022 and 586 million used Weibo on a monthly basis. Douyin (China’s TikTok) had 780 million monthly active users in 2022 and represents great marketing opportunities for all kinds of brands. With users pools this large, viral marketing campaigns and paid advertisements have a lot of potential for your brand to take off.
Chinese influencers also represent a great opportunity to market a product online in China. Key opinion leaders and consumers (KOLs and KOCs, respectively) have grown in influence in China in the past years. From Bilibili videos to private WeChat rooms and live streams, Chinese consumers rely more and more on social media for shopping. Whether a brand may contact KOLs or KOCs will depend on their need and the type of product they sell, but either way, that option should not be dismissed for a successful marketing strategy.
How to sell on Taobao
Establishing a company on Taobao: how to create your account
Chinese businesses can easily create a new account just by completing the registration form and submitting the application. However, foreign companies are only allowed to sell on Taobao if they have a registered joint venture or foreign-owned company in China. Fortunately, there is a solution to circumvent this issue: creating a Tmall Global store. To do this, foreign businesses simply have to go on Tmall Global and follow the registration procedure. While it has some amount of red tape, the process is far shorter and cheaper than setting up a foreign company in China.
How to register as a merchant on Taobao in 6 steps:
- Sign up for an account on Taobao. You will need a valid email address and phone number.
- Log in to your Taobao account and complete the seller registration process.
- Link your Taobao account to Alipay, which is the preferred payment method on the platform. You may need to set up an Alipay account if you don’t have one.
- Verify your identity and business details as required by Taobao. You may be asked to privide a business license.
- Decide whether you want to open a store on Taobao or Tmall. Tmall typically requires a higher level of verification and is more suitable for well established brands.
- Set up an Ali Wang Wang for customer service.
- Customize your store’s name, logo, and design. Add product listings with detailed descriptions, images, and prices.
- Once your store is set up and your products are listed, you can start selling to Chinese consumers.
Key differences between how to sell on Taobao vs. how to sell on Tmall
When it comes to selling online in China, two major platforms stand out: Taobao and Tmall. While both platforms are part of the Alibaba Group and share some similarities, there are also key differences between these two platforms. Taobao is a consumer-to-consumer (C2C) marketplace where individual sellers can list their products for sale, while Tmall is a business-to-consumer (B2C) platform that only allows brands and authorized resellers to trade their products. This means that while Taobao is a more open and accessible platform, Tmall provides a more controlled environment with higher standards for product quality and authenticity.
Additionally, Tmall provides more support for brands with marketing and promotion, while Taobao is more suited to small businesses and individual entrepreneurs. Even though they are two separate entities, the Taobao app features both Taobao and Tmall stores. Therefore, companies selling on Tmall can capitalize on the online traffic from Taobao. Overall, the key to success on either platform is to understand the nuances of how to sell on Taobao vs. how to sell on Tmall and tailor your approach accordingly.
How to sell on Taobao as a foreign company
- If you’re a foreign company planning to expand your business in China, it’s essential to have knowledge on selling through Tmall and Taobao. Fortunately, setting up a store on Taobao has become more convenient with the introduction of Tmall Global. These platforms enable you to bypass the lengthy process of establishing a physical business in China.
- Even if your business is already established in China, having a Taobao or Tmall store gives you access to millions of potential online shoppers.
- With low costs, low maintenance, and low risks due to secure payments, there are almost no downsides to maintaining a store on Taobao.
- However, due to the fierce competition, it is essential to have a solid marketing strategy that focuses on building community and brand awareness. By taking these key takeaways into consideration, you can maximize your chances of success when venturing into how to sell on Tmall and Taobao.
Author: Hannah Wu
