Do you want to open your own Taobao store and sell products on the marketplace, but find that it is more complex than you thought? This article is for you! We’ll take one step at a time, getting started with the basics of how to sell on Taobao.
In this article, we will explain how Taobao platform works, how much does it cost to sell on Taobao, and can a foreigner open a Taobao shop in China.
What is Taobao?
Taobao is an online marketplace that operates according to the C2C model, which means individuals and small business owners can sell their products online through their own “stores” on Taobao. It’s China’s largest online shopping platform and the go-to marketplace for the majority of Chinese consumers. Taobao (淘宝网) literally means “search for treasure” in Chinese.
Taobao is not a marketplace for cross-border e-commerce. However, the largest C2C e-commerce site in China offers low costs to start-up merchants who want access to the lucrative mainland consumer market.
Taobao is a great starting place for any merchant – big or small – attempting to sell to Chinese consumers at a low initial cost. Apart from sales, Taobao also offers one of the most popular online entrepreneurship platforms.
Taobao is one of the largest e-commerce websites and one of the top 10 most visited websites in the world (according to Alexa). To put it simply, it’s China’s #1 marketplace for online purchases, as well as a product search and price comparison tool. Users also read reviews on the app to get an idea of a product’s quality.
It has far over 875 million monthly active users, more than 8 million stores, and over 1 billion product listings, and accounts for nearly 60% of the total e-commerce sales on the mainland.
Taobao.com is mainly known for its domestically produced apparel, jewelry, and accessories, sold to the working and middle class. 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.
Jack Ma – the founder of Alibaba Group, mother company of Taobao platform
Taobao: the Chinese eBay?
Taobao is often compared to the American betting purchase website, but Taobao is an innovative app that is interconnected to the Alibaba eCommerce ecosystem and has its own social media and video streaming service… In short, it delivers much more than just the eBay of China when it comes to online shopping. Taobao does not even have a betting feature.
Why Taobao is such a success in the Chinese market?
Taobao, which was launched in 2003 by Alibaba Group, was the answer to a huge demand in a growing consumer market in China. Chinese consumers have always been looking for convenience, and Taobao was the first platform to answer their needs completely. Let’s list some of the top achievements of Taobao:
- Functionality: the platform is handy and intuitive for both merchants and consumers
- User participation: it’s not only a shopping platform but more of a social media site, where consumers are encouraged to leave reviews and interact with each other. The platform is highly interactive and customers get rewarded for participation.
- Safety: it’s a trusted website with a guaranteed refund service and a secure payment system (merchants receive payment only once buyers confirm the product’s receipt)
- Variety of products: it’s the biggest shopping platform in the country, with products ranging from clothes to cars, services, and hard-to-find items
- Convenience: the platform and mobile app are straightforward to use and shopping can be done in just a few clicks
- Personalization: Customized products and storefront recommendations based on users’ Taobao accounts, search bar queries, and other activities.
- Fast delivery: this is essential in China as consumers are used to receiving products in 1-3 days
How are Taobao and Tmall different?
If you heard of Taobao, then you have most likely also heard of its younger sister, Tmall. Taobao and Tmall are both owned by the Alibaba Group and are highly intertwined, but they are different in terms of their target audiences.
Taobao is a consumer-to-consumer (C2C) eCommerce platform, while Tmall is a business-to-consumer (B2C) shopping platform. Taobao is more popular with small businesses and individual consumers, whereas Tmall is more popular with larger businesses and foreign companies.
Tmall is generally seen as the branded, more quality/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, the UK, Australia, or the USA. Taobao, on the other hand, is more about domestic brands, made for the domestic market.
Tmall, with its Tmall Global platform, is also far more open to foreign companies, compared to Taobao.com – which is purely domestic. Tmall is accessible from Taobao, but Taobao is not accessible from Tmall.
However, they both have the same payment option: Alipay, debit card, credit card.
Taobao has an integrated social media called Weitao as well as a live-streaming tool (that a Tmall seller can also use). The domestic website also has its own search engine: eTao. A convenient tool for users to compare items throughout multiple online marketplaces when online shopping;
If you want to get started in the country, 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.
Alternatively, if your product requires a high degree of trust where customers want to be assured of quality and are willing to put a little extra money to buy items, Tmall may be the place to sell, but be prepared for significant start-up costs.
Can foreigners sell on Taobao? Is cross-border an option?
Unfortunately: no, it is a 100% local app, and unlike Tmall, does not offer a cross-border option. You’ll be unable to open a Taobao.com store as a non-Chinese company. Your first step to start selling on the app will be to set up a legal entity in China. (We can help you register your company – it looks far more complex than it is).
Minimum requirements to set up a company in China:
- Business license application
- Office rental contract
- Passport copies
- Chinese bank account
- Contact info and phone number
You won’t be able to set up 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.
Furthermore, you will also need to open a bank account in Mainland China, which 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
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 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.
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.
Payments made with Alipay
To sell on Taobao, you’ll need an Alipay account for merchants. This online wallet also belongs to the Alibaba group and is well integrated into all its eCommerce apps for checkout. Alipay is the preferred payment option for Chinese online shoppers on Taobao.
Alipay is commonly used by Chinese consumers (everyone has an Alipay account), not only for online shopping but also to complete all kinds of transactions in daily life.
On Taobao, buyers purchase products with Alipay. Then, Alipay waits until the products are well-received before completing the payment and sending money to the seller. This system guarantees that the buyers get to receive products safely and sound after transactions.
How to open a store on the Taobao app?
You can create a Taobao account through the Taobao users registration page and go to the Seller tab on your account page to apply to open a Taobao store or work with a Taobao agent.
A Taobao agent will facilitate and expedite the whole store opening process. A Taobao agent will also help you negotiate advantageous commission fees, help you set up logistics, in-app and off-app promotions, and so on.
The 7 steps to open a Taobao store:
- Step 1. Set up a Taobao account and become a Seller
- Step 2. Connect store to Alipay
- Step 3. Complete identification authentication
- Step 4. Create a store, connect plugins, and set up Ali Wang Wang (for Customer Service)
- Step 5. Designing and setting up your Taobao store
- Step 6. Upload products (referred to as “babies”) and optimized them for the app Search bar algorithm
- Step 7. Promote and market your Taobao store and products
- Step 8. Engage with Taobao KOLs and use Taobao Live, Taobao’s own live-streaming platform
If you’re interested in selling on Taobao but you don’t speak Chinese, hire a Taobao Agent, and you’ll save time.
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 setup process.
Another choice for you is to sell through a Chinese seller. There are a ton of small businessmen that would probably love to sell your products in their online shops. You will need to contact them one by one through the platform app to find compatible business partners.
How much does it cost to open a Taobao store?
Taobao is definitely cheaper than Tmall and JD, but you still need to count in some expenses.
1000 RMB is the mandatory deposit for opening a store on the platform, but apart from that, you will also be charged for company registration, obtaining the necessary licenses, and logistics. Taobao will also take a commission from every sale, which usually is around 5%, but it will always depend on your products.
Promote your Brand and Taobao Store
Opening a Taobao store is only the beginning of your journey to attract Chinese internet users. Taobao, being one of the most popular online shopping platforms, has millions of shops and sellers, so you need to promote your brand in order to stand out from the crowd.
Stand out from the competition
With so many sellers on Taobao, it’s essential to make your products and brand visible to potential buyers. Promoting your brand helps you to stand out and increase the chances of being seen by potential customers and of them to buy items from you.
Build trust and credibility
For customers to buy from you, they need to trust your brand. By promoting your brand, you can build trust and credibility with potential buyers. This will help convert leads into sales.
Reach out to online shoppers through social media
There are a lot of great Chinese social media platforms that you can use to promote your store. Weibo and WeChat are two of the most popular, and they offer a great contact point with your target audience and build brand awareness.
You can also try using platforms like Zhihu, which has a more educated and affluent user base. Whichever platform you choose, make sure to create engaging content that will capture your audience’s attention and encourage them to check out your store.
Collaborate with Chinese influencers and organize live streams
If you want to gain a following and increase your online presence in China, one of the best ways is through positive word-of-mouth. Find Key Opinion Leaders (KOLs) suitable for your brand. Chinese consumers are incredibly influenced by KOLs – more so than any brand alone – meaning that utilizing their popularity can be an effective way for companies or brands looking to soar sales figures.
They can also help you promote products via live-streaming on Taobao Live, which is one of the greatest tools to attract a new audience to your store.
We can help you create your own Taobao Store and start selling!
With 10+ years of experience and a professional team of more than 70 international as well as local talents, we have been helping brands to achieve their goals in China.
We can help you join an eCommerce world leader – wherever you may be from – Australia, UK, USA, South America, and so on… we help you secure an audience and grow on the market!
We offer a full range of e-commerce services, including:
- CHINA E-COMMERCE MANAGEMENT/TAOBAO AGENT/ TMALL PARTNER
- REGISTRATION TAOBAO STORE (or purchase an old Store)
- TAOBAO SHOP DESIGN/WEBSITE
- TAOBAO ACCOUNT AND SHOP MANAGEMENT
- MARKETING CAMPAIGN & CUSTOMER ACQUISITION
- LOYALTY PROGRAM
- CROSS-CHANNEL MARKETING
- INFLUENCERS CAMPAIGNS
Learn more about our China e-commerce Solutions here and discover some of our case studies.
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For brands that want to try out the Chinese market but are not quite ready to register as a physical entity in the country, we suggest you have a look at this post on China’s cross-border e-commerce where we introduce you to the most prominent platforms such as Tmall Global, JD Worldwide, VIP.com, Suning Global…