An internal Alibaba letter released on January 6th from Trudy Dai, the newly named Head of Digital Commerce at Alibaba, announced that the back-end operations of Taobao and Tmall will be unified. The previous Taobao Business Group and Tmall Business Group have been reorganized into three new operation centers for both Taobao and Tmall, respectively focusing on platform strategies, user development, and industrial development for merchants. This marks the unification among users, merchants, and platforms. The changes aim to “upgrade user experience, improve client values,” and “encourage innovation,” according to the internal letter.
What is the difference between Taobao and Tmall?
Tmall and Taobao are both online commerce platforms owned by Alibaba Group. Taobao, which started as a C2C e-commerce platform, was more like a “bazaar” in the initial stage. It is a platform where you can find all sorts of items, however, the services provided are uneven due to the merchant diversity. Following the e-commerce trend, B2C e-commerce platforms represented by 360buy (also known as JD.com) sprang up. They stood out with the smooth shopping experience in the combination of high-quality products and self-operated logistics services. To offer high-quality service, Tmall spun off from Taobao. It was first introduced as Taobao mall in April 2008 and launched its independent web domain in November 2010. The key difference between Tmall and Taobao is that Taobao offers both C2C and B2C sales, while Tmall is exclusively focused on B2C. Tmall differentiates its merchant’s listings, which are either brand owners or authorized distributors, from Taobao’s C2C merchants. This approach eliminates the risk that products of dubious quality and unsatisfying shopping experience:
- Flagship strategy: Tmall sellers need to provide all appropriate documentations to confirm reliability and existence of the organization, company, manufacturer, or brand.
- Sellers are required to put a larger number of guaranteed deposits on Tmall than on Taobao.
- Decent services: Tmall sellers are supported by Taobao merchant services such as quality infrastructure and logistics to offer smooth shopping experience.
- Operational regulations: Tmall sellers are required to guaranteed for example the “Seven days no reason to return”, while it is not offered by default on Taobao
In June 2011, Taobao and Tmall became two independent businesses under Alibaba Group. Following the differentiation of the two platforms, premium merchant support and customer services were provided in Tmall. The move was said to be necessary for Taobao to “meet competitive threats that emerged which the Internet and e-commerce landscape has changed dramatically”.
With the boom of the Mobile Internet, PC e-commerce gradually transforms into mobile e-commerce. Taobao has always enjoyed a larger user base than Tmall. To leverage the platform advantage, Taobao features both Taobao and Tmall stores, which means all Tmall listings can be found in Taobao’s APP. However, the back-end operations remained separated between Taobao and Tmall.
Taobao and Tmall are the leading players in the giant Chinese e-commerce market
The Chinese e-commerce market, identified as the world’s largest since 2013, continues its massive growth. According to an e-commerce report from China’s Ministry of Commerce, national online retail sales reached 11.76 trillion yuan in 2020, with an increase of 10.9% over the previous year.
Taobao and Tmall are recognized as the two leading Chinese e-commerce players, which jointly account for 55.3% of the Chinese e-commerce sales in 2020.
In the September Quarter 2021 Results, Alibaba reported 1.24 billion total annual active consumers in Alibaba’s global ecosystem in the 12 months ended September 30. It consists of 953 million domestic consumers and 285 million international consumers, with a quarterly net increase of 62 million. The same report also disclosed that the total commerce revenue stood at 171.17 billion yuan, up 31% from a year ago but a decline of 5% from the previous quarter. The muted growth of Taobao and Tmall can be explained by the fierce e-commerce competition in the Chinese market. The close competitors of Taobao and Tmall are growing fast as well. Below is a glance at the financial results of competitors in the third quarter ended September 30, 2021:
- JD.com reported net revenues of 218.7 billion yuan, a 25.5% increase from the same period of last year.
- Pinduoduo reported net revenues of 21.5 billion yuan, a 51% increase from the same period of last year.
Unification of Taobao and Tmall: an answer to fierce competition
Every growing market will continue to thrive on competition and a variety of e-commerce modes, like live-streaming e-commerce, have emerged in the market. The conglomerate of Taobao and Tmall has been challenged by not only the industrial competitors in recent years but also short-video platforms such as Kuaishou and Douyin. The MAU (Monthly active users) of short video platforms has surpassed the traditional e-commerce platforms in August 2021 – the MAU of short video platforms has reached 907 million while the traditional e-commerce platforms have only 723 million MAUs. In 2020, more than 500 billion yuan worth of goods were traded through Douyin, a figure more than triple that of 2019. Undoubtedly, Douyin has become a strong competitor that the traditional e-commerce players cannot neglect.
Facing fierce competition, Alibaba is seeking a breakthrough where the advantages of Taobao and Tmall as e-commerce platforms can be further strengthened. With the maturity of the industry and the growth of small and medium-sized merchants, the platform mechanism of Taobao and Tmall has been unified to leverage the resources of the ecosystem.
What will come next after Tmall and Taobao’s merge?
One rationale behind the back-end operations overhaul is to break the boundaries between Taobao and Tmall, which could lead to better services for merchants and a superior shopping experience.
A user experience booster
The unification of Taobao and Tmall will be followed by the integration of a number of sub-platforms on Taobao and Tmall, including Juhuasuan, Taobao Deals. The journey of online shopping will be well-connected and smooth within the Alibaba e-commerce ecosystem.
Taobao and Tmall will also share the same ground for promotion campaigns. The annual shopping festival Single’s Day operated by Taobao and Tmall generated giant sales every year – Alibaba reported a total gross merchandise (GMV) of USD 84.54 billion in 2021. Thanks to the upcoming joint back-end, the promotional activities such as pre-sale and coupons will apply the same in both Taobao and Tmall.
Additionally, the establishment of the user operation and development center will connect the merchant tools such as membership system, logistics, and store products, forming a complete closed-loop around user experience.
Back-end operation support for brands
In the past, the differentiation strategy of the two platforms accumulated various service capabilities facing different merchants to provide long-term support. Merchant services such as Taobao Partner and Tmall Partner are now open to merchants of all sizes. The growth space of new brands is expanded. The ability to serve large-sized branded merchants of Tmall is shared with the small and medium-sized merchants.
What brands need to know about the unification of Taobao and Tmall
- Taobao and Tmall are still the leading players in the Chinese ecommerce market
- Listings in either Taobao or Tmall will enjoy a larger reach, thanks to the joint back-end mechanism
- Unification of Taobao and Tmall will boost user experience by presenting the common ground for listings and promotion
- An upgrade on the merchant service support thanks to the establishment of the new operation centers
- Check out the article published by daxue consulting if you need some tips on setting up a store on Taobao and Tmall