How to sell on Taobao from Australia
Last updated: 14th October 2024
Learn how to setup an online store on Taobao and expand your online selling business in China
Key takeaways
- Taobao is one of the leading e-commerce marketplaces in China with 892 million monthly active users
- It’s also the world’s biggest live e-commerce player with a 35% market share
- To become a Taobao seller, Australian businesses need to set up a legal entity in China
- Tmall Global is the international offshoot of Taobao and Tmall, helping global sellers connect with Chinese consumers
Introduction
Part of the Alibaba Group, Taobao is one the leading e-commerce marketplaces in China with 892 million monthly active users (as of 2023). 60% of Taobao users are under 30 years of age, making it the perfect platform to target Gen Z and younger millennials.
Taobao caterers primarily to the medium to low-end market, empowering individuals and small businesses to connect directly with customers.
By listing products on Taobao, Australian businesses can capitalise on the massive opportunities present in the Chinese e-commerce market and expand their operations globally. Keep reading to learn more about how to sell on Taobao from Australia.
Table of Contents
What is Taobao?
Launched in 2003 by the Alibaba Group, Taobao is one of the major B2C and C2C marketplaces in China. It allows individuals and small businesses to set up their own stores and reach millions of potential Chinese customers at a low initial setup cost.
It is more popular among customers for first-contact shopping and basic necessities. Some of the popular categories on the marketplace include:
- Health products and supplements
- Mom and baby products
- Consumer and smart devices
- Clothing products
- Food and beverage
Taobao vs Tmall: What’s the difference?
Taobao is a C2C and B2C platform catering to the medium and low-end markets. Its sister brand, Tmall, is a B2C marketplace that allows Chinese customers to access leading brands. You can consider Tmall as the branded and more luxurious counterpart of Taobao.
Tmall Global is the international offshoot of Tmall, helping global sellers connect with Chinese consumers.
While Taobao is popular with individual consumers and small businesses, Tmall is used by foreign companies and bigger brands to list their products.
Can Australian businesses sell on Taobao?
At first glance, the answer is no. An international brand cannot open a Taobao store if they are not based within mainland China. However, certain categories on the platform do allow sales from businesses that open subsidiary companies in China.
China allows foreign nationals to own both limited liability companies and partnership enterprises on their own or with a Chinese partner. Of course, you could also work with a Chinese company to operate through Taobao if you choose, but that could affect your profit margins.
As Chinese customers mainly use Taobao, you’ll need to find a local product supplier to work with and buy Chinese-made products. As mentioned, Tmall is a higher-end, more international option, but the setup costs are higher.
Another obstacle foreigners might face when scoping out how to sell on Taobao is that the website is written in Chinese. As a result, you or a business associate must speak or understand a little of the language to navigate the setup and operate on the platform effectively.
How to create your Taobao store and sell from Australia?
Set up a company in China
To sell on Taobao, you need to first register your company in China. You cannot use a placeholder office or virtual location. You have to follow the formal process to establish your company on the Chinese mainland.
- Secure an office rental contract. You need to have legitimate business premises, so you will have to pay a deposit as well as a few months’ rent before you can obtain a business licence application
- Fill out a business licence application. Most applications take up to six months to process and company incorporation will cost around 20,000-30,000 RMB
- Verify your identity. You can take copies of your passport as part of the application process
- Open a business bank account for your operation in China. Later, you will link this to your Taobao account
Complete account setup and authentication
Go to the Taobao store sign up page and click on the ‘Open a shop’ button (You will find the 0元开店 button in orange colour at the bottom of the page.
In the next window, add details about your store like your store name and description.
Connect Taobao to your Alipay account
You will have to authenticate your Taobao account using Alipay.
Alipay is Alibaba’s main payment service and the most popular payment method used by Taobao customers. You will need an Alipay account to accept and process payments on Taobao.
If you don’t have an Alipay account yet, you can set it up by using your phone number and business bank account.
Provide company details
You will have to add details about your business including the entity type and business licence. Most of the information will be automatically pulled in from Alipay after you have linked it to your Taobao account. If you see any errors, correct them in Alipay and resync with Taobao.
You will also have to upload scanned pictures of your personal identity card and business licence.
Perform a real face scan
The final authentication step is to perform a face scan to verify that the uploaded ID documents belong to the account holder.
Design your store and upload products
Your store’s visual aesthetic can be a huge factor in attracting and retaining customers. Take your time designing your Taobao store and choosing colours that align with your brand.
Next, upload products with detailed and concise descriptions in Chinese along with at least 3-5 product images.
Promote and market your products
With so many products listed on Taobao, you will have to work extra hard to attract customers and stand out among the sea of competitors.
Here are some of the more popular ways you can promote and market your products in China:
Taobao live: Taobao is one of the world’s biggest live commerce players In 2022, live commerce generated over ¥770 billion on Taobao.
Millions of Chinese customers watch Taobao live streams by brands or influencers to closely check products before purchasing. You can use social e-commerce to your advantage and host live streams on your Taobao store to show your products in real-time, answer any viewer questions directly and offer limited-time discounts
Collaborate with influencers: To get more exposure on your new Taobao store, you can collaborate with influencers. It can help you reach a wider audience and build trust.
Taobao seller fees: How much does it cost to open a Taobao store?
Setting up a Taobao store is free, but to publish and sell products, you are required to keep a deposit amount in your account. The deposit depends on the product category you are listing in and the amount of transactions done in the past 30 days. It can vary anywhere between ¥500 – 10,000. While the initial deposit may be low, Taobao will automatically increase the deposit amount as your sales increase. Currently, Taobao doesn’t charge any commissions on sales.
Though, these are just the fees associated with their Taobao account. If you have an Australian business and you are registering as a legal entity in China, you also need to consider other major expenses, including:
- Company registration
- Importing products to China (if applicable)
- Logistics and warehousing in China
- Getting the export and import licence
Currency conversion fees on cross-currency transactions
Pros and cons of selling on Taobao
Pros
Large consumer base: Taobao is one of the major marketplaces in China with a high engagement rate. If you want to expand your e-commerce business in China, this is a good entry platform to test the Chinese market.
Wide range of product categories: Taobao sells anything and everything from clothing to accessories, baby products, food and even car supplies. As a seller, you can offer various products across different categories.
Personalised feed: Taobao generates a personalised feed for every user based on their demographics and previous buying history. This makes it easier for your target customers to find your products, increasing your chances of success.
Social commerce: Taobao is not just a marketplace but a social e-commerce platform where customers can watch live streams, leave reviews, and even interact with each other. As a result, customers spend an average of more time on the platform and are more likely to make a purchase.
Taobao users spend 20 minutes on average on the mobile app. It clearly indicates how closely the marketplace is integrated into the users’ lives.
Cons
Long setting up process for foreigners: Setting up a Taobao store can be a lengthy process for businesses outside China, as it requires registering a company in the country. If you aren’t sure about it yet, you can consider listing your products on Tmall instead. (Note: While Tmall allows foreign companies to list products, you must be a brand owner or official retailer)
→ Take a look at our complete guide to selling on Tmall
Business needs to be conducted in Chinese: Since you are trying to reach and connect with Chinese customers, you have to maintain all your communication in Chinese–from product descriptions to store policies and customer support. In case you are not well versed in Chinese, you will need to hire a translator and a regional customer service representative who can handle the communication on your behalf.
Requires an in-depth understanding of social commerce: Just listing products on Taobao may not directly translate into sales. You are competing against domestic sellers who hold live streams and limited sales offers every week. Before setting up your Taobao store, make sure you have a good understanding of the platform and how it works.
Currency conversion costs: The profits you make in CNH have to eventually be repatriated into AUD. Without the right payment provider by your side, currency conversion costs and international transaction fees can quickly eat up your margins.
Expand your business to China with WorldFirst’s help
When setting up shop in new territories, you’ll need trustworthy partners to support seamless transactions.
Every brand needs an efficient supply chain with no delays. So, make sure that you can keep up with demand by partnering with an international payment provider like WorldFirst.
WorldFirst offers your business an innovative solution to transferring currencies cross-border –– you can trade like a local, making same-/next-day payments. All you have to do is authorise transfers before the cut-off times and WorldFirst handles the rest. You get access to competitive exchange rates and protect your profit margins.
Transform your business with language and currency capabilities with machine translation tools and innovative finance solutions.
- Open 15+ local currency accounts with local account details
- Direct CNH payments to 1688.com
- Pay suppliers, partners and staff in 40+ currencies and 130+ destinations
- Collect secure payments from 100+ marketplaces and payment gateways, including Amazon, AliExpress, Paypal and Shopify
- Lock in currency conversion rates for up to 24 months
Disclaimer: The information contained is general only and largely our views. Before acting on the information you should consider whether it is appropriate for you, in light of your objectives, financial situation or needs. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions, estimates, mentioned products/services and referenced material constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. WorldFirst shall not be responsible for any losses or damages arising from your reliance of such information.
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