Taobao is going to sell goods globally

Author | Liu Baodan

Editor | Zhou Zhiyu

Facing the certainty of going global, Alibaba has finally brought its core platform Taobao to the forefront.

On September 26, at a business conference in Hong Kong, Taobao announced that it will invest 1 billion to turn Hong Kong into a free shipping zone. During the upcoming peak consumption season, Hong Kong consumers can enjoy free shipping on Taobao for purchases over 99 yuan. Currently, 92% of the products on Taobao support official direct delivery to Hong Kong.

Hong Kong serves as the vanguard for Taobao's international expansion. Wall Street News learned that Taobao has recently upgraded its international strategy to the "Taobao Tmall International Growth Plan," expanding its international categories from clothing to all industries, initiating a comprehensive international expansion to meet the shopping needs of global Chinese consumers.

Taobao is the cornerstone of the Alibaba Group. In recent years, with the increasingly fierce competition in the domestic e-commerce market, Taobao's market share in China has declined. To address this challenge, Taobao has put forward a development strategy of "putting users first." Now, after stabilizing the domestic market, Taobao is seeking opportunities to go global.

Can the leading domestic e-commerce player Taobao successfully penetrate the overseas Chinese market? A new adventure begins.

Stepping Up Overseas Expansion

After more than 20 years of rapid development in the domestic e-commerce industry, the leading player Taobao is finally ready to show its strength.

At the conference, Taobao revealed that the delivery time in Hong Kong has been shortened to 3-4 days. Moreover, to facilitate pickups, the number of official Taobao self-pickup points and lockers in Hong Kong will increase to 800. Taobao will also enhance cross-border return services, allowing Hong Kong consumers to return items to local logistics points.

Hong Kong is just a part of Taobao's international expansion. Behind this, Taobao is comprehensively advancing its international expansion strategy.

According to Wall Street News, Taobao has proposed the "Taobao Tmall International Growth Plan" internally, and since September 23, it has started recruiting merchants across all industries and categories. Industries such as beauty, maternity and baby products, 3C electronics, sports and outdoor, trendy home products, and small appliances have all become targets for Taobao's international expansion.

Taobao's commitment to international expansion is resolute. An insider from Taobao stated that the investment intensity in the future can be described as huge. Just on September 26, Taobao announced an investment of 1 billion, and this is just the beginning.

This confidence mainly stems from the positive feedback brought by practice. Before the official launch of the international growth plan, Taobao had already paved the way for clothing to go global.

In mid-July, Taobao launched the "Global Free Shipping Plan for Clothing," selling domestic clothing directly to overseas markets through the Taobao app. As planned, the initial phase of Taobao's clothing will cover Asian regions such as Singapore, South Korea, Hong Kong, Macau, and Taiwan. By the end of the year, the free shipping coverage will further expand to countries like Japan.

"The initial exploration of clothing going global has been very successful." The aforementioned insider stated that the clothing internationalization attracted tens of thousands of clothing merchants to participate, with some merchants earning an additional 200,000 yuan in a day.

Shan, the head of Taobao's clothing operations, believes that the appeal of clothing going global to merchants lies in the fact that overseas Chinese consumers share similar aesthetic and consumption preferences with domestic consumers, and the return rate is very low, preliminary data showing only 2% In his view, there are two potential energies for Taobao to go global at this time. First, China's supply of goods is already very abundant, with highly competitive and efficient supply, which is an important driving force for going global; second, the infrastructure for payments, logistics, and other aspects corresponding to going global has been improved in recent years, providing convenience.

Of course, the good feedback on the clothing going global is also due to Taobao's choice of the going global model.

Taobao has chosen a semi-managed model, where merchants do not need to open another store, but only sell their existing domestic inventory overseas through the Taobao APP. Taobao encourages a large number of original style merchants to go abroad.

Compared with other cross-border platforms, merchants participating in Taobao's going global have the right to set prices and own the goods independently. Merchants do not need to increase additional operating costs, nor do they need to consider cross-border logistics and customs clearance. After receiving overseas orders, merchants only need to send the goods to a domestic consolidation warehouse, where the goods will be received upon arrival.

The logistics link is backed by Taobao, with the company providing subsidies for overseas postage, directly offering free shipping to overseas consumers. As for specific overseas logistics and user operations, they are actually handled by Alibaba International.

Regarding the division of labor between Taobao and Alibaba International, Kanshan stated that the two have different mindsets. For example, Lazada focuses on Southeast Asia, while Taobao's layout is mainly focused on Chinese circles and circles influenced by Chinese culture. At the same time, the hot-selling inventory on Taobao will also be simultaneously sent to Lazada and AliExpress.

Behind the going global strategy, Taotian is trying to find new incremental markets in the context of extreme internal competition in the domestic e-commerce industry, and the global Chinese population is undoubtedly a market waiting to be developed.

According to statistics from the China Overseas Chinese Affairs Office, by the end of 2023, there were 67 million Chinese people worldwide. With the growth of domestic Internet users peaking, this is a very considerable market space. In terms of city levels in China, the population of overseas Chinese has exceeded that of first-tier cities such as Beijing and Shanghai.

As early as 2016, the Tmall Taobao overseas business serving Chinese people was launched. As of October 2020, the Taobao APP has covered consumers in over 200 countries and regions. During the 2021 Chinese New Year shopping festival, over 20 million overseas users bought New Year goods on Taobao. This series of explorations has also laid a certain foundation for Taobao's comprehensive global expansion today.

After nearly 8 years of precipitation and exploration, Taobao has finally taken the most crucial step in going global.

Taking the Initiative

Since its launch in 2003, Taobao has gone through more than 20 years of development, making Alibaba the most well-known Internet company globally. In 2014, Alibaba went public, setting the record for the largest IPO in the history of the U.S. stock market at that time.

However, in recent years, the rapid growth of the e-commerce industry has slowed down, with more market players emerging. With the rise of mobile Internet companies such as Pinduoduo and Douyin Live, the e-commerce market has entered a period of major reshuffling, and Taobao's market share has dropped significantly to below 50%.

In this context, Taobao has embarked on a series of counterattacks and embarked on the path of re-entrepreneurship.

Last March, Alibaba began the largest organizational restructuring in history, allowing Taotian, as the "money bag," to operate independently, focusing on the development of the domestic e-commerce market In terms of strategic direction, Jack Ma pointed out in May that Taotian will return to Taobao, return to users, and return to the Internet. This also set the tone for Taobao's future development. About half a year later, the new CEO of Alibaba, Eddie Wu, announced that Taotian will adhere to the development strategy of "user first, ecological prosperity, technology-driven".

2024 is a year of heavy investment for Taotian Group, and it is also a crucial year for the company to regain market initiative.

On the evening of August 15th, Alibaba released the financial report for the first quarter of the 2025 fiscal year. Taotian achieved high single-digit growth in online GMV and double-digit growth in order volume, mainly driven by the growth in the number of buyers and purchase frequency. This means that Taotian has preliminarily stabilized its share of the e-commerce market.

However, behind the achievements is the exchange of profit for scale. During the same period, Taotian's adjusted EBITA growth rate decreased by 1% year-on-year. There is still a considerable gap between Taotian's GMV growth rate and customer management revenue (CMR).

An implicit fact is that the price war in the domestic e-commerce market has already had a negative impact on merchants. Taotian's profits mainly come from merchant advertising, and the pressure on its profitability is already a clear fact.

For Eddie Wu, besides innovating in advertising and fees, the key to unlocking profitability is to find incremental space. From this perspective, Taobao's internationalization is Taotian's inevitable choice and a very operational strategy.

However, internationalization has become a trend, and Taobao is somewhat late to the game. How to quickly tap into the global Chinese market and face the challenges ahead is a significant challenge for Taobao.

Taobao needs to quickly open up the shopping mindset in foreign markets and gain unique competitive advantages in the crowded e-commerce markets that focus on localization. It is reported that Taobao has already started extensive promotion, focusing on using social media, external co-branding sponsorships, offline media placements, and more.

The expansion speed is also a current issue that needs to be addressed. Taobao's current focus is on expanding market size, but behind global free shipping is tremendous cost pressure. It must dilute costs through rapid growth in scale, which will be a race against time.

Embarking on a global conquest is Taobao's way to break the cycle of e-commerce saturation and a test of its own capabilities. The new round of e-commerce internationalization war will also kick off from here