Has the success of Taobao's 99元 free shipping led to its demise in Taiwan?
Domestic e-commerce platforms and politicians have Taobao in their sights
Taiwan and Taobao's Relationship Status = 'It's Complicated'
Taiwanese consumers have a complicated emotional relationship with Alibaba's e-commerce platform, Taobao.
On one level, as a Chinese e-commerce platform, there is a general level of animosity and distrust towards Taobao, considering that it comes from Taiwan’s hostile neighbor, and the company is making money from Taiwanese consumers.
This distrust occurs at both a societal and political level. In 2020, politicians rallied around the flag to kick out Taobao Taiwan, Alibaba's failed attempt to launch a local platform in the Taiwan market. There are strict laws regarding Chinese money and businesses entering Taiwan, and Alibaba tried to circumvent this with a UK shell company. After a thorough investigation into the source of its funding, they were told to pack their bags and leave the Taiwan market
Despite this crushing defeat, Taobao never gave up on Taiwan. The reason for this is that while many Taiwanese dislike Taobao, just as many are in love with the platform, and there is crossover between the two groups.
Why Do Taiwanese Love Taobao?
Range of Products: Simply, you can just find a greater range of products on Taobao than you can find anywhere else in Taiwan. To give an idea of the disparity, Momo, the local e-commerce leader, has four to five million products on its platform, but Taobao lists over two billion items. Taobao covers a lot of niche and specialist products that are unavailable elsewhere
Price: Products on Taobao are significantly cheaper than what you can find in Taiwan, both online and offline. Even bulky products like furniture are cheaper to buy on Taobao and ship from China than to buy locally. During the pandemic, a whole online community popped up on Facebook for people who built home gyms by buying products on Taobao and shipping from China.
Free Shipping Changes All
Alibaba never gave up on Taiwan because it knew it had a loyal user base. Taiwanese continued to order from Taobao in China and ship goods cross-border. To win Taiwanese consumers' hearts, the company gradually improved the cross-border shopping experience, such as supporting Taiwanese bank cards, where previously users had to use Alipay. They also allowed customers to ship to Taiwanese convenience stores, the preferred pick-up point for Taiwan e-commerce deliveries.
Taobao hit big-time success when, in August 2024, Taobao introduced its free shipping for orders of specific items that were greater than 99 RMB (NT$ 448). This eliminated the last friction points for users: the hassle and costs of shipping goods to Taiwan. A few months later, they sweetened the deal by expanding to more product categories and offering free returns via convenience stores. Orders and interest went straight through the roof.
Alibaba invested NT$ 2 billion in shipping subsidies for the Taiwan market, and it appeared to have paid off. During the 11.11 shopping festival, new customers on the platform were 3 times that of the previous year. What's more, according to i-Buzz Research in 2024, they ranked third in terms of e-commerce platform social mentions, behind Shopee and Momo.
The volume of packages being shipped from China to Taiwan through Taobao became so great that customs can barely handle it. There have been reports this year of angry Taobao fan Facebook groups, in which users complained that it was now taking ten days for their orders to clear customs, when previously it had only taken two or three.
Did Taobao Fly Too Close to the Sun?
The success of Taobao's free shipping has certainly ruffled some feathers in Taiwan. On price, neither domestic e-commerce nor physical retailers can compete. This especially hurts because the local domestic e-commerce market is in a downturn; Q1 reports show that leader Momo had its worst start to the year since 2020, and PChome is experiencing its ninth consecutive quarter with negative growth.
Taobao is also back in trouble with the government for placing advertisements on the Taipei MRT. The company tried three times to enter Taiwan's market as an e-commerce operator, but each time, they were not approved. Instead, they entered as an advertising company, but these advertisements have been deemed to extend past that business scope. They have been fined NT$1.2 million and ordered to make corrections by the end of the first half of the year. If they either do not pay the fine or comply, their license will be revoked, and they may be forced to completely divest from Taiwan.
Additionally, because of the tariffs placed by the Trump administration on China, politicians are also worried that Chinese brands will use Taobao to dump excess goods on the Taiwan market, obliterating the local competition. They are suggesting that the tax-free threshold for cross-border goods be reduced from NT$2,000 to NT$1,000.
Nevertheless, Taobao has just been too successful and made too big of a splash with this free-shipping drive. No matter whether it is from politicians or local competitors, the knives were always going to come out, especially when they operate in so many political grey areas.