Taobao created yet another miracle on the day known as the 11.11 Shopping Festival in China on November 11, 2013. On that one day, Taobao and Tmall transacted close to 35 trillion RMB in business. This was nearly two times the volume of transactions conducted on the same day one year earlier, when the total came to 19.1 trillion RMB. The 2013 figure represented a new milestone in the history of China’s Internet-based retail sales.If the 2012 figure could be regarded as the start of the dismantling of traditional retail business, the 2013 figure of 35 trillion RMB could be seen as a key moment in the process of transforming traditional sales into e-commerce. Based on the unique characteristics of the Internet, the new economic model of e-commerce was beginning the actual overthrow of traditional commerce.
As an industry that arose like the rising sun, this was not the first time e-commerce had been regarded as a new force for absorbing large numbers of employees. More and more merchants were setting up business on Taobao, which, on the surface of it, seemed a very desirable thing. However, like the bursting of the information technology (IT) bubble a few years earlier and like today’s financial crisis, if an industry cannot find a path to sustainability, if it lacks the constant renewal of innovation and vitality, the vision of prosperity remains a far-off dream. Right now, for example, the merchants on Taobao are complaining more and more about how hard it is to do business. Even though these grassroots entrepreneurs often came up with astonishing ideas and sales strategies, competition is intense in this market. Many fresh ways of thinking might well get buried by such competition and disappear before you know it. Inside Alibaba, one of the long-term topics of discussion is how to unleash the entrepreneurship of these merchants and also how to make use of this initiative. Taobao University, the Tmall Vendors Training Department, and a number of departments within Alibaba, including the department for developing vendors (bringing them to maturity), spent considerable time and effort on this.
As yet another 11.11 Shopping Festival swept over China like a heat wave, Taobao and Tmall grew another year older. From the day they were established, these two dynamic websites showed a great affinity for attracting business. A number of grassroots brands had made use of the Taobao platform to grow into large businesses and open up their own territory. A number of traditional crafts, such as dying and embroidery, also found loyal customers on Taobao and created a unique kind of adornment. Given increasingly segmented lines of business in China, the innovators of all kinds of unusual and intriguing endeavors found a place to ply their wares on the Taobao website. The creativity of shop owners was allowed full range of expression. Not only did Alibaba constantly stay in the forefront of innovation, but it also mobilized tens of millions of grassroots entrepreneurs to do the same. It built a free and easy “cradle of creativity” for innovators to do their thing.
One might well ask how it was that tiny grassroots peddlers could manage to find business opportunities in the context of fierce online competition. How could they then build themselves up to real strength? What secrets lie behind the legendary stories of so many Internet companies — what are the tricks to being successful, the paths to innovation? How can other potential vendors, lacking experience and yet full of the desire to try, find a way to survive in the stormy turbulence of e-commerce?
In this chapter we get closer to an Alibaba that is not well known to outsiders. We look at the kinds of efforts that Taobao’s online customer services providers put into helping grassroots entrepreneurs. We look at what kinds of experiments these entrepreneurs try, what kinds of successes they have, what challenges they face, and what setbacks they have endured. Taobao University: Serving As Incubator for Training New Vendors“Unleashing the entrepreneurship of store owners” is easy to say but not so easy to do. A myriad of products is now flooding markets. Products that declare that they are innovative by just sticking on a new label are simply gushing forth.
Consumers see such marketing ploys as “Our shop has one of a kind …” or “Custom made for you …” or “Made to order,” and what started out as interested curiosity turns into a kind of numbness. Meanwhile, the real breakthroughs, the success stories, such as frozen food sold via the Internet and ethnic clothes made to order also have faced all kinds of bottlenecks and problems. They have had to deal with raw materials, logistics (handling and shipping), marketing, and everything else. Alibaba is highly aware that innovation is not just a matter of having a good idea and not just a matter of carving out an innovative path. It is more a matter of turning these new things into successes. Taobao University, which is described next, teaches vendors how to turn innovative ideas into reality.
Taobao University is a training department within the Alibaba Group that provides services specifically to vendors on the Taobao platform. It is positioned as an educational platform. It provides professional training for vendors who are currently operating websites on Taobao as well as vendors who want to start a business but do not have experience. From starting out with the most basic operating training on e-commerce, it has gone on to conduct offline training tours around the country, visiting 50 cities with a team that includes the most successful sellers on the net. It also has gone from being a completely free public good, providing primary training, to positioning itself as an increasing high-level professional service that receives compensation. After nearly 10 years of growth and development, Tao-U, as it is called, also has gone from training supply-chain logistics and transaction credit procedures to preparing people for a more strategic approach to growth. Throughout this process, Taobao University has consistently held to its core mission: helping the world make money rather than making money off the world. Its reflexivity is extremely powerful. It develops itself by constantly thinking about the needs of vendors. It is like a patch of very fertile soil that nurtures the growth of tens of millions of e-commerce entrepreneurs and that then witnesses their miraculous successes, one after another.
A famous line in Tang Dynasty poetry describes the effects of a gentle spring breeze that passes over the land, putting all the pear trees in bloom in the course of one evening. This elicits comparison with the many e-commerce businesses that sprang up in China at the turn of the twenty-first century. A profusion of “shops” appeared on the Internet selling everything from women’s fashion to low-cost household electronics to high-cost luxury items. They emerged and then hoped for business like sunflowers facing the sun. The soil that nurtured these things, however, kept a very low-key and humble attitude. The name of this patch of fertile soil is Taobao.
Many people view Taobao as being akin to Wangfujing in Beijing in that it relies on its premier location. It has the advantage of occupying a unique space all by itself. In fact, just as Wangfujing needs the plans of designers and the cleaning services of a host of sweepers, Taobao also needs designers to help it with the platform that supports the online operations of merchants. It needs their acutely sensitive creativity to constantly adjust its functionality. Wangfujing, located in the center of China’s capital city, may have a constant flow of people, but it also still has the underlying precision of excellent management and standardized rules. Every day, Taobao’s network carries traffic that amounts to tens of millions of visits. Without a highly refined set of standardized systems, all those large and small, new and old storefronts would be pouring the blood of their efforts to increase traffic out into the sand.
Meanwhile, as everyone knows, when e-commerce was just beginning, traditional branded enterprises kept firmly to their offline mode of operations. As a result, they were not fast enough to catch the wave of Internet sales. The large numbers of online storefronts came from the most simple and unadorned ideas of people at grassroots levels. To use the words of highly qualified Taobao staff, going from 10,000 to 1 million may not have been such a hard thing to do for these grassroots shops, especially given the overall prosperity of e-commerce in that period. Going from 1 million to 100 million, however, began to make store owners feel that perhaps they lacked sufficient experience and professional knowledge. They began to feel that their heart was in the right place, but they did not have everything else that success requires. The question for Taobao then became whether or not to accept the cold logic of the market. Should Taobao allow microentities to go belly up, especially if they had no way to realize their own potential by themselves? Or should Taobao “borrow a ray of light” and serve as a lighthouse for them, guiding their passage, showing them how to break through bottlenecks and bravely keep moving forward? The Taobao platform chose the latter course of action. In June 2007, a department called the Vendors Training Department emerged to meet the needs of the time. This was the precursor of Taobao University.
From the day of its inaugural ceremony, Taobao University has always positioned itself as being a platform. However, Tao-U personnel say themselves that the platform as it exists today is a little like functioning under the planned economy. That is, Tao-U itself analyzes what it thinks the market needs. How does it know? Generally speaking, it does so by the following several channels:
1. It knows what the market lacks (needs) via new training demand, as generated by advances in science and technology. For example, every time a new e-commerce operating tool is launched, there is a corresponding need to know how to manage this tool.
2. It knows what the market needs via changes in the demand for training in line with changes in production relationships. For example, a normal online store may have one fairly singular goal when it first starts out, namely, to make money. Because of this, training must focus mainly on operations, advertising, and sales as the core subjects. Once that store reaches a certain size, however, the owner may decide to do a retail business, set up a retail store, and enter into the next stage in growing its e-commerce business, so he or she then needs a higher level of training.
3. It knows what the market needs when changes in what consumers focus on drive changes in the demand for training. In the realm of the Internet, the way in which changes in consumer behavior drive business changes goes without saying. For example, platform designers might be able to deduce the psychological needs of consumers by reviewing what consumers search for and what programs they mainly watch; these designers then guide vendors in trying to match what vendors provide with what consumers need and want.
4. It knows what the market needs by the kinds of questions that are asked in training sessions. For example, fairly high-level vendors may raise demands that are highly targeted, including supply-chain training, training in e-commerce branding, and so on, but demand generated by this path is relatively smaller. As online courses constantly improve, most vendors will be able to find the courses they need.In developing training programs in the future, the platform will focus more on the needs that vendors propose themselves. Only by truly paying attention to the difficulties being faced by grassroots operations will the program be able to unleash their entrepreneurship. Only by exchanging places with them and thinking as they think, standing in their shoes, will the program address the problems and resolve them, and only then will it make the whole endeavor a success.
Some people ask how Alibaba can have survived and prospered through all these years, having weathered the bursting of the Internet bubble, eBay’s declaration of war, and other challenges. How can it keep its head up and look to the future? Alibaba firmly believes in what it is doing. It believes that being simple and straightforward leads to being great. In a materialistic society that is immersed in the worship of money, Alibaba holds to its earliest belief, which is return e-commerce to commerce. Each challenge that the company takes on and overcomes is not just for show and certainly not for the sake of public officials. The company’s intent is to create fertile e-commerce soil for servicing the “little trees” so that they can grow and prosper themselves. The core value concept of Ali-people — trust — runs through every action the company takes. As Ali-people say, the process of arriving at trust is far harder than the results of achieving trust. Only by gaining the trust of ever more people, however, will the company and our society have any kind of force that propels it onward and upward. In the eyes of Ali-people, each satisfied smile of a customer, each sincere word of praise, each result, each time things go as expected brings an enormous sense of accomplishment. Ali-people are most glad when they can help customers improve, whether that is in small ways to increase immediate sales or in larger things such as establishing brands. The customer is core — this is what has helped Alibaba to come through hardship and see real success.
The early period of Alibaba and the Taobao platform did not actually have many elements to it that were original inventions. In 1995, when founder Jack Ma set up China’s “Yellow Pages,” he imported the e-commerce model of the United States. Later, Alibaba’s highly successful business-to-business (B2B) business, which was listed on the Hong Kong Stock Exchange, was still, to a large degree, simply localizing a model copied from elsewhere. The birth of the Vendors Training Department was something Taobao did to reduce the distance that still separated China from America’s level of e-commerce.
In 2003, at a time when 100 or more titles on e-commerce could be found in bookstores in America, books on the subject in China were extremely narrow in focus and mostly were limited to textbooks or educational material. In 2003, when eBay’s homepage was alive with the ads of major international brands, inside China, frontline brands still shrank from the idea of appearing on Taobao. They did not want to set a foot in these waters. In that same year, all kinds of Internet sites were up and contending with one another. Finally, in order not to let the opportune time pass by, still in 2003, the precursor of Taobao University, the Vendors Training Department, finally declared its existence.“If you want to be innovative, first copy others.” This realization was something Alibaba had practiced for many years as an innovative company. Between 2003 and 2007, the Vendors Training Department remained at a fairly preliminary stage of development. A team composed of only four people was responsible for everything it did. To start out, the team selected store owners who had particular prowess of one kind or another and asked them to describe their experience for everyone’s benefit. The team was able to find vendors with whom to exchange information on all aspects of the business, including sourcing goods, photographing products, marketing operations, logistical management, customer service, and transaction security. For the first few years, the Vendors Training Department trained eight lecturers. They came from the cutting edge of the market and had developed their own set of ways of doing things that covered all links in the production ecosystem. For example: How could one predict sales volume over the near term so as to have adequate stock on hand? From small things, such as servicing details, to larger things, such as operating rules and regulations, everyone talked about their own successes, and everyone had a good time. Meanwhile, Taobao staff who were designing the actual platform saw how these “children” (Taobao vendors) helped one another and found it hard to express their delight.
Taobao realized an annual turnover volume of 43 billion RMB in 2007, and mainstream products began to be sold on the site that same year. The Taobao platform seemed to have taken some of the wind out of the sails of Target and Walmart. Also in 2007, the Vendors Training Department executed an extremely courageous maneuver. It had always remained behind the scenes, but now it emerged and took a team of Taobao’s most proficient vendors on an offline training tour, stopping at 50 cities around China. The members of the team put up notices on bulletin board services (BBS) describing the locations of the training sessions and the qualifications of their lecturers. Once vendors learned about this, they crowded into the sessions. Each of the 50 sessions was totally full. In some cities, where the room was fairly small, attendees spent the entire time standing, drinking in the lessons with rapt attention. The passing along of knowledge, the enlightened understanding, the sharing of experiences, the infectious nature of the enthusiasm all put a kind of magic wand into the hands of these grassroots store owners. Once the evenings came on and they returned home to wave their wands ever so lightly over their own work, the products on their online shops began to glow.
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