If you are selling a physical product, one of the best ways to find out what is already available is to research Taobao (Taobao.com), the primary C2C marketplace in China and its B2C equivalent, Tmall (tmall.com). Both platform belong to Alibaba and are similar to Amazon but much bigger.

Chinese Marketplace Sites Search

As mentioned before, none of Taobao or Tmall results will appear in Baidu searches, this is why it is important to research this channel separately.

While typing the search term (“sunglasses” in our example), more results will be shown as you type in, giving some insights on what other terms are frequently searched for (of course, you need to understand Chinese to make sense of it):

Additional search terms may give some more clues on what else you should be researching.

Taobao will also display a multilevel filters allowing for more targeted searches. In case of “sunglasses”, the results can be filtered by glasses shapes (oval, round, square, aviator, rectangular etc.), lens color, suitability for different type of face, gender and so on as well as price range.

The results, each with an attractive product photo, short description and the price, will be displayed right below the filters:

Typically, most results will be linking to either Tmall (like in the case of fashion items) or Taobao itself. Tmall is a type of an upscale version of Taobao with a strict policy against fakes. In the physical world, Tmall can compared to a branded department while Taobao is more of a bazaar style market.

How Taobao can help with the market research? First of all, it is the best to research product prices and price ranges for different subcategories of products.

Secondly, you will be able to better understand the overall popularity of the product category, competition and sales channels.
Finally, seeing so many competing offers grouped together may give you more insight on how yours could fit in the mix.
Side note: occasionally, you may even find your own products sold by someone else that you may not be aware of.

Stay tuned for the upcoming post on how to perform basic market research with Chinese social media.

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5 unique Taobao app features that drive its mobile sales

Picture search function

Imagine you are in a store looking at a really nice watch that would be just perfect for you. Unfortunately, you can’t be sure that you are getting the best deal on the price. That’s when Taobao app picture search comes really handy. All you have to do is snap a photo directly from within the app, or load previously taken image, and within seconds Taobao app displays the matches from its vast database.

This powerful functionality enables users to instantly compare online prices while browsing for goods in a physical store or, practically, anywhere they come across something they would like buy. In most cases, Taobao prices will also be lower which, in effect, threatens to turn some traditional retailers with brick and mortar stores into nothing more than showrooms.

Package tracking system

All online marketplaces have some type of shipment tracking system but only Taobao app takes it all the way to the new level. As soon as a seller ships the product you have just bought, it will be tracked at every point along its journey regardless of what delivery service was used.

Tracking packages is being updated within minutes which makes it really easy to figure out where it is and when it will be delivered. Finally, when it arrives, Taobao app will send you a push notification and, in some cases, SMS message as well.

Alipay payment integration

Alipay, Taobao payment system, is the principal technological enabler of the platform and the integral component of Chinese ecommerce landscape. Alipay provides an extremely easy and secure way to pay for purchases both online and offline.

Practically, everyone with a smartphone and a bank account in China has Alipay account which is also widely used to pay for purchases in physical stores, restaurants and even in the government offices. When used within China, Alipay doesn’t charge any fees except for very large transactions. Paying with Alipay is also very secure, convenient and fast. In effect, Alipay acts as a personal bank account in and of its own, complete with monthly statements and spending breakdowns.

Although, some Taobao vendors still accept cash on delivery, it is hard to imagine Taobao achieving such popularity without Alipay being its integral part.

AliWangWang instant chat

Chinese online consumers overwhelmingly expect Taobao vendors being able to answer questions and reply to inquiries within the shortest time possible. Also, the vendors realize that responding to inquiries from potential buyers in real time significantly increases chances of closing the sale. This is why Taobao integrated live chat app called AliWangWang, has become another important component of Taobao platform.

Customers can initiate chat sessions with sellers directly from the mobile app while sellers can use AliWangWang as a stand-alone app running on mobile or computer. It offers an easy way for both parties to communicate and not only serves as an effective pre-sale tool but also goes a long way in building trust.

Push notification remarketing

Almost all mobile apps use push notification in one way or the other. What makes it different in Taobao case is that the push notifications are tailored to each user and are made relevant to them. The way this is done is by taking into account users’ product search history, content of their wish list and past purchases in order to deliver tailor made messages that are most likely to pique their interest.

Also, unlike in the case of other apps, users tend not to disable push notifications from Taobao on their phones because they don’t want to miss messages related to product deliveries or any issues related to their purchases in progress

Mobile app makers are well aware that sending too many push notification can quickly annoy users. This why Taobao typically limits them to no more than once per day.

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Here are just some of the most impressive nuggets on what has happened on one minute on China Internet:

• Almost 400,000 people log in to WeChat app every minute;
• 625,000 Youku-Tudou videos are being watched;
• Almost 65,000 Weibo tweets with over 50,000 of them containing images;
• Over 4 million of Baidu search queries;
• $1.1 million is spent on Taobao or Tmall;

China Internet in 60 seconds:

(credit to TechInAsia)

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Singles day is an informal shopping festival in China that has originally celebrated people who are still single. It falls on 11/11 which is meant to symbolize people who are not in a relationship. Since it started back in 2009, it has become the largest shopping event in China, akin Black Friday or Cyber Monday in North America, although much bigger.

Originally, the event was started by Alibaba which began offering discounts on its main shopping platforms, Taobao and Tmall, that lasted for 24 hours. The festival was picked up by other Chinese e-commerce sites like JD.com and now, increasingly, by traditional brick-and-mortar stores. Most of the action still goes online via e-commerce sites and mobile apps.

Every year, the festival kept getting bigger but this year, there were concerns that  it might actually slow down a bit. The main worry was that slowing Chinese economy and the trade war with US would dampen shoppers’ enthusiasm.

“It is possible that there will be a slowdown in growth for Singles Day sales, given that they have had exponential growth in the past,” Xiaofeng Wang, an analyst with Forrester, said before the event.

This did not happen. In fact, 2018 Singles Day raked a whopping $30 billion in the first 24 hours, beating the last year record of $24.2 billion.

Here is the latest data compiled by Statista:

Similar North American events are dwarfed by China’s 2018 Singles Day – the sales on Thanksgiving Day combined with Black Friday are about 5 times smaller.

Attempting to capitalize on seemingly insatiable appetite of Chinese shoppers for foreign products, the event was picked up by platforms outside of China. A recent survey from research firm Oliver Wyman found that 57% of China’s online shoppers consumers were planning to buy goods from overseas during 2018 Singles Day. The top countries that were most popular with the consumers are Japan, USA and Australia.

In addition, Alibaba’s South East Asia subsidiary, Lazada, was offering Singles Day discounts in Singapore, Malaysia, Indonesia, Thailand and Vietnam.

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In the first half of 2018, more than 85 percent of all Chinese ecommerce sales in retail trade were shared by ten major players on the market. Recently, the market witnessed the growth of several smaller e-commerce retailers such as Pinduoduo and Gome. However, Alibaba consistently occupies the highest place over the years, with a 58.2 percent share of all e-commerce retail sales in 2018.

Alibaba.com was originally launched in 1999 as a B2B e-commerce portal to connect Chinese manufacturers with foreign buyers. In 2003, the service expanded to C2C with the launch of the largest ecommerce marketplace Taobao and in 2008 a B2C online retail platform Tmall, which are the current market leaders in their respective business segments.

In the fiscal year ending March 31, 2018, the annual revenue of the Alibaba Group amounted to approximately 39.9 billion US dollars (an increase of 58 percent) with a net result of 9.79 billion US dollars. The annual revenue of the core commerce company rose by 60 percent to around 34.12 billion US dollars, the highest sales growth since the IPO. In 2018, Alibaba retail markets recorded 28 percent annual growth in total gross commercial value (GMV), driven by Tmall and its robust physical goods, GMV growth in clothing, FMCG, household appliances and consumer electronics categories. The following graph compiled by Statista illustrates the current state of Chinese ecommerce sales in 2018.

Chinese ecommerce sales in 2018

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Alibaba still dominates Chinese ecommerce with Taobao for C2C and Tmall for B2C. The other major player in B2C space is JD.com, currently this company holds about a quarter of the total market.

WeChat Weidian is another newcomer that is quickly gaining traction in Chinese m-commerce but it is not featured in this infographic due to lack of available data.

Other platforms in China ecommerce landscape are significantly smaller with market share in single digits. They also tend to be more specialized – for example, Suning and Gome mainly sell appliances and electronics while Vancle is a clothing branded retailer.

China ecommerce landscape

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In the last few years, Chinese Singles’ Day or Guanggun Jie (光棍节) has become the biggest China shopping festival. This is the day when young people celebrate the fact of being single. The date, November 11th (11/11), is chosen because the number “1” resembles a single individual. This festival has become the largest offline and online shopping day in the world with ecommerce operators like Alibaba and JD (JingDong) reaching new heights every year.

This year was another record settings one. For example, during the festival, Alipay has registered processing 256,000 payment transactions per second, reaching unprecedented number of 1.48 billion transactions in 24 hours. Another remarkable fact is that 90% of purchases were done via mobile app rather then from PC.

The festival has also resonated globally with more participating locations outside of China than ever before. Alizila, the Alibaba news aggregation, listed top 5 Countries/Regions Selling Cross-Border to China by GMV (Gross Merchandise Volume) were:

1. Japan
2. United States
3. Australia
4. Germany
5. Korea

Top 5 Countries/Regions Buying Cross-Border from China by GMV were:

1. Russia
2. Hong Kong
3. United States
4. Taiwan
5. Australia

Here is the infographic on the largest ecommerce platform, Alibaba, that the folks from Alizila have put together:

China shopping festival 11.11.2017 in numbers:

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Communication, browsing mobile internet, listening to music and watching videos are the most common activities of Chinese mobile users. Not surprisingly, companies who traditionally dominated those niches on the internet have also been the leading providers on mobile.

Interestingly enough, not only that there isn’t a single non-Chinese app in the top 10 list, they don’t even make the first 50. In fact, the only foreign app that enjoys some popularity in China is Google’s mobile Chrome browser.

Top 10 Mobile Apps in China

#1: WeChat

Having been installed with almost every Chinese smartphone, WeChat is the undisputed leader of mobile apps in China. WeChat user base has recently passed 700 million and continues growing. Tencent, WeChat developer, is one of the most innovative Chinese tech firms and is part of the so called BAT – the acronym for Baidu, Alibaba and Tencent.

#2: QQ

QQ is another hugely popular messaging app that has been the flagship Tencent product before WeChat. In fact, it is still the most popular communication tool on desktops and, is, perhaps, the most well known Chinese internet brand. Overall, its migration to mobile has been largely successful as offers a simple alternative to WeChat, although most people still use both. In fact, you are unlikely to meet a Chinese person below 50 who doesn’t have a QQ number.

#3: Mobile Baidu

While Baidu holds “only” about 60% of desktop search market in China, it completely dominates mobile with about 90% market share. Baidu mobile app is the third most used mobile app in China. It is also well designed, very fast, and accepts multiple input modes. Baidu is another part of BAT mentioned earlier.

#4: Taobao

When Chinese are not chatting or searching mobile net, they are shopping. Browsing Taobao app, is one of the most favorite pastimes for millions of people and it is often highly addictive. It is not uncommon to notice people shopping on their phone with Taobao app while eating, riding a subway or even driving…

#5: UC Browser

UC Browser is a mobile browser developed by Chinese mobile Internet company UCWeb. UC Browser claimed to have reached 500 million users in March 2014 majority of which were in China. It is still the most popular mobile browser here despite 2015 leaks linked to whistleblower Edward Snowden revealing some serious security weak points of UC Browser.

#6: QQ Browser

QQ Browser is the second most popular mobile browser across all mobile platforms. Tencent, has been leveraging their browser app installation using their other popular platforms mentioned earlier.

#7: Tencent Video

Watching videos is another most popular activity of Chinese mobile users and QQ video has been their platform of choice. Tencent video app has recently surpassed YouKu, the most popular Chinese video platform, in terms of mobile market share. Most commonly, it is used for watching TV soap operas and TV game shows while on the go.

#8: Sogou Mobile Input

Initially released in 2006, Sogou Pinyin is the most popular Chinese input software. It makes use of its search engine techniques which are the analysis and categorization of the most popular words or phrases on the Internet. Its mobile app version can be used with both Android and iOS devices offering dozens of colorful keyboards with hundreds of popular emojis and stickers that are so popular with Chinese mobile users.

#9: 360 Mobile Security

This app serves as both antivirus and memory management app and is most popular with Android devices, although it can installed with iPhones as well. It was developed by the second most popular Chinese search engine, Qihoo, also known as 360 Search. Qihoo 360 security software has a large install base on desktop, largely thanks to its free antivirus software.

#10: YouKu

YouKu is the largest video hosting platform and is among most popular video mobile apps in China. Although, it has been losing its mobile share market to Tencent, YouKu isn’t too far behind in terms of popularity. Often associated with pirated shows and films in the past, YouKu has largely cleaned up its act and now claims to only host legitimate content. Millions of Chinese tune to YouKu for their favorite TV shows everyday.

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China is one of world’s fastest urbanizing society in absolute terms. Although decreasing every year, approximately 45% of Chinese still live in rural areas which comes to about 600 million people. 

Taobao villages refer to the entire communities of rural food producers who turn to Taobao to sell their produce. As defined by AliResearch, Alibaba’s research division, a “Taobao Village is a cluster of rural e-tailers where at least 10% of village households engage in e-commerce or at least 100 online shops have been opened by villagers; and total annual e-commerce transaction volume in the village is at least RMB 10 million ($1.6 million)”.

Alibaba is keen on further developing Taobao villages

Based on 2014 AliResearch’s study, the number of Taobao villages have exceeded 70,000 and provided 280,000 job opportunities in rural China that year. Since 2014, the number of such communities only continued growing. Alibaba says that it plans to invest $1.6 billion in the effort to spread rural ecommerce through 2019, with the ultimate goal of opening 100,000 Rural Taobao centers.

Government is also interested in connecting more rural population to ecommerce economy in the hopes that this will stem the flood of villagers moving to large cities. Rapid increase in migrant population is bringing a large number of social problems giving quite a bit of headache to local authorities. If rural population would see more opportunities back home, less will choose to move to the cities.

In accordance with this approach, the ministries of commerce and finance have allocated $300 million to 200 rural counties to spend on warehouses, training and anything else that might push the project forward. According to Sun Lijun, general manager of Rural Taobao, “when we send in one Alibaba employee, the government deploys 10 people.”

There are stories about farmers in their 60s opening ecommerce stores and rapidly growing their online businesses while pulling entire communities out of poverty. Such was the story of  Luo Bishui who used to just grow potatoes, but now he is opening an eight-room guesthouse for tourists. This also shows the potential beyond just selling produce online but also developing ecotourism in country side.

Taobao villages also tap into growing demand for healthier organic produce at affordable prices. By moving such sales online, sellers no longer need the middle man and can now reach this market directly. There is even a growing trend of people moving from the cities back to their home villages to develop online businesses. Although, they often earn less, money go much further in rural areas than in the cities.

Some of rural Taobao sellers manage to do even better. Liu Dongdong, a Yonghe native and then university graduate working at a building and decorating firm in the provincial capital of Taiyuan has decided to move back to his poverty stricken village to setup an online business of selling Chinese red dates. Even in the off-season, he now makes 20,000 yuan (U.S.$3,000) profit a month from selling red dates online, far more than he made working in Taiyuan.

When villagers make money on Taobao, they also tend to use the platform to buy supplies, such as fertilizer etc. This, in turn, creates a rural ecommerce ecosystem effect, driving the demand side of the market. Once rural population becomes more accustomed to do business online, they continue using Taobao for all their other shopping needs, something that Alibaba is keen on promoting.

Alibaba is not alone in their efforts to develop rural ecommerce market. JD.com, Alibaba’s main competitor, sent a team on a six-month tour of the country, showing locals how to buy products on its site.

One of the main obstacles to Taobao villages development is the so called “digital divide”. Broadband access is still limited in rural areas as opposed to the cities. Majority of villages still have only 1% of households connected to broadband. Internet penetration in rural China is only 30%, compared to over 60% in urban areas.

In response, central government has set a target of bringing unlimited broadband to 98% of China’s administrative villages by 2020. This will, undoubtedly, help to grow China’s rural ecommerce market exponentially.

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As this infographic illustrates, increasing number of Chinese online shoppers now put higher value on branded goods over lower priced generics. In fact, sales of not branded goods have dropped to 35% in 2014 compared to 42% in 2011, while sales of branded products have increased to 65%. This trend is certainly good news for foreign brands targeting Chinese online shoppers.

At the same time, the rise of branded ecommerce in China hasn’t been affecting every brand equally. In fact, the share of top brands sales has seen a slight drop of 2% while the sales of lesser known brands increased by 4%. Regional and pure online brands have shown the largest increase of 6%.

How to succeed in branded ecommerce in China?

The infographic gives the following advice:

Beginners:

• Build standalone online marketing and sales systems, supplemented with a small digital sales team.

Intermediates:

• Integrate online and offline channels to improve consumer engagement;
• Rely on full-function digital team or an integrated team for online and offline channels;

Experts:

• Disrupt established business models to create innovative, consumer-led products and experiences;
• Create project teams focused on multiple consumer segments.

Here is infographic:

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