Taobao is the Mall of the Future

Consider Tmall, and its older sister Taobao.

The world’s largest shopping mall.

Tmall is the glitzy mall where only official brands can have a presence. Taobao is the much larger market in the forecourt where anybody can run a stand with whatever products they want.

They provide the infrastructure empowering millions of brands — official and personal — to build their business.

They provide the structure and drive traffic to their mall.

They guide the consumers and provide advertising space to highlight individual stores.

They provide a payment system and rewards card for the consumers.

They provide the three walls within which a brand can establish its own presence, stock its own products and hire and motivate its own staff.

More importantly, consumers are treating it as a mall.

Rather than use ecommerce because it saves time finding the product they wanted to buy, many use it to kill time: browsing multiple stores, multiple recommendations, multiple products to find what they never knew they needed.

Hours are wasted each day, at work and home, just hanging out in the virtual mall chatting with store staff and sharing the latest finds with friends and colleagues.

This has fundamentally shaped how consumers approach ecommerce in China and how they view their interactions.

This chart from Capgemini provides a great look at how the platforms that consumers use to shop online has also impacted how they view their online experience.

The key thing to notice is that online consumers in more developed retail markets a more likely to view themselves as driven by rationality or value (price and ease) while those in developing markets see themselves as driven by experience.

It’s possible to approach this by arguing that there are fundamental cultural issues involved (my experience has been the westerners are more driven by price than consumers from most developing nations). But that gets into too much pop-pyschology and opinion.

The key issue is encapsulated in this quote from Jack Ma

Bricks-and-mortar retailing is a mature business in the US, where consumers have been shopping in malls for decades and continue to do so, augmenting their purchases with occasional forays on the web.

Online shopping is dessert in the US, but in China, it is the main course”

Jack Ma

In developed markets, consumers have most brands easily available to them in the offline world. They walk in stores, experience the brands, touch the products, meet the staff. They visit the mall, hang out with their friends, eating, chatting, browsing, talking, experiencing.

Brands don’t need to invest in their online brand experience since consumers already know the brands from their offline interactions. Consumers go online to find deals from brands they already know.

And this has been reinforced by online retailers who historically have provided the most bare boned of consumer experiences, focused on generating the cheapest prices possible.

In markets where consumers don’t have this easy access to brands, online is the only interaction consumers will have with the brand until they receive their product. Therefore more is required from brands. And the way brands have developed online shows that they realise this.