These figures are expected to continue to grow with the advent of telecommunications infrastructure improvements as well as portable, mobile devices equipped with Internet applications. For businesses looking to start-up a new organisation in the Taobao environment, there are certain risks and advantages related to known consumer behaviour patterns, understood consumer shopping behaviour as well as innovation and speed of technological advances. This paper describes the opportunities and challenges in this effort.
Taobao has become so popular that it is quickly becoming the foremost leader in online product sales in China; and abroad. Built into the many technological support technologies on this platform is the ability of consumers and business leaders to use social media to connect with one another at the relationship and marketing levels. Referred to as the social media revolution, applications that allow for blog entries, discussion platforms and video-sharing capabilities have given the Internet a new presence that is readily accepted by multiple target markets (Smith 2009). Familiarity with sites such as YouTube, Twitter and Facebook are now moving into mainstream consciousness and TaoBao has actively pursued inclusion of social media platforms to enhance communications between buyers and sellers.
In terms of specific shopping behaviour in the e-commerce environment, a recent survey identified that 73.8 percent of Chinese consumers prefer to pay online using their debit and credit cards (Li & Suomi 2009). Only 28.1 percent of those surveyed still valued traditional cash purchases in the physical retail environment. Growth in the availability of credit services in China has made Taobao ideal for new businesses that are well-equipped with high quality distribution networks that can supply consumers after making an e-commerce transaction.
However, there is a disadvantage to this growth in credit card usage. Consumers in China are very price sensitive today