How Can Taobao Succeed in China?

It’s been quite some time since my last English article, and the reason is mainly because I have been thinking about my choice in future career path in the past couple of months. I have left Xiaomi Finance as well as Beijing in May, and hopefully I’ll be on my next journey soon after some solid consideration.

Okay it could be a huge title but in fact I am not going to elaborate the reasons from a general view, since there are tons of well-written articles already around the web dissecting it from all possible angles. Instead, I want to talk about it from a tiny little detail that I have experienced yesterday, and it might draw out the whole picture from an unexpected perspective.

The story goes from my purchase of one microphone on Taobao, because in the past three months I have been working on my Youtube channel in the part time, and the audio quality issue has been driving me crazy. After some initial research, I decided to buy a wireless microphone for my mirrorless Sony Camera. To be honest I know not too many of you will be geeky enough to be willing to know the details of my choice, so in short the wireless microphone for DSLRs is kind of a new area where few companies have technology to tap into, so it is a small, niche and competitive market.

I bought a Sennheiser wireless microphone from the only available seller on Taobao, and it is quite costly with a $350 price tag. In the meantime another brand called Rode from Australia has a competitor product coming out next month, and it is considered better but with a $200 price. So the background is the Sennheiser one is likely to be overshadowed by the Rode one very soon, but out of the love and trust for Sennheiser mic system, I decided to give it a try. I received the product yesterday, and after some brief trial, I chose to keep it and commented about the pros and cons in the product page, as what I would do usually.

Purchasing goods on Taobao is a very personal experience, because you will need to talk to the merchants directly asking whether the products are in stock, any details you’d like to know in advance before you click the “Buy” button. Unlike Amazon in the US, there’s no direct chatting feature available for you, since Amazon considers all useful information is already there, no communication is needed, and the price is the price, the package is the package – that is to say, there’s no room for negotiation. (Amazon has pulled back from China last month, “announcing” their failure in competing with local giant JD.com and Taobao, and it could be another interesting case for businessmen to look into.)

No negotiation could be a huge problem in China, or similar in most other developing countries. For those who have travelled to developing countries, for example, China, I bet most of you have the idea of bargaining. Especially for stalls on the street, if one merchant sells you a T-shirt for 50 yuan, you know it is highly possible for you to take it away with 30 yuan, and that is a shocking 40% discount. While some might not like bargaining, it does give others lots of fun during the process. Along the process you and the store keeper might act a little bit, showing your cards one by one, and eventually reaching a win-win price – it is quite an interesting journey if you like shopping. Okay, you got the idea that on Taobao you can do this all day. For example, if you buy in large quantity, you can negotiate with the merchant for a lower unit price, or ask the merchant to give you some extra stuff in the packaging.

Back to my Sennheiser microphone example, after I posting the neutral comment, the merchant came to me saying they could send me some useful accessories for free and a 50-yuan gift card for future purchase in his shop, in order to thank me posting the first comment for the microphone. The owner is really nice, but he is not the only one who is this nice to me in my Taobao purchase history. I still remember when I purchased my second acoustic guitar from another merchant, the specific model I want is out of stock, and I was a bit angry that the guy who chatted with me lied to me about this fact. However before I made any act, the shop called me apologizing about their carelessness and gave me a free leather guitar case, a box of picks and a tuner, all being extremely useful to me. And I can raise numerous other similar cases from my own experience on Taobao.

And the core of that is one thing, that all is negotiable, and all is personal. It is like dining in a local, crowded but cheap restaurant compared to a McDonald’s drive-through. You can’t imagine negotiating with McDonald’s staff on a drive-through lane, can you?

But China is still kind of like a developing country, because in many ways standards have not been set, or more sarcastically, not been met since there’s still plenty of gray area to operate on. Taobao has successfully inherited this cultural message by transforming our love in negotiation on the streets since ancient time to a modern, high-efficiency web portal. The model could be possibly successful in some other developing countries, but I could hardly believe that it can be used in developed countries, where everything has a standard and the standard has to be met.

Ironically, that also makes China, as a country, attractive, at least I love that. 🙂

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