Taobao is Amazon, Instagram, Buzzfeed, and Periscope in one app
Part of a series about life on the Chinese internet.
Taobao is like Amazon, but a lot bigger and more full of life. There’re dozens of departments and storefronts. Flash sales ticking down. Auctions of exquisite goods. A news reader with clickbait galore. A feed filled with glamour shots, autoplay videos, memes, and puppy pictures. Live streaming sessions where everything the host wears is for sale. Crowdfunding for clever new products. It’s a bona fide miracle Taobao manages to fit all these features into its app—but somehow it works.
Jack Ma’s Alibaba empire started as a website where businesses from around the world could buy supplies from small Chinese manufacturers. But it’s Taobao that’s made it a daily habit for millions of Chinese. Three hundred and fifty million people made a purchase on Taobao or its companion app Tmall last year, and 289 million people visit these apps at least once a month. That all adds up for Alibaba, which moved $400 billion in merchandise in 2015 and grew revenue by 43%. Amazon? $225 billion.
The Americans, what they’re really strong in is hardware and integrating systems. They were way early on that. But if you want to play the information game, the software game, Chinese people’s minds are every bit as good as theirs.
There’s a well known video of Alibaba founder Jack Ma bucking up the troops in the early days of the company where he makes this claim. His vision for Taobao has always been that it should be a force for Chinese self-empowerment and cater to Chinese needs. And that vision has helped Taobao fend off challenges from e-commerce heavyweights like eBay and Amazon. But it’s only in the last few years, as Taobao has ridden the rocket ship of mobile internet growth, that the company has broken through to the true, untrammeled frontier of e-commerce.
Taobao is now doing things that no one else is doing, including its American counterparts. There’s more functionality in the Taobao app than virtually any other app in China or anywhere else. In fact it’s more akin to a dozen apps packaged together that exhibit very tight synergies.
So what has Taobao accomplished and what can tech leaders elsewhere learn from it?
Taobao’s genuine innovation is in the way it conceives of the shopping experience. While Amazon has done wonders to inform American consumers and get them the best prices with the most convenience, Taobao has made the leap into experiential commerce.
For Taobao, shopping should elicit feelings of excitement and fun. And Jack Ma’s product designers pack in every whiz-bang concept they can think of to give shoppers a bountiful and variegated shopping experience. At its most forward-thinking, it completely erases the line between commerce and content in ways that we’ve only begun speculating about.
Shopping as excitement
A palpable energy pervades Taobao. Bright colors, interesting layouts, smiling faces, and different ways of shopping make Taobao feel like an expansive bazaar filled with both goods and characters.
In terms of excitement, nothing beats the deals.
You could say that a cardinal rule of sales is to create a sense of urgency. If the buyer doesn’t act quickly, they’re going to miss out on a great product at a great price. Taobao makes this a basic dynamic of the shopping experience. It’s not enough to say here are today’s deals. For Taobao, the operative word is 抢 (qiǎng), to steal — in the same sense as “wow, what a steal!”
At times, it can feel like 抢购 (qiǎng gòu) — that is, making a steal-purchase — is a foundational idea of Chinese consumerism. It captures how fervently Chinese have taken to the material life. And it has particular resonance in a society where if you’re not prepared to qiang, you will miss your subway train and your turn at the cafeteria counter, and your kid decidedly will not get into that school.
Taobao drives home this urgency in a number of ways. Many products have countdown clocks ticking away the milliseconds till the deal is over. Bars show how many units have been scooped up and how many are left, as well as badges and buttons beckoning you to “steal now.”
And as if looting were not violent enough, there’s an even more urgent type of deal called the 秒杀 (miǎo shā), meaning “instant kill.” This kind of deal, named after a scenario in video games where one character kills off another in one swoop, lets shoppers get their hands on a very limited number of units at a ridiculously steep discount — say, 80% off a phone — so they need to have their screen tapping thumbs cocked and ready at the appointed time to make the kill as fast as they can.
In this sense, Taobao turns shopping into an experience much like gaming. There are stakes at play and success or failure depends on whether you can win the object of your desire.
Time also speeds up dramatically in the app. Sales that might once have spanned a holiday weekend in traditional retail now march towards the consumer in an endless procession. The 4pm sale is now starting, and soon there will be the 6pm sale and 8pm sale. It’s a lot to take in, but the overall effect is one of dynamism. The torrent gushes on and indeed the next time you dip a toe into these waters, it’ll be a whole different river.
More ways to shop means more chances to buy
It’s clear that the prevailing philosophy at Taobao’s offices in Hangzhou is that more is more. More selection. More visual interest. More ways of discovering products you might love.
The design effort alone is daunting. The home screen shows a plethora of items, but is actually just a portal to dozens of sub-shops within the app. What are the sub-shops like? Start scrolling and I’ll meet you at the bottom.
Each of the sub-shops also has its own sub-sections and special promotions. And these are just Taobao’s curated shops. There are thousands more from individual sellers.
One thing’s for sure — your eyes do not get bored.
Taobao takes advantage of the Chinese writing system to pull off these designs. Compared to languages written in alphabets, Chinese is visually more dense. Because each character contains more internal complexity than letters, it takes up less horizontal space to express an idea. That means Chinese apps can display more information on screen at one time.
This phenomenon is seen across Chinese apps, and my personal feeling is that their designs do not feel cluttered in the sense that information is ill-placed or hard to process. Information density is high, but you feel like you’re getting more value.
Beyond visual variety and an abundance of consumer products, Taobao’s auctions give people access to some rare, big ticket items. This includes gemstones, fine wines, and cultural artifacts, but also government assets like official vehicles, commercial real estate, and even mining and forestry rights listed at over 100 million RMB (US$15 million). To round out the experience, there’s also a crowdfunding feature where people pool funds for VR controlled drones, foldable electric bikes, and smart tea makers.
If Taobao has a core competency, it’s taking abundance to the extreme. This is fueled by sellers who open their stores on Taobao by default due to its vast network effects, but also by Taobao’s efforts to design diverse visual experiences and mechanisms for conducting business. The result is a commercial universe that seems to encompass the entire range of human activity, and therefore whatever transaction you need to make, it’s quite likely you’ll be able to make it on Taobao.
Shopping as content experience
Apps have to fight for your attention. An e-commerce app is no different. What’s most interesting though is the logical conclusion Taobao’s leaders have made: that if Taobao can also be your source of entertainment, then you won’t ever have to leave.
Traditionally there’s been a pretty stark dividing line between media companies and retail companies. Media companies, whether in publishing, TV, or social media, have been content to act as purveyors of information. So while consumers encounter a ton a commercial information through media — in ads or in the content itself — they typically have to go to a different business like Amazon, or Wal-mart, or Best Buy when they want to make a purchase.
Presumably this is because the challenges of media (content production, selling ad inventory) are quite different from the challenges of retail (logistics, selling physical goods), and there are efficiencies in specializing.
But these two forces are so intertwined, it’s easy to wonder — what if they just acted as one?
At Taobao, this not only an area of contemplation, but the very future of e-commerce, and it’s already taken several steps into this wild unknown.
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Taobao’s news reader is for the internet masses. More than 1,300 media partners provide content, but what gets the most traction are staples like “Turns out women are most attracted to this part on a man” and “iPhone 6 back cover oxidizes over time — how to stop yours from turning into a mess.”
Some articles directly sell products within the content. A piece like “How a goddess stays a goddess — she always has these items in her bag” is a standard listicle but the images of sunscreens, lip balms, and clutches give prices and readers can purchase those products with a couple taps. Many other pieces though are just videos of pets and food.
The idea is you don’t have to hard-sell people at every opportunity. Keep them in your ecosystem with stimulating information and there’ll be plenty of chances to direct them to one product or another.
The newest phenomenon in the Taobao ecosystem though, and perhaps the most alluring, is the emergence of 网红 (wǎng hóng). This term refers to all internet stars, like the ones who’ve made a name for themselves on YouTube or Instagram, but the ones on Taobao distinguish themselves by just how much merchandise they sell.
Taobao’s inclusion of a social media feed and, now, live streaming, has been an inspired move. The pictures that the wanghong — mostly fashionable young women — were posting on other social media platforms like Weibo can now form the cornerstone of Taobao’s content experience. It’s the perfect match. Fashion and beauty are ever-replenishing, providing limitless material. And since fashion photography is is little more than taking pretty pictures of products, the wanghong are more than willing to participate on this new platform where they can directly monetize their work, rather than having to speak on behalf of other brands.
This tight integration of social media and retail has been a boon for Taobao’s biggest wanghong, Zhang Dayi, who is reportedly selling 300 million RMB of clothing a year ($50 million) through her Taobao shop, of which she pockets seven, possibly eight, figures in dollar terms. This is on par with the biggest wanghong of the non-Chinese internet, Youtube star Pewdiepie, who took home $7.4 million last year.
Live streaming, which Taobao launched in March, has only accentuated these eye-popping figures. While Buzzfeed staffers exploding a watermelon with rubber bands remains a high point for Facebook Live, Zhang Dayi went live on Taobao on the evening of June 20th and in the span of two hours moved 20 million RMB worth of clothing ($3 million). Viewers could browse her products right in the video and have them delivered with a couple of taps.
Other makeup and fashion mavens stream for hours every day, modeling and explaining their wares and drumming up excitement for upcoming miaosha deals. It’s the Home Shopping Network reincarnated on Chinese smartphones, but the hosts have to endure answering the same basic questions over and over again from shoppers just dropping in.
The future for US e-commerce?
American companies like Amazon, Facebook, Twitter, Pinterest have all been dancing around the features now seen on Taobao. Will they move towards tighter integration of content and commerce? Can they?
Amazon has the clearest advantage. While Facebook, Twitter, and Pinterest have gobs of consumer data on their advertising platforms, it would take far more effort for them to build out an e-commerce operation with all its attendant concerns of order management, warehousing, logistics, and payments than it would be for Amazon to develop a media platform.
An Amazon partnership with one of the major social networks also seems out of the question as Amazon would need to tightly integrate the user interface with its ordering system. Unfortunately for Amazon, they’ve never shown a knack for delivering a cutting edge app experience, a prerequisite for a trendy social network.
Meanwhile, Taobao has a number of structural advantages that have allowed these features to coalesce. One is Taobao’s utter dominance in Chinese e-commerce. It’s far and away the best choice for small, individual sellers who can take advantage of Taobao’s payments, marketing, and logistics platforms. Taobao has no competition in this area. As an outlet for big brands, Taobao’s Tmall controls about half the retail market, with runner-up JD.com taking up another quarter. That means any effort to create a social network within Taobao can piggyback on the deep networks effects that already bring shoppers and sellers together on the platform.
But that doesn’t mean Taobao can stand still. As the Chinese app economy catches up to Silicon Valley and gradually begins to pull ahead, competition will surely be the main driver. Taobao understands that with a market as big as China, its competitors will continue to fight savagely for a piece of the spoils. If Taobao does not continue to innovate, it may easily see JD.com’s market share inch upwards. Amazon, on the other hand, has no adversary that can offer a comparable shopping experience, so adding more spice to its app’s user experience or acquiring a company like Pinterest to introduce a social aspect to shopping may stay on the drawing board for awhile to come still.
Then there are the deeper philosophical questions surrounding the marriage of commerce and content. Although more media outlets are experimenting with “native content” that dress ads up like ordinary content, they carry an ick-factor. Editors are careful to label commercial content as such, lest they cross the ethical line stating consumers should not be sold to unless they know they’re being sold to.
In general, ads are viewed as dirty and manipulative, while “real” content is revered as vessels for truth and creativity. This has the biggest consequences for YouTube and Instagram stars, who can barely sponsor a product without cries breaking out that they’ve “sold out.”
The fantasy of “authenticity” held by consumers can be both naive and unfair. In this way, Taobao eliminates the need for elaborate dances by making it clear where it stands: it’s there to sell. Consumers can adjust their expectations accordingly. Indeed if it’s part of a young woman’s personal brand that she is a photographer and owner of an online fashion shop, she can’t ever be accused of selling out. Do those pictures of her skipping around Paris reflect the true her? Well, it’s always better to suspend your disbelief than to have your faith in authenticity shattered by an ugly commercial reality.
Taobao also suggests the answer to another vexing question: if it’s clear that younger generations favor experiences as opposed to possessions, then why not turn the process of acquiring possessions into an experience itself? While traditional retailers dream up interactive displays and augmented reality features for their brick and mortar stores, Taobao suggests another way to bring commerce to life is to use the contours of digital interaction to create engaging and fun experiences that lead to purchases.
When Chinese people talk about using smartphones, the verb they use most often is 玩 (wán) — that is, to play. Office workers take a break to 玩手机 (wán shǒu jī), or “play” with their phones. When a company releases new app features, they announce all sorts of 新玩法 (xīn wán fǎ), or new ways of “playing” with the app. The meaning isn’t at all limited to games. Messaging, swiping through friends’ pictures, buying stuff all fall into this generic type of “play.”
Indeed just as game developers combine shapes, colors, motion, and characters to produce an infinite variety of gameplay, Taobao combines different products, categories, images, videos, limited-time offers, and social interactions into a huge variety of ways to conduct a transaction. For the app user, the expectation is not simply to acquire a good, but to have many diverse shopping experiences that activate different pleasure centers of the brain.
This ethos to push e-commerce to its limits lies at the heart of Taobao. Americans may have traditionally been the most shameless and rapacious consumers, but it’s the Chinese, who are charging headlong into modernity with the greatest possible speed, who may show us just how far the material life can go.
Whether they find greater riches or only a gnawing emptiness is something I’ll be watching with much interest.
Part of a series about life on the Chinese internet.
