China-based online retailer Taobao is known for offering a massive amount of options for online shopping. The online store offers online shoppers everything from plane tickets and clothes to home appliances. Even though Taobao’s audience is huge, it has been reported that small e-retailers are looking at new sites to generate revenue.
For example, one of the small retailers who runs a shop on Taobao for seven years is considering changing the business focus from the huge online platform which features millions of e-retailers, to other platforms. The Shenzhen-based e-retailer, Chen Xiaogang said, “The opportunities to make a fortune (on Taobao) are small but the risk of losing money is rather high.” Chen and team generated a revenue of about 20 million yuan in 2013 by selling women’s clothing.
However, despite this success, Chen explained that the marketing investment to make his company recognizable in the sea of competition was a heavy burden. Chen went on to say that they spent about 1 million yuan on advertising alone in 2013 in order to ensure that the shop was not buried by others offering similar products on Taobao.
For each click on the banner, Taobao earned 1 yuan, however, not every click led to a successful sale. Overall, the retailer said that the game it about the survival of the fittest in the market.
Photo Credits: Phys