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Alibaba’s Social Commerce Strategy is Gaining Steam

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Alibaba Group might be struggling to kick its knock-off reputation, but the Chinese e-commerce company is getting at least one thing right—social commerce.

During an earnings call discussing its first-quarter results earlier this month, Alibaba revealed that daily active users opened its Taobao marketplace’s mobile app an average of seven times a day for a total of roughly 25 minutes in June. On top of that, users posted more than 20 million reviews and comments a day.

“We tried to build up connections not only between buyer and the sellers but also between buyers with the same hobbies and preferences,” said Daniel Zhang, chief executive officer and director. “This creates a lot of new demand from customers. So today, Taobao is more like a social commerce app rather than a marketplace.”

He went on to explain that users—75 percent of whom are under 35—return to the app time and again to scroll through “visual product discovery features” created by data-driven algorithms, to answer questions posed by other users, to share recommendations with each other and to watch one of the more than 1,000 livestreams that take place daily.

“We see users responding very well to a highly personalized experience on mobile Taobao,” Zhang said, adding, “In a nutshell, this is the value proposition that enables long-term sustainable revenue growth.”

Alibaba launched Taobao in 2003. By 2015 it was China’s largest mobile commerce destination and in June the daily active users to monthly active users ratio was 40 percent, meaning the average user returned to the site 12 days out of 30. Taobao reached 427 million monthly active users on mobile as of June 30, up 39 percent from 307 million a year earlier, and the company’s overall mobile revenue in China hit $2.6 billion.

“To capture the attention and imagination of young people you have to provide more social features,” Alibaba’s co-founder and vice chairman Joseph Tsai told Bloomberg. “We want to continue the sense of community so that they’ll come back and engage with the platform.”