Are you looking to enter the Chinese market even if you’re a beginner in this kind of business? Perhaps you’re a well-established manager or CEO wanting to sell your products in China. Luckily, Taobao is a great platform to get started in — it serves as China’s biggest network for all kinds of retail business and includes both C2C and B2C transactions. Read below how you can take advantage of this medium along with instructions on how to open and sell in China with a Taobao shop.
Taobao is China’s Biggest e-Commerce Platform
Launched back in 2003, Taobao has grown to become China’s largest eCommerce website. It was then acquired by another one of China’s giants, Alibaba, which allowed it to become an even bigger platform. Currently, the platform has over 8 million stores registered under its name.
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This includes everything from expensive Western brands such as Adidas and Nike to cheap, locally made products. However, it’s worth noting that Taobao is primarily used by customers who belong to the low to medium-price consumers category.
Taobao has many product categories to chose from and it’s the go-to online store for the majority of Chinese internet users, with over 800 million monthly active users and more than 8 million stores. It’s one of the most popular online shopping platforms in the world, accounting for almost 60% of the total e-commerce sales in Mainland China.
Having your products on Alibaba’s Taobao platform will provide you access to hundreds of millions of potential customers at the tip of your fingers. Because China has one of the highest ratios of digital payment and e-Commerce users in the whole world.
Those who have a company that’s registered in China or those who have the chance to work with a Chinese-registered company can operate and sell their products on Taobao. These requirements are a bit more loose compared to the more high-end websites such as Tmall Global and JD Worldwide.
Benefits of selling on Taobao
Although most foreign brands don’t consider to sell products on Taobao, it’s actually a great marketplace to access the biggest amount of online shoppers with the smallest investment (in comparison to Tmall and JD, which are usually the first choice). Why is it worth to sell your products on Taobao? Here are some of the main reasons:
- The users: Taobao is the biggest marketplace in China and it also has the greatest user engagement from all the available platforms. Alibaba Group designed a reviews system for Taobao where consumers are encouraged to leave reviews, to make shopping easier for others, in exchange for rewards.
- The products: Taobao is known for selling everything, from lingerie to plane tickets, making it the best entry platform for big and small businesses wanting to test the Chinese market.
- Quick delivery: Various delivery options are provided by Cainiao Network’s logistics partners, with online package tracking.
- Personalization: Taobao’s algorithm makes sure your products will be shown to those that might be interested in buying them, maximizing your chances of success.
- Payment methods: All the main mobile payment methods used in China are available on Taobao and all the payments are secured, making it easier for consumers and sellers
Taobao is a very simple-to-use platform and the go-to online marketplace for the majority of online shoppers in China. It won the hearts of the Chinese by providing a platform with all categories of products, a secure payment system, and fast deliveries, with products arriving sometimes even in just a few hours.
Here are just a few things you need to do to start selling on Taobao:
- The first thing you need to do is to register your company or partner with a company that is already registered in China to gain access to Taobao.
- You will also need a physical address — unfortunately, using a postbox company through a virtual office won’t be possible.
- Prepare the most important documents you’ll need, such as your business license, passport copies, and office rental contract.
- Having money prepared for registration purposes, which may cost around $3,000 to $5,000. This process may take around six months.
- Taobao also requires sellers to have a Chinese bank account which needs to be connected to their Taobao store. Here are just a few popular options you can consider:
- China Merchants Bank (CMB)
- Bank of China (COB)
- Industrial and Commercial Bank of China (ICBC)
- You will also need to import your products into China, which means you’ll need to register them with the China customs, the General Administration of Quality Supervision, Inspection, and Quarantine of the People’s Republic of China (AQSIQ), along with other authorities before importing.
What is the Process to Open a Store on Taobao
To get started with your own Taobao store, here are a few steps to take:
- Set up your account and register your business as a seller on Taobao
- Link your Alipay account to sell online
- Finalize the verification of your identity
- Create your store and connect the plugins you need, and set up your Ali Wang Wang for your customer service needs
- Design your store and make it look attractive
- Upload your product, keeping in mind that your images and videos will make up a huge part of your store
- Market your products and promote your store to raise brand awareness
- Once you have a Chinese company or a partner to work with, you can set up your account and register as a seller
The Pros and Cons of Selling on Taobao
There are various reasons why sellers are happy to sell on Taobao. However, there are also cons to selling on this platform. Below are just a few examples of both.
What are the Advantages of Selling through a Taobao Store?
It’s affordable to open a Taobao store
Taobao has relatively low prices, at least we can say it is far less expensive than selling on its sister app Tmall. Indeed, everyone can sell on Taobao by depositing thousands of dollars to just register a store online in China.
Low Operating Risk
Because there’s no inventory pressure, management risk, or space limitation when starting a business on Taobao, it makes for a great platform choice for all kinds of products. Selling on this platform eliminates the various risks associated with storage, rent, logistics, and personnel management. This significant advantage will naturally attract a large number of consumers quickly.
Enormous Users Base
China doesn’t just have the biggest online shopping market in the world, but it is also one of the fastest-growing and most sophisticated today. As a result, Chinese consumers are looking for more services and products from outside of China, and Taobao will continue to provide them with these needs, all at a fraction of the cost compared to international offerings.
Taobao has earned the reputation of being called “the everything store” because you can find essentially anything you need within this shopping platform also meaning you can sell anything, and thanks to the huge user base, even niche categories will have enough material to work with. Taobao carries the biggest assortment of all kinds of products, including:
- Unique, creative, and crazy items
- Usual home improvement products
- Groceries and food items
- Adorable accessories for pets
- All kinds of giveaway products and trinkets
- Rent-a-date services
- And more!
No matter what your needs are, you can count on Taobao to have it and you can expect them to have great prices for you to promote your brand.
Plenty of Marketing tools, Deals, Events, and Sales
A great way to attract more customers to your Taobao store is to offer them all kinds of Taobao sales, deals, and events, where your shop can offer great prices. There are also huge discounts to be offered along with vouchers. Here are the top events and sales in Taobao:
- Integrated Live streaming & social media app: Weitao
- Clearance Sales
- Taobao Daily Sales
- Singles Day/Double 11: Happens every November 11 each year, which is also called 11.11
- Double 12: A huge end-of-year sale that happens every December 12 and is also called 12.12
Disadvantages of Taobao Selling
If you plan to sell via Taobao, a good thing about this platform is that it’s free to register and start your shop here. However, those without a Chinese ID or who are using a foreign passport will find the authentication process lacking in the ability to verify foreign identification numbers. As a result, only Chinese and Hong Kong IDs are accepted for registration. Because of that, the majority of products available on the platform are domestically produced apparel and items.
Another stumbling block that beginners may run into is the fact that Taobao doesn’t have an English website, so you’ll need to conduct every part of your business in Chinese. As such, your Chinese partner will need to be reliable and easily accessible, or you may need to have a few staff members who can respond to customers using the Ali Wang Wang chat support system that comes with Taobao. This system plays a vital role in the success of your Taobao store, helping you to fully understand the needs of your customers and to improve their shopping experience.
You need a local presence to open a Taobao Store
Rather an inconvenience than a disadvantage but still can be an incredibly high barrier for some companies. While any Chinese individual could sell on Taobao, your company will need to have a business license (meaning the company is registered in China), be a joint venture with a Chinese company, or have a Chinese partner that will be the legal owner of the shop.
The Language Barrier
Unfortunately for international sellers, Taobao can pose a bit of a challenge because the website is in Chinese. However, online transaction tools such as Google Translate can help out in this regard. But this also applies when it comes to payment since you’ll need to be integrated into Alipay which is itself connected to a Chinese bank account. (having a Chinese bank account is not an option when selling on Taobao).
Being able to speak the local language is important when it comes to your pricing and localization strategy but also for customer services. You’ll definitely need Chinese when your buyers have issues such as defective products, exchanges, returns, and other item needs.
No Cross-Border on Taobao
Unfortunately, you can’t open your own Taobao store if you’re a non-Chinese company. You can, however, open an online store in a few product categories provided that you registered a company in China (It is one of the major differences between Taobao and Tmall, check out this post to learn more).
Taobao commission fees
The commission fees of Taobao are not fixed and will mainly depend on your industry. This will be negotiated during the initial registration and every year after. A trend we have been observing is the tendency Taobao has to inflate its commission fees every year for successful shops. We suspect it is to push successful Taobao merchants to move on to Tmall where initial fees are way higher than Taobao.
Want to open a Taobao Store?
With Alibaba partners and other agencies offering eCommerce services for China, setting up and opening a store in Taobao is now easier than ever, where you can avoid time resource-consuming processes to sell goods as quickly as possible in China. By having a Taobao store, you’ll have access to millions of potential shoppers online.
Furthermore, considering the low cost, low risks, and low maintenance that comes with its secure payments, there’s almost no reason why you shouldn’t try selling on Taobao.
Leave us a comment or contact us, so that we can help you open a Taobao shop as soon as possible.