This is a solution of Unit 3 Online Marketing Assignment Help in which we discuss Developing business

Literature Review

In recent years, with the fast development in online shopping and distinctive contrast between the Taobao and eBay, therefore there have lots of scholar conducted the study in various areas such as marketing strategy, logistics model, service model and other area. In numerous research areas, the commercial model is obviously important for an online shopping company, because this is concern about competitiveness in a market. (Xiaojuanou and Davison, 2009, Li et al. 2008)In simpler terms, the commercial model is direct determines a company will be popular or not in a country or region, because in present, the consumer is gradual change its consumption awareness, there no more rational consumption and feeling consumption, the sensitiveconsumption is more in peoples mind, in other words is consumer will buy something will satisfy a spiritual demand. (Zhang et al. 2011) Hence, the researcher will discuss some relevant literatures in this chapter. This chapter will review the situation between the Taobao and eBay as well as some basic definition of commercial model, competitiveness and its relationship, after that the researcher will constructing a conceptual framework.

Development Status and history of the Taobao (Alibaba)

The sales condition of the Taobao (Alibaba)

In July 2003, Alibaba created awebsite which belong to C2C E-commerce model and that is Taobao. The basic framework of the Taobao is similar with Japan’s Rakuten and American’s eBay, they are all belong to virtual online shop, this place can sell a product with a fixed price, sell a product can negotiated price, auction product or provide product information system and other business portfolio.(Huang, et al, 2010)In the initial period of the Taobao, the register membermainly onyoung people which only come from Beijing, Shanghai, Guangzhou and other first-tier cities. But to date, Taobao register member are already spread across the China even the world. The first-tier cities still are main consumer group for Taobao, but it getting saturated, there are increased Taobao register member in second and third-tier cities. Today, there are 70% of Taobao register member are come from second and third-tier cities, Taobao are found less than 3 year, it become a Asia biggest C2C website. Therefore up to year 2009, the Taobao register member already has9800 million people. In Chinese C2C E-commerce website, the Taobao is developing rapid and fast. According to China’s online shopping market research report (iResearch (2012)) and China’s online shopping market research report (CNNIC, 2009), in first half year of 2009, the transaction scale of China online shopping reach 119.52 billion RMB, sum amountof business transactions of Taobao are achieve 82.76 billion RMB, it almost occupies 80% of the whole Chinese market share. The Alibaba group website processed a statistical and result show that up to first half year of 2009 the Taobao register member are achieve 145 million people. And in Year 2009, the Taobao sum amountof business transactions are over 200 billion RMB, it is anAsia biggest online shopping platform. (Li et al. 2008)

According to the Taobao official data to show that Taobao register member in year 2010 already achieve 370 million, online product achieve 800 million, maximum 60 million people visit Taobao every day and every minute sell 48 thousand product.(Kan, 2011) At same time in year 2010, the Taobaoas the representative of B2C business and its turnover rose fourfold, according to Barczyk and other scholar analysis, within few years, the Taobao B2C business will keep this growth level. (Barczyk et al. 2011) In 2010, the trading volume peak of Taobao is over 1.9 billion RMB per day, even higher than the retail sales of tee major cities which is Shanghai, Beijing and Guangzhou. In the consumer area, the overall number of consumer are increase, therein a consumer groups come fromsecond and third tier cities are increase fast and occupy two thirds of overall growth. Compared with year 2009, in 2010, the average number of transactions per customer on Taobao are increased nearly 35%. (Wee, 2011) Taobao officialdata platform show that over the past year, Taobao sold 48,000 productsper minute, including 864 clothes, 36 mobile phones, 880 cosmetics, 85 books, 53 packages of diapers, 13 lamps. The most crazy data from November 11 so call Singles’ Day, that day the Taobao trading volume reached 1.95 billion RMB. This data has exceeded the one-daytotal retail sales of consumer goods in Beijing, Shanghai, Guangzhou, tee first-tier cities. Data from the National Bureau of Statistics show that in November 2010, the average total per retail Beijing is 1.891 billion, Shanghai is 1.68 billion, Guangzhou is 1.404 billion. (Ali Research Center and report from IDC, 2011) Read more : Information Assignment Help

From the above, the user per transaction amount of the Taobao is increased 35%in 2010 than 2009, this is indicating that greatly increased in number of people to acceptance online shopping. The most common consumer goods types are not confined toclothing and digital, in year 2010, the furniture and relevance product are increased about 120% than 2009. Under driven by the trends of online shopping, the mobile phone online shopping also showed a good development momentum, the user through mobile client to visit Taobao are achieve 17 million per day maximum and peak 37 million RMB trading value per day.

The commercial model of the Taobao (Alibaba)

Brand Strategy

SinceTaobao was established, it begins use a business marketing strategy which is free open online shop in Taobao and does not charge any transaction fees. This marketing strategy is aim at a people who just join online sells and help them adapt doing business online, at same time can make other resource which come from competitor join in Taobao. In addition to this kind of competition ways, Taobao also are use many other promotional methods, such as making a media advertising on television, advertising in magazines especially a magazines for aimed at the youth market and other advertising ways, and Taobao also create a detailPublic relations marketing strategy to use media advertise its image to maximize the effect of publicity.(Werder, 2006)

This kind of marketing strategy of Taobao is promote and established the brand image of Taobao. Therefore the biggest difference between the Taobao and eBay is that eBay complete copying the foreign profit model, and never consider the China’s national conditions, hence, before Taobao appear the eBay is very popular. In august 2001, eBay is started charging set up an online shop, and in year 2002 September is started charging transaction fee between the seller and buyer. Since year 2003 Taobao coming, it make eBay in a passive situation, because eBay need face to all free marketing model, they have to reduce the charge for set up an online shop, but still in a passive situation and behind the Taobao, as a result they are stop charge transaction free, but increase a lot in set up an online shop.(Li et al. 2008; Lu et al. 2010)

Alipay: a securitypayment tool

The online security problem always troubleChinese e-commerce market, just because Taobao takes into account this aspect of the problem, therefore after Alibaba set up the Taobao trading platform, they are cooperated with Industrial and Commercial Bank of China, and ICBC provide Taobao a free third-party payment tool with guarantee function and this is Alipay. In Year 2003 Taobao established and after 2 years the Alipay was introduced. Alipay can play a role which is full compensation, but this compensation must pay with specific condition which is buyer have suffer the loss because of the issue with Alipay. But just because this tool with guarantee function was appeared, this is eliminating lots of peoplemistrustful psychogenic when they are process the online shopping.(Yang and Qian, 2009)To data, in Taobao, there have up to 70% people is use Alipay make a payment. (Zhang and Zhu, 2013) But there still exist some fraudulent conduct, such as product quality side. Therefore, Taobao established a third-party credit authentication system in Taobao internal system. The buyer can check the reputation of the seller and product quality before buy a product.

Communication Tool

In China, the buyer likes immediately negotiate with seller when buyer looks at some products, this is Chinese trading habits since long time ago. Since Taobao was found, they are taking into consideration of this Chinese trading habits, therefore they are introduce the Ali wang wang this messaging tools as an official messaging tools of Taobao, the buyer and seller can use this tool communicate before process the trading, this tool can make buyer more understand what is the situation of the product, also can increase the credibility. In contrast to that eBay don’t have any official messaging tools, only can’t through email or other message tool, even some of eBay seller also use Ali wang wang.

Preferential system

In recent years, in order to promote the sell, Taobao have complied with time to implementgroup-buying. This action is very popular in China, this is when some product achieve certain number of buyer to buy this product, that will get some discount, in other words is more people buy this product, this product will more cheap. Therefore the group-buying is including furniture, travel, air ticket, clothing and other product in other industries. After the group-buying, the price usually lower 20%-30% than original price, this is greatly promoting the consumer to consume. See more : Cultural Education Assignment part 1 

Unit 3 Online Marketing Assignment HelpStrategy of select excellent online shop

Free service strategy is one of competition approach of the Taobao marketing strategy. AfterTaobao became a first place in Chinese C2C website, they are considering the development strategy of the profit model.Because Alibaba has been successful in the B2B e-commerce model,in C2C e-commerce model, in consideration of aim at personal marketing methods, the register member who is a seller, own a big online shop in Taobao and have good sales volume, these kind of register member are more easy to charge some advance service fee. Therefore Taobao have stared the “excellent shop” selection strategy. To qualify the “excellent shop” is after finish every transaction, buyer will give seller some evaluate and grade, accumulation the grade and summary these evaluate, in the end can check how the reputation of this shop and what reputation level of this shop, the high level reputation shop will qualified the “excellent shop”. This is propose at 2 side, first is take advantage of this strategy to cultivateexcellent shop to keep the overall Taobao service and product quality, second is attract more consumer to buy product, improve the shop sell volume and make shop owner seek a further advance paid servicefrom Taobao. Therefore through this strategy can make Taobao in “an invincible position” in future development, as same time gain more economic interest from these excellent shop.

Development Status and history of the eBay

In September 1995, eBay was found in the United State, this website is very similar with the flea market, every can come into this network platform to process the online shopping or online transaction. Therefore e-commerce model determines that eBay only can play a role of intermediary,in other word that is bring seller and buyer together and process the transaction, and earn transaction fee from transaction.(Grochal-Brejdak and Szymura-Tyc2013)The aim of eBay is help any buyer in any place can buy any product which come from any place, the early eBay are provide anentrepreneurial platform for people, at same time various product and discount price also bring a huge convenience and new shopping methods for consumer. SinceeBay was found, eBay never stop moves outward, they have set embranchmentspread all over the world in 33 country and set lot of online retail website in Americas, Australia, Europe and Asia and other countries and region, eBay own 193 millionregister members, therefore it became a world largest online sales center. In year 2002, the eBay stared invested EachNet (in that time is a biggest e-commerce company in China) and in year 2003 injectioncapital about 150 million RMB merge the EachNet and renameeBay-EachNet in year 2004, after that eBay started fast explore Chinese C2C market. According to eBaystatistics, endings infirst quarter of 2006it has reached a total of 20.3 million users in China, and in that time is a ChinaonlyC2C website for provide international trade opportunities. But eBaydidn’tunderstand Chinese market and culture all the time, after mergeEachNet also forced copying the foreign marketing environment strategy implement in China market, as a result in the end of year 2006, eBaylosing in the competition with Taobao, at same time announcejoint venture with and bring EachNet to to establish New-EachNet, and eBayit selves are exit China market, only own certain share of New-EachNet. (Du et al, 2012) Therefore in year 2007, the New-EachNet with release a new trade platform which conforms to Chinese market, meanwhile New-EachNet will keep the eBay function because eBay still own share of the New-EachNet. through the change, the New-EachNet so call eBay-China has operated with a strategy suitable for Chinese market, it has greatly changed the image of the eBay-China. Here need to be explained although eBay main HQ is quit Chinese market, but still remainChinesemanagement team, the original eBay management team is evacuate from China, because their concept is not fit chinese market.

Just because the eBay-China keep the eBay function, the logistics of eBay-China have own a lot of China and international business. And they don’t have own logistics company, therefore they are use method of logistics alliance to cooperation with external logistic company. The main logisticcompany who cooperation with eBay and eBay-China is Federal Express, UPSExpress, United States Postal Service and DHL Express, these logistic companies are famouslarge international enterprises. In these of companies, the most ofeBay and Bay-Chinaexpress are ship by United States Postal Service and UPSExpress. They are provide eBay and eBay-China free door-to-door service, discounted services on freight and express trace service and other convenience service. In year 2009, with continues increase in global business of the Bay and eBay-China, hence, they are choice the DHL as main cooperationalliance, because DHL have has a super wide network cover the world include more than 200 countries and regions.( Song and Bake,2007)

Competitiveness and Online shopping


For the competitiveness, that exists everywhere, at this time improve the competitive power is an important things. Especially in e-commerce area, pressures of competition anywhere, a little deem lightly will cause huge lose.Competitiveness or competitive power is a comprehensive abilityreflected by one or more participant when they are competing or comparing. This is a relative index, it will expressedthroughcompetition, in general, the competitiveness or competitive power have stronger and week. (Ciechomski, 2014)Take into consideration of today’s market, a company who are in the trade sector, they are always try to get a good place in that market and try make a good image for the consumer, try to make a competitive advantage for the competitors, try to make some discount authority for the supplier. The competitiveness usually not very stable, in fact if companies are easy to get advantage in a competition, that may cause company in a dangerous situation. (Ciechomski, 2014) Also, in Ciechomski research mention about 4 elements will impact and determinecompany competition power: first is thecapacity of the company (such as tangible and intangible assets); second is competitive advantage (the ability whichcan improve the competition situation); third is method of the competition power (use the tool or other methods to achieve the target); fourthly is competitive position (aposition which gained from the competitorsthrough fight).

Therefore if a company wants acompetition power for keep company in an advantage position in a long time, that will depends on many factors. The most important element is efficient resources, the entrybarriers level, motivation and the level of attacking and defending during the competition.(Ciechomski, 2014) Hence, only a comprehensive analysis on the quality of the resource of the competitive advantage and formulate the marketing plan, as well as a knowledge and nimbleness can support company change plan or detail when process marketing plan encounter with some trouble, that can only in this way can make a company in a stable development situation and success in a changing competitive environment.

In present, the online shopping, it is a new market relative toretail market and other market. The competition pressure and competition area, there have lots of different between the tradition retail market.


Therefore in online shopping market, attract and retain consumer to shop online is a first competition area. With the competition in C2C market become intensified, to understand how a consumer accepted online shopping and what kind of antecedents they are experience has becomes important for online retailers. In Zhou’s research (Zhou et al, 2007) this kind of knowledge about consumer is necessary, and this also will helpful for the customer relationship management, and this already recognized as a successful and effectivestrategyin the online shopping market. For the online shopping, understand consumer is get everything, because for a consumer, they are usually consider about below certain things, such as profit mode, service, information flow, logistics, payment methods, website design, publicity and counterfeit and shoddy products. (Brown et al, 2003; Bhatnagar and Ghose, 2004)

In present online shopping market, the consumers usually divide into two kinds, one is seller and other one is consumer. As a seller, they are always consider what kind of profit mode in this online shop website, what kind of service are the website will provide, what kind of information flow will provide, what is the logistics situation and what kinds of payment method the website will provide, for an online shopping website, the seller is important, but the consumer even more important. Because an online shopping website if only have seller, but consumer not interested, the seller will lose and online shopping website will faced with more lose. Therefore in fact, the consumer is more important, they are directly impact the Service,Information FlowLogisticsand other certain element which mentioned above. Only online shopping website get to understand what is real thinking in the consumer mind, in this way can be success, but this also should be based on the management team understand the culture and market situation. (Ko et al, 2004)On the other hands, in Chang’s research (Chang et al, 2005), they are using an interesting method to analysis how the consumer to access the online shopping and how they are keeping buying goods in online shop and that is called Online Shopping Acceptance Model (OSAM), with the Zhou’s extend research on the OSAM, that provide a lots of key element to impact the consumer buying online.

Over all service

The for the online shopping website, the competitiveness is depend on the consumer and profit mode, service, information flow, logistics, payment methods, website design, publicity and counterfeit and shoddy products these service will decide consumer will like this online shopping website or not, so to speak the competitiveness, consumer and service is inseparable relations. At the same time Wang and Huarng (2002)throughidentifysatisfaction of the online shopping website and service of the consumer ensure for an online shopping website can be affect by nine element: (1) general feedback on the website design; (2) the price level of product; (3)productdiversity; (4) merchandise condition; (5) delivery on-time; (6) merchandise return policy; (7) customer support; (8) the confirmation process of customer order; and (9) promotion activities. Thus, faced with high competitionpressure in online shopping market, online shopping industries need to grasp the consumer and the first condition is provide good service with good quality to the consumer. Hung point out (Hung et al, 2005) that online shopping website must understand what is the situation of the consumer, after that website can provide service with customized for domestic market. The most of operator are initially not very understand its own consumer in domestic market, but after a certain time, with the certain information which the consumer leave on the website, even some consumer look for advance service such as VIP service. The website can’tthrough analysis these data and knows the buying preferencesand shopping habits and this information will help website improve the marketing strategy and service.

Quantitative method

Quantitative analysisis a method to analysis the social quantitative characteristic, quantitative relation and quantitative variation. It is a popular analysis method in certain research area. (Thamhain, 2014)In this study, the researcher will use the quantitative analysiscombine the correlation analysis to process the research project. In this study, that will involve four elements and which are competitiveness,commercial model,consumer, andservice. Therefore, the first step is collect the data, the researcher would like to collect the data via quantitative survey (thequestionnaire will attach in the appendix), at initial the researcher plan collect survey from 100 to 150 people, later will increase number of survey people as appropriate if necessary, after that will statistical the data to process the quantitative analysis. In this research, there include the independent and dependent variables. First, it will through analysis the data get an intuitive result, and then use the data to process the correlation analysis to do a further analysis, the data will divide into two part, because it is compare study between the Taobao and eBay. Throughcomparison on the data and curve will get the result, and the relationship between the certain elements will show in below conceptual framework parts.

Conceptual Framework

In the present, there have a lots of scholar has been made a mass ofresearches on the online shopping area and other related area. And these research achievementsmore or less help some online shopping company to do business. As mention above, the competitiveness directly depend on consumer, the certain element will affect consumer mind and impact company’s commercial model. Relationship show in figure 1.

Certain ServiceCompetitivenessCommercial ModelConsumer and Consumer MindAffectGenerate certain feedbackImpactAffectIndirectly ImpactE.g.: public praise

Therefore, for this research, the Chang’s OSAM mode and Zhou’s extend research will as the reference. The independent and dependent variables will include in this study, the competitiveness will be dependent variables, commercial model, consumer and service will be independent variables.

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