Analysis of Taobao's Marketing Strategy

Analysis Marketing Strategy of Taobao
Marketing (Trường Đại học Sư phạm Kỹ thuật Hưng Yên)
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Analysis Marketing Strategy of Taobao
Marketing (Trường Đại học Sư phạm Kỹ thuật Hưng Yên)
Scan to open on Studocu
Studocu is not sponsored or endorsed by any college or university
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BCP Business & Management EMCG 2022
Volume 31 (2022)
205
Analysis Marketing Strategy of Taobao
Shiyu Zhang*
School of Worcester Academy, Worcester, U.S
*Corresponding author: [e-mail]
Abstract. With the rapid development of the Internet and the epidemic's impact, the transaction
scale and practitioners of online shopping in China have repeatedly created new heights. In addition,
people have favored online shopping because of its low cost, convenience, and product diversity,
which has become a new shopping trend. As a result, Taobao, a subsidiary corporation of Alibaba,
has proliferated to become China's leading e-commerce site. This article studies the marketing
strategies of Taobao through literature articles review and field investigation of five marketing
methods Taobao implements: Tao Coin, 88 VIP, limited-time discounts, Double 11 shopping festival,
and live streaming. Meanwhile, this article uses the SWOT method to analyze Taobao has low price,
variety of goods, and safe payment method; it also has potential opportunities with convenient and
fast internet development. However, Taobao has issues with the unequal quality of goods and non-
uniform delivery. Based on the analysis, this article offers suggestions for future improvement of
Taobao.
Keywords: Taobao; E-commerce; Marketing strategy; SWOT analysis.
1. Introduction
In the past decade of rapid development in China, e-commerce has occupied a place in the market.
People prefer online shopping to offline shopping. Many e-commerce companies are slowly rising
here, including Taobao, Jingdong, and Suning shopping platforms, and the rise of the WeChat
business. However, under the impact of the epidemic, China's economy has been affected, making
the competition of e-commerce fiercer, and many industries are facing the problem of survival.
According to the article by Wenting Fan, if an enterprise wants to survive and develop in the cruel
market, it must work hard in the market and do an excellent job in marketing [1]. In-depth market
research and grasping consumer preferences are fundamental to business development and operation.
There is an example from Nike. The price of some Nike shoes has risen to a high value and raised a
heated discussion. However, this is a marketing strategy. Nike catches the phycology of consumers
that pursuing limited products can bring a sense of satisfaction and make them look fabulous so that
consumers will pay for the high price of shoes. However, the price is over it should be. Nike is a
successful case of marketing and shows how effective marketing can play a role in selling.
In recent years, many scholars have studied Taobao, the leader of electronic commerce. Shuhua
Li researched the vital function of the Tao Coin on the Taobao Platform [2]. Next, Guojian Xing
claims the importance of perceived value in time-limited discounts [3]. Additionally, Yuzhao Zhang
points out the analysis of spreading marketing strategies of Double-11 [4].
This paper summarizes the business, financial situation, marketing methods, advantages, and
disadvantages of e-commerce giant Taobao in China through the study of previous academic papers
and the investigation of daily life and puts forward an optimization plan.
2. Firm Description
Online shopping and retail platform Taobao is popular among Chinese people, which Alibaba
established in May 2003. Taobao has nearly 500 million registered users in China, more than 60
million regular visitors daily, and more than 800 million simultaneous online items daily, with an
average of 48,000 items sold every minute. Among the development of online shopping, Taobao has
become the first and biggest website that offers a platform that provides sales opportunities for
customers and businesses service in China, which contains three different departments:
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BCP Business & Management EMCG 2022
Volume 31 (2022)
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• Taobao offers customers to customers service.
• Tmall is a platform-type business to customers e-commerce service provider.
• Etao is a promotional shopping guide website that offers consumers more discounts on top of
Alibaba Group's rich offerings on Taobao and Tmall.
Moreover, Taobao has a safe payment method, Alipay, from the same parent company to protect
the transactions between sellers and consumers.
Taobao's parent company, called Alibaba, in its financial results for the year 2021, has an operating
income of 7172.89 billion yuan and a net profit of 1503.08 billion yuan. In the industry comparison
of the net profit in the 2021-year financial result, Amazon is number one, Alibaba comes second, and
Taobao has declined 58.78% by 2020. In Alibaba's financial results for the year 2022, the first quarter
has a net profit of 451.41 billion yuan it was down 5.15% year on year, and the midterm has a net
profit of 53.67 billion yuan, declining 81.34% compared to 2021. The third quarter has a net profit of
204.29 billion yuan, decreasing about 70.32% compared to 2021. It can be seen that the epidemic has
had a significant impact on Alibaba's economy in the past two years.
Alibaba's latest stock market showed the latest 92.62, up 2.52%, the highest at 94.87, the lowest
at 88.20, and the average price of 92.53. Its outer disk has 18.15 million yuan; the inner disk has 16.28
million yuan. The total market value of Alibaba's stock is 245.3 billion yuan, and the total capital is
2.648 billion yuan.
3. Evaluation of Marketing Strategies
Previous academic articles and field investigation of the daily use of Taobao summarizes five
marketing implements that benefit Taobao.
3.1 Tao Coin
Tao Coin is one virtual currency on Taobao. The mechanics of gaining Tao Coin is like a game:
Every day, the system will have some missions for consumers to complete, such as daily sign-in,
browsing goods for 20 minutes, buying a product, or posting a comment for a completed order. Each
mission will have 20-200 Tao coins as an award, and the missions will update daily. These Tao coins
can partially offset money when people buy goods, which provides consumers with favorable prices
and a good shopping experience. One-coin equals 0.01 yuan and is limited to one order, but it attracts
consumers to continue completing the missions to get awards and be willing to share with others so
that it can promote sales. Almost every store on Taobao accepts the Tao coins, making consumers
happy when buying and improving their satisfaction. It expands the influence of sellers, increases
stores' browsing and clicking volume, and increases the interactive experience and communication
between customers, platforms, and sellers [2]. The game mechanics of Tao Coin benefits consumers,
sellers, and the platform at the same time.
3.2 88 VIP
Taobao has launched 88 VIPs for consumers. As the name implies, 88 VIPs only need 88 yuan to
open the service for a year, which includes rights and interests such as discounts on some products,
exclusive gifts, and discounts on VIP fees for cooperation with other platforms. However, this price
is only for the consumer who has over 1000 Taoqi values. For whom do not reach 1000, the price is
888 yuan for one year. The way to get more Taoqi is by shopping more, timely posting comments for
orders, and using Taobao family payment. Thus, if customers want to have more rights on Taobao at
a low price, they should gain more Taoqi value, which promotes more consumption and brings profit
to the Taobao platform. Also, boosting consumers' comments on orders makes others feel Taobao
provides truth for all consumers while purchasing goods on Taobao, so it will attract more and more
people to use Taobao. Furthermore, when consumers get 88 VIPs at a low price, they would feel they
are getting the "insider" place of the platform, which offers more service to them. This exclusivity
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