Free shipping and localized services push Alibaba’s Taobao ahead in global e-commerce markets.

Header image source: Alibaba Group.

This year, the overseas business of Alibaba’s Taobao has surpassed USD 20 billion in gross merchandise value (GMV), achieving robust year-on-year growth.

While primarily serving domestic users in China, Taobao also operates an overseas version targeting Chinese communities abroad. Despite its lower profile compared to cross-border e-commerce leaders like Shein, Temu, AliExpress, and TikTok Shop, Taobao’s international operations have exceeded Temu’s full-year GMV for 2023 and matched TikTok’s e-commerce performance during the same period.

Taobao’s overseas journey began over a decade ago. Established in 2013, the platform catered to spontaneous demand from overseas Chinese familiar with Taobao.

Initially operated by a small team, it had minimal merchant awareness and limited operational focus. In 2016, the business was rebranded as Tmall Global as part of Alibaba’s consumption upgrade strategy, incorporating branded products and setting up localized teams and logistics in key regions like Hong Kong, Taiwan, Singapore, Malaysia, and Australia. By 2018, it was integrated into Tmall and later absorbed into Alibaba’s international business group in January 2022 under Ye Tian’s leadership.

Unlike competitors relying on high-profile marketing, Taobao currently emphasizes service enhancements to drive growth.

In July, Taobao partnered with Alibaba’s international business group and Cainiao to introduce a global free shipping initiative for fashion goods. Designed to be consumer-friendly, the program features relatively low purchasing thresholds—RMB 99–199 (USD 13.9–27.9), adjusted to regional buying power—making it accessible to a wide range of shoppers. The initiative covers six regions: Singapore, Malaysia, South Korea, Hong Kong, Macau, and Taiwan. Cainiao oversees logistics, significantly reducing delivery times from the typical 15–30 days to just 5–7 days.

Since its launch, the program has delivered notable results, driving nearly 40% year-on-year growth in overseas GMV for Taobao’s fashion category between August and October 2023. Chinese apparel sellers, particularly those in women’s fashion who often face high return rates, have seen notable gains. One plus-size fashion seller shared with 36Kr that joining the program generated an additional RMB 1 million (USD 140,000) in monthly GMV, underscoring its effectiveness in boosting seller performance.

Under the program, Taobao subsidizes logistics costs, removing what previously consumed 30% of sellers’ revenues. Now, sellers are only charged a 20% commission on the total selling price. For instance, once a seller ships goods to designated domestic warehouses and confirms receipt, they receive 80% of the payment upfront.

Even for unsuccessful transactions or returns, the products are returned to specified international addresses, with the platform and insurance providers managing logistics. This setup allows sellers to maintain pricing and ownership rights while transferring risk and operational responsibilities to the platform.

Since its launch, the program has attracted over 200,000 sellers. In August alone, approximately 70 million items were included under the free shipping offer. Taobao’s approach has provided significant advantages to sellers, particularly in reducing operational costs and boosting international sales.

Among leading e-commerce players, Alibaba distinguishes itself with the broadest global presence, spanning diverse markets. While this scale introduces greater management complexity, it enables highly localized operations tailored to specific regional needs. In contrast, competitors like Temu, Shein, and TikTok rely on single-platform models to serve most countries, simplifying operations but exposing them to heightened regulatory risks.

Taobao holds a unique place within Alibaba’s suite of international ventures. On the consumer side, it targets nearly 100 million overseas Chinese users, focusing on regions with significant Chinese populations. On the supply side, it offers an extensive variety of products, from white-label goods sourced from Taobao to branded merchandise from Tmall. The platform also boasts a significantly higher average order value compared to other cross-border players. Operationally, Taobao employs a platform-centric model, outsourcing only a small portion of logistics to optimize efficiency.

In September, Taobao expanded its free shipping program beyond fashion to encompass all product categories. The initiative now covers 13 regions, including Australia, Canada, Japan, and Cambodia. Sources told 36Kr that Taobao is responding to user demand by exploring new language options. An English version of the platform was launched in October for Thailand, Cambodia, and Australia, with plans to extend it to Hong Kong and Macau.

Taobao is currently promoting its free shipping services in Mongolia and Central Asia, with a goal to accelerate coverage in additional countries and regions.

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