Since its founding, Taobao has increasingly become a force to reckon in the commerce sphere. Its extraordinary growth rate remains a puzzle to many scholars in consideration of the fact that it came into an already-packed market. However, by studying its SWOT analysis does one come to the root cause of its historic growth.
Taobao has friendly transaction fees, which in essence allow buyers and sellers to make most out of their transaction. This strategy has and continues to attract a vast number of online dealers. The strategy further strengths its relationship with other parties.
Second, it has strong ties with reputable banks. In consequence, it has largely improved the integrity of e-payments and transactions by eliminating instances of fraud. By improving the credibility of e-transactions, it has been able to increase customer confidence.
Third, it has good relationships with other strong enterprises. For instance, it presently cooperates with sohu.com, one of the premium internet companies in China. By developing good relationships, it has benefited in several ways including reducing costs and sharing of assets.
Fourth, it has one of the safest trading platform. In cooperation with the Chinese government, it ensures the identities of all its users are valid (Li, Luo, He, & Cai, 2007). In other words, it discards from its system users without valid identities. In this way, it enhances its reputation as one of the most reliable trading sites.
Lastly, it has a robust and highly inclusive website. One of the upsides of its website includes the provision for both buyers and sellers to be able to communicate privately through the site. Communication provided is likewise highly interactive.
Taobao has a complicated user-interface. The arrangement of tools within the site is somewhat complicated. In this manner, users are bound to encounter several challenges in using it- an aspect likely to damage its economic potential.
Secondly, the site employs only a few languages. In particular, apart from Chinese, it has only three languages, with popular tongues such as Spanish, French, and German excluded. From a critical perspective, such limitations impede its goal of becoming the preferred online destination.
Third, supervision of products remains poor. It has and continues to face instances of customers complaining of receiving counterfeit goods as well as instances of sellers criticizing its inability to prevent trading of counterfeit products. Collectively, these issues have reduced customer confidence as well as tarnished the reputation of some sellers.
Fourth, it is possible for sellers to delete user comments and evaluation of their products. They can do this individually or alternatively hire specialists to delete negative comments. For that reason, there is a high probability that potential customers may buy substandard goods.
Fifth, it does not have a valid register of oversee users (Xinping, Qian, & Xu, 2009). This shortcoming explicitly and implicitly affects sellers in various ways. Accordingly, it is sometimes difficult for sellers to tell whether a buyer really wants a product.
Lastly, its business model is easily replicable. In China, for instance, other ventures have replicated its model of group buying. As a result, they directly threaten its existence.
The growing number of internet users both locally and internationally offers much hope for the premise. In China alone, research indicates that a majority are turning to online trading (Boone, L. (2012). In fact, more than 50 percent of Chinese imports came through online trading. With the further proliferation of internet-enabled devices, the premise is bound to reach a diverse market.
E-commerce policies are increasingly becoming friendlier. For example, regulation of shipping fees has become a major boost to online trading companies. Friendlier policies imply that it will be able to woo as well as retain its customer base.
Alibaba has and continues to demonstrate its will of providing technical assistance to it. In consideration of the fact that Alibaba is colossal online institution, the premise will benefit largely by having a perfect association with it. With good and continued technical support, the venture will by far outperform institutions such as e-Bay.
Taobao operates in a highly competitive market. Two of its notable competitors are Amazon and eBay. Apart from having large market bases, these companies rely on superior technologies. Moreover, these companies are financial sound and continue to develop large market networks.
Another major threat the premise faces is the indefinite change of customer base. At times, the customer base is incredibly high and sometimes the numbers sharply go down. These changes, as evidenced by research, result from changes in preferences and tastes among consumers. Competition likewise plays a tremendous role in influencing the pattern.
Changes in government policies, in particular, the increasing and decreasing of taxes are equally a potential threat. Increases in taxes imply that it will have to raise its shipping fees among others. Such moves are bound to affect consumer preferences and tastes.
In conclusion, by closely studying the SWOT of Taobao is one able to understand why it remains very competitive. From a critical perspective, Taobao is able to tackle its threats and weaknesses. In piecing up the whole piece, it is correct to say that Taobao has a bright future.
Boone, L. (2012). Contemporary marketing, 2013 update. S.l.: Cengage learning custom.
Li, S., Luo, J., He, J., & Cai, H. (2007). Trust Build-Up in Online Transactions Empirical Analysis of Taobao's Trust Mechanism. 2007 International Conference on Wireless Communications, Networking and Mobile Computing.
Xinping, D., Qian, H., & Xu, C. (2009). The Analysis and Optimization of Taobao's Credit Evaluation Mechanism. Proceedings of the International Conference on Internet Technology and Security, 135-138.