Analysis of taobaos business strategies

August 20, 2017 Business

Taobao is the most celebrated online shopping web site in China. It was launched in 2003 and within two old ages it became the leader of China ‘s on-line shopping market. In order to maintain the leading place in progressively intense competition and prolong its development, Taobao needs to modify and better its schemes for future development. Furthermore, its selling schemes can besides supply a good illustration for other on-line shopping companies. This essay is traveling to do an overall analysis on Taobao ‘s concern schemes by SWOT.

Cardinal words: Taobao ; selling schemes ; SWOT analysis

Taobao operates a web site, Taobao.com which is the largest Internet retail web site in China. Harmonizing to its website the dealing volume on Taobao ( gross ware volume or GMV ) exceeded RMB200 billion ( US $ 29 billion ) in 2009. Taobao launched in 2003, is owned by Alibaba Group, which is a household of Internet-based concerns. ( Taobao, n.d. ) Taobao provides non merely on-line platforms but besides third-party on-line payment services ( Alipay ) and instant messaging services ( Aliwangwang )

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Platforms within Taobao include Alimama ( alimama.com ) , an on-line advertisement exchange and affiliate web for publishing houses in China. In add-on, there is besides a classified listing website Koubei.com. ( ibid. )

SWOT analysis, harmonizing to Philip Kolter, is an overall rating of a company ‘s strengths, failings, chances and menaces. ( Kolter, 2003 )

As the competition in the online shopping market is going progressively ferocious, Taobao faces some jobs as good. The intent of this SWOT analysis is to supply a critical reappraisal of cardinal factors that may decelerate down Taobao ‘s hereafter development.

2. Strengths

2.1 Leading place in China ‘s on-line shopping market

Taobao is an acknowledged leader in both B2C ( concern to consumer ) and C2C ( consumer to consumer ) online shopping market in China. Taobao has ( should be: had ) more than 190 million registered users by ( could utilize: at ) the terminal of April, 2010. ( Taobao, n.d. ) It has built a strong trade name and is recognised by more Netizen ( which is defined as the Chinese population who have accessed the Internet in the past 6 months by China Internet Network Information Centre ) ( CNNIC. 2008, January 15th ) . The company is respected by clients which gives Taobao more advantages in competition.

2.2 Effective combination of diversified offerings

Taobao combines its three section concerns efficaciously to enlarge its client base. Take Alipay as an illustration, it is a third-party on-line payment platform, provides a simpler, efficient and safe payment service for both clients and Sellerss. This service non merely guarantee ( should be: ensures ) the dealing security but besides reduces the dealing hazard for on-line consumers, as it enables purchasers to corroborate the quality of goods before let go ofing financess to Sellerss. For illustration, if goods are found ( to be ) broken or forge, clients can bespeak Alipay to prorogue the release of financess to Sellerss. ( Taobao, n.d. ) This service aid ( should be: aid ) Taobao ( to ) pull more clients.

In add-on, an instant message ( could utilize: messaging ) service called Aliwangwang make ( should be: makes ) the communicating between ( the ) purchaser and marketer easier. Furthermore, this service enables ( the ) purchaser and marketer ( to ) hold a straight private deal during the minutess, which is the penchant of Chinese clients.

2.3 Precise market positioning

Taobao analyzed China ‘s on-line shopping market at the beginning of its concern. Different from other on-line shopping web sites which prefer older white-collar worker ( s ) with higher wages or people who like roll uping and sharing, Taobao chose stylish younger females as the mark client. This market positioning proved more suited for China ‘s market compared to other web sites ‘ ( apostrophe non needed ) . This is one of the grounds that the growing rate of Taobao is much higher than other rivals.

3. Failings

3.1 Restricting itself to local market

The design of Taobao web site and other back uping services were based on China ‘s local market. This localization of function scheme made Taobao grew ( should be: grow ) fast at the beginning. However, with the development of the web site, this scheme limits Taobao to the Chinese market and ( , hence ensuing in a ) deficiency of presence in ( the ) planetary market.

3.2 Insufficient screen procedure to command forgery merchandises

Although Taobao has taken some steps to command the sale of bogus goods, such as evaluation the Sellerss by recognition value, the consequence was non as expected. Because of the free scheme that Taobao used, persons can set up an online store easy without charge and demand. This makes it even hard to supervise and choose Sellerss that commit fraud. Lack of effectual showing processes to command the sale of forgery merchandises has had a negative influence on clients ‘ assurance in Taobao. It could besides impact Taobao ‘s trade name image and gross revenues.

4. Opportunities

4.1 Turning demand for on-line shopping in China

Harmonizing to CNNIC, the figure of on-line purchasers reached 87.9 million by June 2009, increasing from 74 million in 2008 and 46 million in 2007. The online shopping incursion rate achieved 24.8 % by June 2009. ( CNNIC. 2010, January 15th ; 2010, July 15th ) As the information above shows, more people in China prefer to purchase merchandises on-line. Convenience and assorted picks could be two chief grounds. This progressively turning demand for on-line shopping contributed to the growing of Taobao.

4.2 Government support

After the planetary fiscal crisis, ( the ) Chinese authorities provided a RMB 4 trillion stimulus bundle in order to hike the domestic economic growing through 2010. ( the ) IT industry received about 0.5 % to 1 % of the hard currency injection. ( Xinhua, 2008 ) . This gave on-line shopping companies strong support for future developments.

4.3 Safer payment systems for on-line minutess

The improved on-line payment systems play an of import function in the growing of Chinese on-line shopping markets. There are more flexible payment systems for clients to take. For illustration, a third-party on-line payment system ensures the security of dealing ( s ) and enables clients to acquire their refunds easy. A simpler and safer payment for on-line dealing ( s ) attracts ( should be: attract ) more clients.

5. Menaces

5.1 Low entry barrier leads to fierce competition

Because of the low entry barrier and fast turning market, Taobao meets many challenges, peculiarly in the face of increased competition from new market entrants. In add-on, without many proficient troubles, it is easy for other rivals to copy Taobao ‘s concern form. Therefore, Taobao will be forced to increase investings on advertisement or technological invention.

5.2 Rigorous policy for 3rd parties payment licence

Recently, People ‘s Bank of China issued an ‘Administrative Measures for the Payment Services Provided by Non-financial Institutions ‘ which has raised the entry criterion for 3rd payment party. In order to acquire ( could utilize: obtain ) and maintain the licence, Taobao has to increase its outgo on on-line payment.

5.3 Higher logistics costs

Taobao will give clients suggestions about the logistic companies which are largely local 3rd party logistics suppliers and clients normally take the suggestions because of the lower bringing monetary values these companies offered, compared to other international express companies, such as DHL and UPS. However, local 3rd party logistics late announced that they would raise the monetary value. As most on-line clients are extremely monetary values sensitive, this will hold a negative consequence on Taobao ‘s sale.

6 Decisions

Harmonizing to the SWOT analysis, although there are some drawbacks which have negative effects on Taobao ‘s hereafter development, the advantages still outweigh the disadvantages. In add-on, there are many chances for Taobao ‘s farther growing. This decision will give some suggestions for Taobao ‘s hereafter concern enlargement.

First of all, in order to maintain the leading place, technological invention is important for Taobao. Taobao may concentrate on uninterrupted betterment of its on-line payment system, which is besides one of its strengths, peculiarly in the facet of dealing ‘s ( should be minutess, without apostrophe ) dependability and security. Furthermore, website maps, Internet stableness and high-velocity entree to web sites are besides of import in supplying a better user experience, which may assist to pull more clients.

Second, as Taobao has the advantage of big scale consumers and Sellerss, Taobao may section its market to supply more specialised services based on different demands so that it can run into clients ‘ demands more efficaciously.

To sum up, it is undeniable that the hereafter of ( the ) online shopping market in China is assuring. Based on the statistics by CNNIC, It is in a steadily ( should be: steady ) development phase. In this attractive online shopping market, more complete logistics suppliers and payment systems will look. These will supply Taobao more chances to develop in the hereafter.

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