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Taobao Case Study

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Critically analyze the factors that led to Alibaba sustaining its leadership position in the Chinese e-commerce market. Alibaba’s contributing factors include: Smart competitive and marketing strategies, first mover advantage, leadership and vision, local knowledge, and navigation of regulatory hurdles. The e-commerce company’s strategy focus allowed it to differentiate itself by providing better services to its customers. The company put an innovative business model in which customers would try out the company’s services without any cost. As time progressed, the company was able to generate revenue from alternative means. In addition, the company began to generate revenue from an increase in the willingness of its users to pay for additional…show more content…
Factors that led to Taobao’s success include: growth strategy, differentiation, trusted and established payment method, customer interaction and customer preferences. Taobao used aggressive and promotional strategies to grow the business. Taobao placed ads online and on billboards located in major Chinese cities. Furthermore, Taobao’s easy-to-use feature features allowed it to attract new consumer, while at the same time attract EachNet users to shift to Taobao. Ma differentiated Taobao by allowing users to post free product listings, while EachNet charged for its services. Taobao’s business model was called unsustainable by EachNet, who was later forced to adopt a similar model. EachNet’s growth was halted by Chinese consumers’ lack of trust of selling and buying online. Consumers were required to pay with credit card (not trusted by Chinese then) by EachNet, while many Chinese preferred to pay by cash. Thus, Taobao held an advantage having access to Alibaba’s established AliPay, a payment system that held the money in an escrow account before the transaction. Taobao was more open to interacting with its customer than EachNet was. A big complaint against EachNet was that the company did not offer much customer service, as well as not providing a phone number in case of queries. Thus, Taobao attracted customers by enabling the seller and buyer to communicate through instant messaging. Furthermore, EachNet was not designed properly to tailor to the Chinese public. On the other hand, Taobao’s layout was more in tune to Chinese preferences by having a layout similar to Chinese department
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