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Guide on how to set up a Taobao shop to enter the Chinese market

Read more about market entry in China

Taobao is Asia’s largest network retail business, founded by Alibaba group in 2003. As the largest online shopping platform, current business includes both C2C and B2C transactions. Today, Taobao has also become the most used online entrepreneurship platform. How can foreign businesses set up a Taobao shop and enter the Chinese market?

Why it can be profitable for a foreign brand to sell on Taobao

China has a huge number of online shoppers

According to the China Internet Network Information Center (CNNIC), the number of Chinese internet users reached 828.51 million in 2018. It shows an increase of 56.53 million new Internet users from 2017. The Internet penetration rate in China also climbed to 59.6 percent at the end of last year, compared to 55.8 percent in 2017.

When it comes to online sales in China, the growth is even more apparent. Last year, Chinese shoppers spent ¥9 trillion online. The Chinese online retail market has increased at a spectacular 70% average annual growth rate since 2009. Since 2014, China’s five-year online shopping retail sales have increased by ¥621.6 billion.

Why sell on Taobao? Low cost and low operating risk

Starting a business on Taobao includes no inventory pressure, space limitation or management risk. Selling on Taobao eliminates traditional business obstacles as a logistics, rent, storage, and personnel management fees. This will reduce the cost for the seller on a per-product basis and then reduce the final price for the consumers. As commodity prices are the most important influencing factor of consumer buying decision, compared to traditional brick and mortar shops, Taobao has absolute advantages in the operating cost and operating risks. This significant advantage of selling on Taobao will naturally attract a large number of consumers quickly; Business on Taobao can be very profitable method of market entry in China.

It is easy for foreign brands to quickly adapt their marketing strategy on Taobao based on consumer feedback and the information gathered about their specific market. As entering China’s market brings the risks of strategic mistakes and cultural misunderstandings, selling on Taobao can be a good opportunity to reduce these risks.

Taobao Alipay, the secure payment system

Like Taobao, Alipay is a service founded by Alibaba group. It is an independent third-party payment platform looking to provide a “simple, safe and fast” solution for the Chinese e-commerce online payment.  When a buyer purchases a product, the money is put in escrow until the product is safely delivered. This system creates a safety net for the customer to ensure their money will not be sent to the seller if something is wrong with the product.

However, the aim of this solution is not only to ensure the safety of users’ online payment, but at the same time let the users from both side, buyer and seller, build up mutual trust through the platform, to establish a pure Internet environment in accordance with the Chinese business culture of trust and friendly relationship. Once you set up a Taobao shop, the next step is marketing.

How to make a marketing strategy on Taobao 

Pay attention to your keywords

When online shoppers look for specific goods, they will more than likely use the  “search” bar. This is why keywords you have defined for each product will be important.

However different buyers who search the same goods may use different keywords. So how can your business on Taobao appear on the first page of search results?

Keywords can be the brand, the model, the product features, the promotions, the product characteristics, adjectives describing the product, the shop name, and even the credit rate. Thus, these keywords can be developed with a wide variety of combinations such as store name + brand + model; Promotions + commodity characteristics. This will require some research about the most searched keywords on Taobao, insight from native Chinese speakers or those in the industry.

Use opportunely your community

Taobao is a place where buyers and sellers can meet each other. Animating the community of users will reinforce their loyalty and will make the networking between buyers and sellers easier. By posting hot discussion topics you will step up attention rate, create awareness for your shop, improve organic views and extend your business.

Secondly, popular discussion posts will be ranked higher in the Taobao community and possibly elsewhere on the internet to become viral. The Taobao shop associated to the discussion will be more likely to be found by shoppers. Moreover, multiple quality posts can make your shop appear more professional and gain the trust of buyers.

Developing an attractive Taobao promotion

Price value is still one of the most important factors in determining the demand for goods. Thus discount promotion are one of the most effective ways to attract buyers.

Taobao offers a specific solution for promotion activities with a specific page dedicated to  showing the best promotion offered in the Taobao shops.

Another solution to offering relevant and efficient promotion with your Taobao shop is to take advantage of festivals such as Valentine’s Day, New Year’s Day, Spring Festival and the most important for online shopping, the Single’s Day, also known as Double 11. These festivals are marked by a significant increase in online shopping in Chinese households. Offering special promotion during these days can allow a foreign brand to make a great entry on the market as well as showing good expertise of China’s culture and shopping customs.

Gain the confidence of your potential customers

The brand image is an important factor to influence consumer behavior. In a virtual online mall, this statement is even more important.

Even if the low price and attractive communication can temporarily catch the eyes of the consumer, poor quality goods, service, and the publication of false information will contribute to losing customers. This is especially true in China where the trust and the safety are culturally important criteria of decision. According to online marketing experts, having only positive product reviews can signal to consumers that your brand is buying fake reviews.

Enter the Chinese market through Taobao

Establishing a company on Taobao: how to create your account

Chinese can easily generate a Taobao account, just by completing  the  registration form and submitting the application. However, if you are not Chinese, T-Mall Global enables businesses abroad to sell (and deliver) their products to the Chinese market. Creating an account is the first step to set up a Taobao shop.

Promoting your store to reach more customers

“Taobao hot shop” is a value-adding tool which allows store owners to customize the appearance of their online store.,and offers programs to help with promotion.

Being active on Taobao’s forum

Every item mentioned can be displayed on Taobao’s forum, which could also be an effective way to promote, as individuals reading the article can click the link to your store.

Participating in the sales campaign

Taobao often sets up campaigns on different topics, which is a good opportunity to gain more exposure for the Taobao store.

Therefore, the use of reasonable and effective networking marketing methods to run shops should be favored. It is the key to gain credibility and trust from Chinese online shoppers.

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