Alibaba’s getting serious about the quality of the goods on its platforms and wants to attract more high-end brands. How’s it going to do it? The poacher is turning gamekeeper. The e-commerce giant frequently criticised for allowing counterfeit or low quality goods onto its sites is teaming up with four third-party inspection agencies to boost the quality of products sold on its C2C Taobao site.
The company has already boosted the high-end credentials of its B2C platform Tmall and last year Burberry became the first luxury brand to open a virtual shopfront there.
Now it’s Taobao’s turn. The aim is to help Taobao satisfy consumer demand for better quality and also help local manufacturers improve their offer. In the process Taobao could shift slightly from its original C2C marketplace concept. As more reputable manufacturers see it as a channel through which they can sell their products (without being tainted by an image of poor quality and rampant counterfeiting) change is inevitable.
Anyway, the four agencies Taobao is linking with all have heavyweight credentials and include Swiss inspection & certification agency SGS, Germany’s TUV, French agency Bureau Veritas, and the China Certification and Inspection Group.
The company is spending billions in order to attract over 10,000 higher quality manufacturers to set up shop on Taobao and it has a target of CNY100bn (that’s nearly $16bn) for such goods.
Earlier this year Taobao set up a vertical channel for high-end Chinese manufacturers and more than 4,500 of them have set up stores already, with sales of over CNY15bn expected by year-end.
The move makes good business sense. Taobao itself has said its growth has been slowing down as it’s struggled to remove low quality goods and counterfeits from the site. It should also reduce the chances of it being sued as it has been in the past. Only this year Gucci owner Kering sued Alibaba claiming over 2,700 different Taobao sellers were offering 37,000 counterfeit Gucci bags in one month alone.
The challenge ahead for Taobao is huge. Will luxury labels think it’s doing enough. We’ll have to wait and see.