Alibaba's Taobao (a)

Case Assignment for Taobao

1. What are the major reasons that Taobao beat eBay in China’s C2C market?

The following factors lead to Taobao’s success in Chinese C2C market:

a. Deep understanding of Chinese consumers and vendor business behavior and consumption habit, the related market design such as nickname Taobao showcase and suit character of Chinese business context.

b. Alipay and related mechanism design like vendors and buyers feedback are constructively instrumental for generating trust between sellers and buyers, which in turn engender sustainable transaction increment.

c. The “free of charge” strategy nurtured and secured large loyal and incremental customer base

2. How will you evaluate Taobao’s “Zhao Cai Jin Bao”? Is this the right approach to monetizing Taobao?

The vendors overwhelming objection to ZCJB proved its failure, which can be contributed to the factors below:

a. It neglect the dominant free service inertia and habit embedded deeply in the vendor’s heart;

b. It skipped the vendors who are struggling for breaking even vested interests. They successfully exploited the web’s influence to force ZCJB out.

c. It also triggered the buyer’ aversion. They were afraid that the increment cost would definitely distribute to them.

ZCJB may be plausible, but it is not the right time to implement the strategy. Though, till now, Taobao is endeavoring to find the proper business model to generating revenue. However, ZCJB is not the right approach to monetizing Taobao now. The appropriate way will have to focus on triggering the incumbent vendors’ initiative incentives to promote their products and services via Taobao.

3. With competition by eBay, Paipai and other C2C platforms in China, what will be the best way to monetize Taobao?

The best way to monetize Taobao is to exert the synergy by combining the advantages between Taobao and Alipay. Since Alipay accumulate large sum of money, though it could not be embezzled. Alipay can exploit a certain...