Roaming though one of the many Shanghai shopping malls one could not help but wonder where everyone was? The place was empty, populated with the low paid workers tirelessly keeping it clean. Meanwhile, a few fiber-optic wires away, a booming mall was busy catering to the 250m+ customers enjoying a hassle free shopping experience. That mall was Taobao.
Whether it be a casual or luxury shopper—intellectuals (refined, less brand focused), followers (doing just that), lovers (big brand, big logo), or the laggards (last to keep up) the one stop shop that is the behemoth Taobao is catering to them all with a great velocity.
Taobao is simply an online force of nature. Bigger than eBay, Amazon, and the rest. There are a number of contributing factors behind it's incredible growth. The vast array of products, cheap distribution costs (average delivery is $2), easy debit payment methods, transparency of sellers, the list goes on. Just incredible to see how it captured a whole nation.
The latest push by TaoBao is to make the official 'retail TaoBao Mall' aligned with Chinese offline retail standards. Licenses, professional fit outs, online service and standards are now a pre-requisite in setting up a store. But it's all worth it. As many foreign brands are learning the key to retail success in China is vast becoming an online play. With brands such as Zara, Louis Vuitton, Adidas all with online flag ship stores.
Traditional retail expansion is certainly a requirement for customers experience. Yet the challenges that accompany gaining any real headway in China's retail industry requires millions of dollars in securing space, government red tape and not to mention the staffing headaches make this only a 'if we must' strategy. China has over 300 cities with 1m+ residents, that's a lot of retail space to cover. One online store front and a shift in marketing investment can support market development overnight.
Traditional thinking expects a shoppers would always consider the 'touch and feel' retail experience a necessity. But as we learn more about the Chinese 'modern' consumer they are more than comfortable to explore through trusted online Chinese channels.
Andrew Collins is the CEO of Mailman.