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Taobao.com

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by

Elaine C

on 16 December 2013

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Transcript of Taobao.com

GROUP 4
CHEN XI
GU YUAN
XIE CAN RAN
YIN CHUAN BIAO
WANG XI LING
ZHU ZHENG QIN
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Outline
Introduction
Analysis





Problems & Fixing
Suggestion & Conclusion
Q&A

-General Environment
-Five-Forces Model
-SWOT
-Resource-Based View
-Business Model
-Life cycle


General Background

Time Line
Enterprise Culture
& Social Evaluation
2011
2013
2012
2006
2003
Found by
Alibaba Group
Online shopping website
B2C, C2C, group-buying, auction
Over 760 million listing products
GMV exceed 1 trillion yuan
Services & Features
More
Services
Than these...
Taobao University
Happy Taobao, etc.
Official communication tool
Chat between buyer and seller
Digital evidence
(Trademanager)
Official online payment platform
Release payment when buyers
are satisfy
Support various services payment
Enable users to finance their wealth online
Free of charge
Credit system

High quality
Features
-Real name registration system
-Buyers recommendation
-Mutual evaluation
-Thoughtful guideline (Taobao university, real time help center, etc.)
Establishment
Became the largest online
shopping website in Asia
Divided into
Taobao
Tmall
e-tao
Tmall created record that
transaction amount reached to
10 billion yuan within 13 hours
Got the fund
third-party e-commerce
platform management qualification
Integrity, Active and Quick
Create millions of job opportunities
for the society
General
Environment
Demographic Segment
Age and Population Structure
-Covers all age level
-Largest Population and
Spread Widely → Huge Demand

Economic Segment
National Income Increase
-Economy develops rapidly → National Income ↑ → People‘s Purchasing Powers ↑
→ Need a Bigger Market

Financial Crisis and Price Advantage
-China still suffer from the financial crisis
- Price: Online Shopping V.S Traditional Retail Shopping

Socialcultural
Segment

New Fashion
- Ages between 16 to 35 are the main consumer → Pursue Fashion

Technological Segment

Development of the Internet and Information Integration
-Development of the Internet → More Convenience
-Internet give a channel for industry
-Online chatting platform become more mature
→ Information are more integration

Legal/Political Segment
Government Monitor
Government Support

Aging Structure for Taobao
AliWangWang
Five-Force Model
The Intensity of Rivalry among Competitors
Keep market share and has increasing trend in each year.

Major competitors: Eachnet and Paipai

Oligopoly Pattern
-An oligopoly is a market or industry is dominated by
a small number of sellers 


The Threat of New Entrants
In order to construct an online shopping platform
→ Require a lots of capital
→ Maintenance cost and logistic support in long run
→ Create a high barrier for the new entrants

Baidu → New Entrants, build up by big corporation
→ Market share is not high → Taobao’s position is
safe

The Bargaining Power of Buyers
Buyers usually buy products in online are belongs to normal goods
→ Buy goods at different sellers easily → The
switching cost is low


The amount for buyers to purchase is too small
→ The treat of backward integration by buyers
is low

The Bargaining Power of Supplier

Supplier does not actually “exist”

The Treat of Substitute Products and Services

The major substitute products and services are retail store

LOW
LOW
LOW
NEUTRAL
Supermarket
Like Wal-Mart, plenty of goods, such as food,
vegetable, dairy, etc

Convenience Store
Like 7-11, Save the customer’s time

HIGH

Brilliant Market Strategy
-Free Charge Strategy, Attracted a huge customer groups,
Expand market share

Mature Technology
-Instant-Communication software
-Aliwangwang and Escrow Payment solution, Alipay,
which is more safe and convenient, and it get most users’ support.

Advantage of Tangible and Intangible Asset
-For tangible asset, Alibaba Group
-For intangible asset, Excellent brand image and reputation

trengthen
eakness
“Free” to Bring a Heavy Burden
Model Limitation
-Originally design to the China’s
market, expanding market is difficult
due to the model limited

pportunities

The Rapid Development of Online Shopping Market
-Until 2012, China has using the online payment
users reached 167 million, which increase 21.6%
compare with year 2011.
 
Recent Boom in Nontraditional Financial Products
-Yu E Bao, a money-market fund promoted by Alipay.
-Plenty amount of cash flow into Alipay every day →
Making fund investment

hreats
Strong Competition with Others
-C2C mechanisms are easy to duplicate,
-Stabilize their customers → Focus on building
customer loyalty

11.11
External
Internal
Intensive
Other
Categories
Credit rating system
Suggestion
Problems:
Lethal loop
Spurious rating
Improvement
Improvement
Extensive
Development mode
Conclusion
Relying on rapid Internet development in China
Taobao kept a smooth sailing for a long time.

Many competitors outside and drawbacks inside
Taobao begins to introspect and contemplate.

Opportunities always lie within crises
A further step towards a first class C2C platform.
Chinese online shopping industry will get more
mature.
Problems &
Fixing

Taobao crack down the bad sellers almost every day.
As of January 11 2012, Taobao did with the cases about infringement of intellectual property up to 82 million, punished 79 million sellers.
On November 28, 2012, Taobao announced crackdown data of 11 months in 2012.
In 2013, Taobao even did more.
Crackdown
Violation Points System

If deduction of the points approached to 48 points, the sellers needed to close the stores.
Since 2013, If the sellers violate again, they will be deducted by 24 points.
If the sellers use multiple accounts to repeat selling fake products, they may face the deduction of 48 points.
Many scholars believed that in the future B2C will become the most important market on the internet.
C2C is hard to control the quality
Shift the attention to Tmall
Attract more sellers and buyers
Decrease the inventory
Scale effects
Increase the visibility

Yu Ebao is a good try
On October 31, 2013, CRSC issued a third-party e-commerce platform operating qualification license.
In the afternoon of November 1, 2013, Taobao started its fund financial management channel.
Outcome
The crackdowns sometimes made mistakes
The small sellers got together to attacked some of the big sellers
Bought many hot selling goods of the big sellers but asked for the refund after
Outcome
On November 11, 2012, Taobao single-day trading volume reached 19.1 billion yuan.
On November 11, 2013, the total transaction of Alipay fixed at 35 billion yuan in the end.
The total transaction volume reached 1.5 billion yuan within 10 minutes, and reached 50 billion yuan within 38 minutes. 
Cheating gate
-Fully refund after the promotions
-Fake “original price”
-Logistics were not powerful enough
The trading volume is still not good enough
People are not ready
Prefer seek more professional website
Outcome
Intangible
resource
Organizational capabilities
Instance service for buyers—AliWangWang
sellers on group purchase can built up their own customer service center
Taobao’s customer service center--self-service, telephone service and online cloud service
Resource-Based View of Taobao
Tangible
resources
Financial resources
Revenue over 8 billion each quarter
1.online advertising
2.Alipay
3.Value-added service
4.Tmall business
Physical resource
Head office in Hangzhou
Service offices in major cities
Organizational resource
Evaluation & control system
Seller-credibility rating system
Technological
resource
Selling shop decorating tools
online shop management service
gallery featured positions
Human resource
3000 employees
Campus recruitment—Ali star project
Taobao management team
Reputation resource
High
Asia No.1, World No.3
Comparative mature in customer guarantee project
occupied more than 80% of the china’s e-commerce market share
Customer services
Taobao is a star company with high market share and growth rate

Taobao’s current stage in Life-Cycle
Growth stage?
- strong increases in transaction volume
- high brand recognition
- trying to built up differentiated products
Maturity stage?
- predominant in Chinese e-commerce markets
- relative mature in technology and organization
system

Product Quality Concern
Poor quality products
-In the previous years, people care more
about price than quality of products
-Taobao always provide cheap commodities
Sell fake commodities
-Hard to check products one by one in a
mass market
-Not only affect seller’s credit, also affect
Taobao’s credit, even worse
Fierce Market Competition
Taobao presents a mass market for customers.
Its competitor’s focus strategy might bring threaten to it.
Taobao’s competitors are making effort to catch up with it.
Jingdong: focuses on online-selling electric appliances
Dangdang: focuses on online-selling books and could provide more book resources for customers
Problems they encounter
Manipulation of Credit Rating System
Manipulating credit rating grade
-Grading system gives customers rights to grade
the shops they consumed.
-But the sellers cannot change it themselves, so they
hire people to buy their goods in very low price in
a large number to make their sell look convinced.
When real customers wrote something bad about
their goods.
-offer some benefit to them if customers change their
review about the goods.
Cont'd
Other firms provide more specific commodities→easier and quicker to find what customers want →switching cost is low→customers will turn to them.
For instance: Buying a cell phone
Awkward situation
Famous for its mass market before

While mass market became a problem

Created by Elaine
Full transcript