You want to open a Taobao store and sell on Taobao your products, and you discover it is not that easy, but we can help you. Full guide for foreigners, small business owners.
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Taobao is not the platform for cross-border e-commerce; however, it is the largest C2C e-commerce site in China and a place to go for any merchant – big or small – attempting to sell to Chinese consumers at a low initial cost.
This article will explore what you need to know about selling on Taobao.
I. What is Taobao?
Taobao is an online market place that operates according to C2C mechanism, which means individuals and small business owners can sell their products online through their own “stores” on Taobao.
Taobao is the world’s largest e-commerce website and one of the top 10 most visited websites in the world (according to Alexa).
It has by far over 600 million monthly active users, more than 8 million stores, over 1 billion product listings and accounts for nearly 60% of the total e-commerce sales in China.
Taobao.com is mainly known for its domestically produced apparel, jewellery and accessories, sold to working and middle class Chinese. It’s China’s go to place for low to medium end consumer goods of all kinds.
Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology. We fight for the little guy. Since our founding in 1999, we have helped millions of small businesses to achieve a brighter future.
II. How are Taobao and Tmall different?
Tmall is generally the branded, more luxurious sister site to Taobao.
- On Tmall, consumers trust to find authentic branded items, and even cross border products, shipped directly from Hong Kong, Europe, Australia or the United States.
- Taobao, on the other hand, is more about domestic Chinese brands, made for the domestic market.
- Tmall, with its Tmall Global platform, is also far more open to overseas and Hong Kong companies, compared to Taobao.com – which is purely domestic.
If you want to get started in e-commerce in China, then Taobao is the place to go. Taobao has relatively low start-up costs and with some initial input and effective marketing, sellers can achieve high sales volumes.
However, if your product requires a high degree of trust where the buyer wants to be assured of quality and willing to pay a little extra, Tmall may be the place to sell, but be prepared for significant start-up costs.
III. Is it possible to sell cross border products on Taobao?
No, you cannot open a Taobao.com store being a non-Chinese company.
However, you can open a Taobao store, in some product categories, if you register a company in China.
The requirements to setup a company in China follow below:
- Business license application
- Office rental contract
- Passport copies
You will not be able to setup a postbox company, using a virtual office to be able to sell on Taobao.
You need to actually rent an office, meaning that you must pay a deposit and a few months rent, before you can even apply for the business license.
You will also need to open a bank account in Mainland China, that you later link to your Taobao.com store.
Most foreign-owned companies in China go to the following banks:
- Bank of China
- China Merchants Bank
As you can see, setting up a company in China to sell on Taobao.com is, therefore, a major commitment – long before you see your first sale.
Most agencies charge around RMB 20,000 to 30,000 to help you register your business in China, and the application can easily take up to 6 months.
Besides, Chinese consumers who are looking for foreign products would generally prefer other platforms such as Tmall or JD… instead of Taobao.
Taobao is perceived as more a domestic e-commerce site for domestically made products.
If you are a merchant or a trader, you can team up with local partners to test how your products sell in China market through Taobao as it doesn’t require a lot of initial investment as well as a rigorous application process like other platforms.
IV. Can I use a Hong Kong company to sell on Taobao.com?
While Hong Kong is part of China, it has its own legal system. Setting up a company in Hong Kong is very easy, and can be done without ever visiting the country.
However, Taobao.com requires that you set up a company in Mainland China to sell on it, which is on an entirely different level in terms of complexity and cost.
V. Payment made by Alipay
Like Taobao, Alipay is a service provided by Alibaba group.
Alipay is commonly used by Chinese consumers not only to shop online but also to pay for all kinds of transaction in daily life.
On Taobao, the buyers pay for the products with Alipay. Then Alipay waits until the products are well-received by the buyers before paying the sellers.
This system guarantees that the buyers get to receive products safe and sound after transactions.
VI. How to open a store on Taobao?
You can create a Taobao account through the Taobao user registration page and go to the Seller tab on your account page to apply to open a Taobao store.
The 7 steps to open a Taobao store
Step 1. Set up Taobao account and register as Seller
Step 2. Connect account to Alipay
Step 3. Complete identification authentication
Step 4. Create store, connect plugins and set up Ali Wang Wang (for Customer Service)
Step 5. Design store
Step 6. Upload products (referred to as “babies”)
Step 7. Promote and market store and products
Step 8. Engage with Taobao KOL
Unfortunately, if you do not understand or read Chinese then opening a Taobao store can be complicated because it is only available in Chinese. You should work with Chinese partners to help you navigate through the set-up process.
Another choice for you is to sell through other Chinese sellers. There are a ton of small businessmen that would probably love to sell your products on their online shops. You will need to contact them one-by-one through the platform app to find the compatible business partners.
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