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.
China’s largest online shopping website
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, but overall, this marketplace is a great starting place 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.
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Want to learn more about the eCommerce landscape in the middle kingdom? Check out our Chinese e-commerce guide, where we have compiled useful information about the most popular marketplaces, as well as tips to make it online in the middle kingdom.
I. What is Taobao?
Taobao is an online marketplace that operates according to the C2C mechanism, which means individuals and small business owners can sell their products online through their own “stores” on Taobao.
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 800 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 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.
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Taobao: the Chinese eBay?
Taobao is often compared to the American betting purchase website, but Taobao is an innovative app that is interconnected in the Alibaba eCommerce ecosystem and has its own social media and video streaming service… in short, it does deliver much more than just the eBay of China when it comes to online shopping. Taobao does not even have a betting feature.
II. How are Taobao and Tmall different?
Taobao and Tmall are both owned by the Alibaba Group and 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.
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 overseas and Hong Kong companies, compared to Taobao.com – which is purely domestic.
- However, they both have the same payment option: Alipay, debit card, credit card
- Tmall is accessible from Taobao, Taobao is not accessible from Tmall
- Taobao has an integrated social media called Weitao as well as a live-streaming tool (that a Tmall seller can also use)
- Taobao 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.
III. Is Cross-border Ecommerce an option on Taobao?
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 :
- Business license application
- Office rental contract
- Passport copies
- Chinese bank account
- Contact info and phone number
You will not 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, 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
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.
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 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, the 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 safe and sound after transactions.
VI. 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 Taobao store and products
- Step 8. Engage with Taobao KOL and use Taobao Live
If you don’t read Chinese, hire a Taobao Agent, 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.
VI. Promote your Brand and Taobao Store
- Stand out from the competition – With so many sellers on Taobao, it’s important 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 – In order for customers to be buying 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 have 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.
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We also can help you with services such as:
- China #1 e-commerce app: Tmall → we are a certified TP (Tmall Partner) and help you through the whole process of your Tmall Journey.
- The Chinese Social e-commerce app Little Red Book is best suited for Beauty & Lifestyle Brands
- Access Cross-border e-commerce
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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 cross-border e-commerce where we introduce you to the most prominent platforms such as Tmall Global, JD Worldwide, VIP.com, Suning Global…
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