Herong Wang' Blog

preface

The traditional economic model is mainly based on the real economy. Customers need to go to the store, pick the goods or services they need, and complete the transaction. However, with the rapid development of the digital economy, people are becoming more and more inclined to choose e-commerce platforms to purchase the required products, which is not only convenient and fast, but also expands the scope of choice to the global field. Therefore, e-commerce platforms such as Taobao, Amazon, and JD emerged as the times require.

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1. Introduction

Back in 2000, when eBay and Amazon were still the focus of business media, it is difficult to imagine that China will soon replace the United States as the global leader in e-commerce. In 2016, China’s online transaction volume has surpassed that of the United States, with 450 million online shoppers and 750 billion dollars a year in total. Among them, Taobao, which was established in 2003, has an 83.9% market share. (Bartleby.com, 2020) In 2006, Taobao became the largest shopping website in Asia. In the same year, Chinese netizens exceeded 100 million. On November 11, 2012, Taobao platform renewed the daily record of online purchases to 19.1 billion yuan. The total turnover of Double 11 in 2019 was 268.4 billion yuan, exceeding 213.5 billion yuan in 2018, setting a new record again. Why Taobao can far surpass eBay and Amazon and become the leader of Chinese e-commerce platforms? This article will analyze how the digital economy helps Taobao succeed and make possible predictions and recommendations for development trends.

2. How does the digital economy contribute to Taobao succeed?

2.1 Integrated instant messaging system—Wangwang

The biggest difference between Taobao and eBay and Amazon are that eBay and Amazon believe that technology can automate customer service and effectively improve service quality, so the communication between buyers and sellers is omitted in the transaction process. (Play.google.com, 2020) However, Taobao believes that the online communication between sellers and buyers is not only a kind of customer service, but also involves the establishment of sales and customer relationships, which helps strengthen the relationship between buyers and sellers. Therefore, Ali Wangwang, an online instant communication system, is designed, which is an integral part of the seller’s online store. Through online communication, sellers can better understand buyers’ needs and guide buyers to put more products into their shopping carts. This also caters to the consumer psychology that Chinese people like to bargain with sellers in the process of consumption.

2.2 Use the Internet to form an online community

Taobao brings together different types of communities for Taobao members who share a common hobby by designing online channels. It’s aesthetically pleasing to Chinese consumers. These communities may be promoting the success story of members’ entrepreneurship, provide some skills acquired by sellers in the process of using Taobao. Or created a series of awards, Taobao members can nominate sellers to participate in the selection, and then the entire community to vote on the candidates. Community members are selected to form an arbitration panel, who has the final say on disputes between buyers and sellers. Make communities more democratic and vibrant. This community, composed of members, managed by members, and working for the benefit of members, plays the role of a virtual government agency, making Taobao more attractive and cohesive, and standing out in the industry. (Brennan, 2018)

2.3 Join Taobao Live Platform

Taobao Live is a live broadcast platform launched by Alibaba in March 2016 and is positioned as a “consumer live broadcast”. It can guide consumption under the introduction of the anchors. By 2019, compared to 2018, the overall live broadcast of Taobao has grown from 60,000 daily broadcasts to nearly 100,000 daily broadcasts. (ZHAO, 2019) In the Double 11 Shopping Festival in 2019, Taobao Live Broadcasting reached the full day of Double 11 last year’s transaction amount in just one hour, and the final day transaction amount was 20 billion yuan. For example, Li Jiaqi is an online celebrity with 50 million followers in Taobao live broadcast. He is called “Lipstick king”. He can drive 3.53 million yuan in transaction volume in 5 and a half hours of live broadcast. he sold 15,000 Lipstick in 5 minutes. (li,2018) The integration of the influencer economy has brought huge transaction growth to Taobao.

3. Conclusion

In today’s globalized digital economy, Taobao is keeping up with the times. The continuous launch of Ali Wangwang, online communities, and webcasting platforms into its sales platform has greatly enhanced the experience of consumers and helped Taobao’s success. However, the opportunities brought by the digital economy will also have a series of risks. Taobao should strengthen the maximum use of data resources, deeply explore customer needs and value, and at the same time strengthen the cooperation of offline companies to develop sustainable profit models Ensure invincibility in the digital wave.

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Reference

1. Play.google.com. (2020). [online] Available at: https://play.google.com/store/apps/details?id=com.ebay.mobile&hl=en [Accessed 5 Mar. 2020].
2. Bartleby.com. (2020). Why Ebay Lost to Taobao in China – the Global Advantage Bartleby. [online] Available at: https://www.bartleby.com/essay/Why-Ebay-Lost-to-Taobao-in-China-P3U25JE36ZYS [Accessed 4 Mar. 2020].
3.  Brennan, C. (2018). Digital humanities, digital methods, digital history, and digital outputs: History writing and the digital revolution. History Compass, 16(10), p.e12492.
4. ZHAO, C. (2019). TAOBAO TECHNOLOGY. [S.l.]: ROYAL COLLINS PUB GROUP.
5. 李芳，2018.互联网+背景下网红商业经济模式研究. pp.9-11.
6. Zhang, R. (2018). Yu Minhong: from ordinary people to become the elite. Zhong Guan Cun