The Alibaba Story - Crocodile in the Yangtze - Trailer from Taluswood Films on Vimeo.
Introduction On Taobao
Taobao ("searching for treasure") is a Chinese website for online shopping similar to eBay and Amazon that is operated in China by Alibaba Group. Established in 2003 to facilitates consumer-to-consumer (C2C) retail by providing a platform for small businesses and individual entrepreneurs in chinese-speaking regions
With around 760 million product listings as of March 2013, Taobao Marketplace is one of the world’s top 10 most visited websites according to Alexa.For the year ended March 31, 2013, the combined gross merchandise volume (GMV) of Taobao Marketplace and Tmall.com exceeded 1 trillion yuan.
Our team believes that the key success point for Taobao is innovation.
To elaborate this point, we did a comparison between Taobao and another big e-commerce company, Ebay.
Taobao Timeline
So, How does the story goes ?
In theory, there are 8 critical areas for innovation:
- No innovation without leadership.
- Innovation requires calculated risk management.
- Creativity triggers innovation.
- Innovation requires organizational integration: time management and uncertainty.
- Success requires excellence in project management.
- Innovation requires effective communication within the organization.
- Protect creative efforts with IPR.
- Successful innovation requires understanding of the market.
- Our team mapped the differences between Taobao and Ebay with the 8 critical areas and below is our analysis.
Crazy Ma
Sustainability was questioned because Unlike Ebay who charge people for listing, taobao make it free. That earns jack Ma as a Crazy MA
“eBay may be a shark in the ocean, but I am a crocodile in the Yangtze River. If we fight in the ocean, we lose—but if we fight in the river, we win.”
Deep understanding of Chinese market
All the success point that Taobao beats Ebay are all based on Ma Yun’s deep understanding of Chinese customer consumption habit and Chinese economics environment. Chinese people are price sensitive, they like to bargain and they don’t have the confidence to do transaction online with someone they never met before. Ma Yun understands such fact and he puts his understanding into the design of whole taobao’s running, including website design, marketing strategy and operation strategy.
Creativity triggers innovation
Taobao has a very creative company culture that always looks for new valuable ideas. Take Alipay as an example. Even though Alipay has already became the most commonly used online patment gateway in China, it never stopped innovation. In the past few years, Alipay keeps building partnership with banks, like China Construction Bank, to come up with new financial products like “Gragon Card”, a credit card dedicated for online shopping. Last year, Alipay come up with a new product - YuEBao, which is an investment product that provides customers a much higher interest rate than banks.
Inside Taobao, the entrepreneurship culture is also very strong. In 2010, after 7 years when Taobao was born, Taobao initiated a project called “horse-racing”. It is a project that incentives employees to propose new ideas and implement the new ideas. There are two ways to encourage new ideas: the first way is to give freedom to their employees. Employees can form their own group and propose their ideas during the company meeting. The second way is that Taobao will give their employees a topic and employees need to think of ideas related to the topic. No matter which approach employees are choosing, in the end, there will always be a voting inside Taobao and only the team who has the best idea will gain financial and human resources support from Taobao to implement their idea to be a real product.
Such “horserace” project is a continuos project conducted every year. Until 2013, more than 800 proposals were created and thousands of employees were involved in such project. There is no doubt that Taobao has a very innovative culture.
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