What is Taobao

Taobao (淘宝), which has a direct translation in Chinese meaning “seeking treasure”, is a Consumer-to-Consumer (C2C) and Business-to-Consumer (B2C) e-commerce marketplace started in 2003 by the Alibaba Group which offers a platform for individuals and small business owners to sell their products online through their own “stores”. There is Taobao Marketplace for individual and small and medium businesses and Tmall (also Tmall Global) for medium to large businesses.

Sometimes, and mostly outside China, Taobao is referred to as the China Amazon or eBay, but in reality it far surpasses them. It is the world's largest e-commerce website and one of the top 10 most visited websites in the world (according to Alexa). It is China’s biggest e-commerce site by far with over 600 million monthly active users and nearly 60% of e-commerce sales. It is used by most Chinese and a growing number of Asian and global, users.

With over 1 billion product listings Taobao is China’s largest online marketplace selling anything from cosmetics to dead mosquito bodies.

The Wall Street Journal’s Thomas Di Fonzo explains why Taobao has helped Alibaba dominate China’s e-commerce market.

How Does Taobao Work

Taobao is made up of virtual stores owned by individuals or companies. The seller places a product or service on Taobao in their Taobao store. Sellers on Taobao are able to list products and services and sell at fixed prices or via auctions. The majority of the products are a wide range of goods sold at fixed prices (similar to traditional retail stores). To help buyers assess the products and stores they can check product and store/seller details, reviews and ratings.

The buyer searches for a particular product via the Taobao search engine. If the customer has questions, he will contact the store through Taobao’s instant messaging system (Ali Wang Wang). Once a product has been selected the customer pays for the item using Alipay (Alibaba's online and mobile payment platform). This money will be held in escrow (for up to 10 days). The seller will be notified of the payment and then needs to send the goods to the customer. Once the goods have been received by the customer they have a limited time to verify that the goods are satisfactory and the customer can rate the product. The payment will then be released from escrow to the store.

Taobao hosts multiple online shopping festivals throughout the year (most well known is Single's Day or Double Eleven) to promote stores and products. These festivals along with paid search, live streaming and other marketing opportunities provide an opportunity for sellers to promote their products and entice Chinese consumers.

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