Deblackboxing: Taobao Leading by Design

The most powerful things about our technologies are invisible.

— Irvine’s Law

Abstract

Taobao is a Chinese Internet-based third-party platform where many small businesses and individuals sell goods and services. The website combines the key features of previous online shopping platforms while plugging in several new functions and adopts an efficient recommendation system to reach a balance between providing more merchandise and helping consumers make decisions in a shorter time. It is a complex system that should be regarded as a mere website, but a mini-society where social background, culture, regulation and people all play a crucial part.

In this paper, I will focus on the question why Taobao, the e-commerce giant, is designed in this way rather than another way. To figure it out, I’m going to briefly introduce the current situation of Taobao by a series of statistics. Then, I will use design, computational and socio-technical thinking to deblackbox Taobao.com, trying to find out what is behind the website.

Introduction

Unlike Amazon or eBay that focus on either C2C or B2C, Taobao offers the both.

According to the Online Consumption Report, 2016, released by 100ec.cn (a Chinese e-commerce think tank), in 2016, Taobao took up 85.6% of Chinese e-commerce market with the gross merchandise value amounting to RMB 3767 billion ($569 billion); it had 4660 million active users, about one quarter of the country’s population.

Taobao.com is a success.

 

Design thinking:

In Chinese, “Taobao” means “searching for treasures” literally. As Norman once said that “when things are visible, they tend to be easier than when they are not”, Taobao conveys an obvious message to consumers: this is a place full of treasure waiting to be explored.

Modularity & Abstraction:

Abstraction is a technique for managing complexity that is deeply ingrained in human beings.

Design rules volume 1: the power of modularity.

the four-hierarchy taobao interface

The interface of Taobao can be briefly divided into four hierarchies from top to bottom in terms of consumers’ shopping experience:

  • Front page

The front page serves mainly as a searching page. It provides three ways for consumers to search items: the search box (in the top middle of the page), category sections (under the search box and in the left side of the page) and recommendation section (taking up the rest of the page). Users can search items by directly typing the key words into the searching bar or find things they may be interested in from the suggestions.

  • Searching result page

In this page, users can find items in the order of lowest/highest price, best sellers and sellers’ credit. Certain filters (like brands, features) can also be applied to narrow down the searching results.

  • Description page

This page provides users with detailed descriptions of an item as well as reviews.

  • Payment page

The four layers are relatively independent from each other while information can only flow from a higher layer to a lower layer through interaction points, i.e. interface. By clicking on the picture of a specific item in the searching result page, a consumer can enter the description page of the item. In this case, the picture is an interface bridging the two pages. But he cannot go to an upper level page from a subpage unless he clicks the browser’s “Backward” button.

This structure hides a substantial amount of the information in each module, leaving parameters to the discretion of the module designers. Therefore, the designers can work separately, adding new product pages to the website without affecting other pages.

Cumulative Combinatoriality & Extensibility of Combination:

The development of technology is the procedure of combining the already existed ones together. In his book, Arthur once said that “novel technologies must somehow arise by combination of existing technologies”. Taobao is a combination of the previous online shopping website; an extensible platform embracing future adaptations and growth built-in.

Amazon home page in 1995. Source: http://www.noblemania.com/2017/09/my-first-amazon-orders.html

The year 1995 witnessed the birth of Amazon and eBay. At that time, the former one was an “online bookstore” receiving online book orders from all over the world, finding books from publishers and delivering them out. Although the website page looks quite simple compared with modern websites, it functioned well, processing orders totally valuing 12 thousand dollars the first week Amazon.com opened its virtual doors. Years later, the company expanded from a “bookstore” to a “grocery store”, selling not only books, but almost everything in the world like clothes, electronic products and so on.

Different with Amazon, eBay was more like a flea market providing a platform for users to make deals with each other online. Long before eBay, there was flea market, but eBay was the first to move it online.

Then comes the year of 2003 when Taobao.com was launched by Alibaba Group. The website was born under the influence of Amazon and eBay, but it develops further. It is a Chinese Amazon where consumers can search, compare and buy thing online; a Chinese eBay where users can make an auction or sell their used products; an online platform for people to order food from different restaurant; a travel agency where people can rent cars, buy tickets and consult with trip advisers; a movie agency selling tickets; an online branch of telecommunication company offering self-service for paying bills.

Besides, Jack Ma, founder of Taobao, introduced two novel features to Taobao, setting the website apart from competitors. First, consumers can directly talk with sellers at any time on Taobao to acquire information they want and even ask for discounts. This gives consumers a feeling of shopping in a real store. Besides, joined by “Alipay”, a payment system developed by Alibaba, Taobao has a different payment system from other e-commerce platforms. The website assures consumers that once an order is placed, the payment will be kept by Taobao and won’t be sent to the seller until the buyer confirms that he has received the product or the order has been placed for one month. As Chinese consumers were skeptical of the safety of e-commerce when Taobao was launched, this model gave people confidence to give the website a try. In 2012, cooperating with HuaTai Insurance Company, Taobao launched a new insurance called “shipping insurance” to users. When placing an order, a consumer can buy the shipping insurance (usually costs 0.5 to 2 yuan, ie. 0.1to 0.3 dollars) in case he may not like the product when receives it. With the insurance, he can get a compensation to cover the shipping fee to turn the product back.

Computational thinking

The recommendation section takes up the largest part of Taobao’s front page. Why?

The Rapid development of technology brings people more ways to gain information than before. Meanwhile, information overload occurs as people have a fair limited cognitive processing ability.

When shopping online, a consumer will get hundreds of searching results for one key word. This is a strength as well as drawback of online shopping platform. User wants to have choices as much as possible when shopping, but the more choices he gets, the more confused he will be and eventually spend more time finding out the one that suits him the best. The flooding information makes it difficult for people to make decisions.

Recommendation system, an information filter technology, is an efficient tool for online shopping platforms to achieve a balance between the number of products and the length of consumption-decision time. The system can collect a massive volumes of raw user event data captured during sessions in which consumers log in to the website. By compiling and analyze these data, the system can predict future consumption actions and trends and recommend products or online sellers to users. On one hand, the recommender system reduces the time for a user to find his ideal product thus brings more sales to the platform. On the other hand, it can redistribute the flows of the platform, attracting users to less-popular items and new sellers by showing the items or traders in the recommendation session.

To some extent, we can say that recommender system plays a crucial part for the success of an online shopping platform.

The recommender system of Taobao, as shown below, can be divided into three levels.

the three-level Taobao recommendation system

Pre-analysis:

  • Collect raw user event data, including: what the user is searching for, which seller he adds as favorite, how much money he has spent, etc.
  • Build up a basic database dividing products and users into different classes.
  • Based on the basic database, the system consumes that product A and B have a similar tag as users fond of product A usually favorite product B; user A and B belong to the same group as the favorite list of user A are similar with that of user B. It will also analyze the user’s behavior over sessions to better understand a user. With these data, the system set up a core database with more specific classifications on products and users.

Real-time response:

  • External factors, like physical surroundings and the time a user logging in to the website, will also be taken into consideration.

Response valuation:

  • Examine and improve the database by analyzing data like CTR (click-through rate), GMV (gross merchandise volume) and conversion rate.

Berners Lee once pointed out in his book that “a computer typically keeps information in rigid hierarchies and matrices, whereas the human mind has the special ability to link random bits of data”. The recommender system is to some extent, give computer the ability of “associating”, narrowing the gap between a computer and human.

the interface of recommendation system. Source from: google.com

Meanwhile, the interface of recommendation system is also personalized in two aspects: the category of recommendation and the specific item shown in the front page. Different people will see the recommendation categories in different orders. For female users, the categories tend to be shown in order of clothes, costumes, overseas shopping, while males are more likely to have electronic products ahead of the recommendation list followed by sports accessories. Besides, the specific item displayed in a specific category also varies. Users preferring spicy food tend to see picture of La Tiao (a kind of spicy gluten) as representation of the snack category while users like sweets may see Hershey’s.

Different platform employs different recommender system as they have different strategies and targets.

Jingdong.com, the second largest e-commerce giant in China according to the report released by 100ec.cn, has a recommender system built on two models: recalling model and reordering model.

Ever since the first day JD.com went online, the platform has a slogan of “Making life easier and happier”. The recommender system is good at calculating out the potential interest of users but falls short in timeliness as it needs a great amount of calculating. On the other hand, the pre-analysis section and modularity feature gives Taobao advantages in calculating logically with a high speed. This is consistent with Taobao’s recent actions: improved the delivery speed and announced that the platform would pay refunds on behalf of sellers to good-credit-users before they send the items back. But Taobao’s emphasis on speed also lead to the system’s lacking in personalization in recommendation.

Socio-technical thinking:

Taobao.com is not a website build up with codes and machines; it is an interdependent social configuration of technologies and institutions.

Social background:

Both Amazon and Taobao are e-commerce giants offering omnibearing online shopping service, but their development tracks are totally different.

The American society experienced the Dot-com Bubble from 1995, the year when Amazon.com was set up. At that time, the world wide web had already had a solid foundation of American users. People believed that the world wide web would play a crucial part in the future. This led to a pomp up of new internet companies. Before Amazon was set up, there were already several e-commerce corporations in America. When designing Amazon.com, Jeff Bezos targeted the website at being “Earth’s Biggest Bookstore”, as the American book market had not been monopolized by one single company yet. Books are easy to be delivered at a long distance and have a relatively high market demand in America. Besides, online book selling can largely reduce the cost of a book by eliminating the fees for bookstore rental. Two years after foundation, in 1997, Amazon became listed on NASDAQ valued as 5400 million dollars.

In contrast, Chinese e-commerce trade started from late 1990s, years later than that in America. When Taobao.com was set up in May 2003, eBay had the largest share of Chinese online retail market. At that time, traditional Chinese companies could not accept the emerging way of trading online, while many individual sellers were more willing to make deals online. Based on this social environment, the Jackie Ma oriented Taobao.com at a C2C (consumer to consumer) online shopping platform. To win the battle with eBay, Taobao adopted a series of rather liberal regulations to the platform: everyone could sell goods on the platform even those without business license or off-line stores; to register a virtual shop on Taobao.com, traders did not need to pay any registration fee.

Driven by the increasing trader population and higher penetration levels, Taobao moved forward to B2C (business to consumer) market and developed a sub-website, “Tmall”, in 2007. And finally became a platform offering nearly all kinds of goods and services.

Physical surroundings are another factor needs to be considered. The reason why Bezos chose Seattle, WA as the birthplace of Amazon is that Seattle was already a big I.T city with Microsoft located there. The headquarter of biggest book distributor in the U.S. at that time, Ingram Book Group, was also close to Seattle.

Similarly, when founding Taobao, Jack Ma compared the top three cities of mainland China at that time: Beijing, Shanghai and Hangzhou. The capital city was filled with state-owned companies, while Shanghai was the warmbed of foreign companies. In both cities, competitions were fierce and rentals were expensive. On the contrary, the local government of Hangzhou had a series of policy encouraging people to set up their own companies. Therefore, Jack Ma eventually chose Hangzhou as the headquarter base of Taobao.

Culture:

The traders’ nationality and culture background can have an influence on the structure of an e-commerce platform. Hofstede said in his book, culture’s Consequences, that people in the US rate high on individualism and moderate to low on power distance, while those in China are high on collectivism and power distance. These differences affect the Chinese e-commerce market structure and Taobao’ behavior.

Meanwhile, Taobao reshaped Chinese culture. In 2009, Taobao started the first “‘Double 11’ Shopping Festival” on November, 11 to boost sales and get more people involved in the platform by offering lower prices than normal. The first “‘Double 11’ Shopping Festival” was an immediate success. The total sales on that day was RMB 52 million ($7.8 million), far exceeding the ordinary daily sales of the website. Nowadays, the eight-year-old festival now becomes the Chinese version of “Black Friday”. On that day, not only Taobao will have a series of discount activities, but all the Chinese e-commerce platforms. On the Double 11 Day this year, the festival made a record that the daily sales of Chinese e-commerce market exceeded RMB 253.9 billion ($38.3 billion) with RMB 168.2 billion ($25.4 billion) of Taobao.

Along with the festival, appears many new understandings to traditional Chinese phrases to describe consumers’ feelings or actions. For example, one may use the phrase “Duo Shou(剁手)” to say that he spent a huge sum of money in online shopping at a time while the phrase’s traditional meaning is to chop one’s hand to stop him from doing (including buying) anything. Literally, “Bao Cang(爆仓)” means storing too many things in a warehouse and eventually leading to explosion; but nowadays, it is a phrase specially refers to the scene where express delivery companies have too many packages in their garages to deliver as people made millions of orders on the “‘Double 11’ Shopping Festival”.

Regulation:

National law can affect the operation of the website.

Regulated by the government, Taobao provides commercial voucher for every user shopping in “Tmall Supermarket”, the online supermarket of Taobao. In June, 2010, the Ministry of Cultural Affairs issued new regulations on online games industry aiming at providing a better online game environment, including banning transaction services for uncensored or unrecorded online games. Sooner, Taobao removed all the transaction services for overseas in-game currency from the website.

Apart from national law, Taobao has its own regulations to keep the platform works well. Take “‘Double 11’ Shopping Festival” again as an example. According to the website, on November 11, the price of the off-price merchandise must be lower than 90 percent of the lowest price of that item during the period from September 15 to November 10; the trader must raise the price right after the festival and cannot lower it down at least in the coming month.

People:

It is not only Taobao Team that is working behind Taobao, but millions of people from different industries.

People involved in Taobao can be briefly showed as follows:

A project done by the School of Labor and Human Resources of Renmin University of China shows that by the end of 2016, Taobao has provided 33 millions of working oppotunities in China, creating many new jobs, like cybershop designer, online selling trainers.

 

conclusion:

What can be studied is always a relationship or an infinite regress of relationships.

Never a ‘thing’. 

—Gregory Bateson

Looking back to the question raised up in the beginning of the article — why Taobao is designed in this way rather than another way, it can be answered as follows:

Influenced by the existing e-commerce platform Taobao combines all the key features of e-commercial platforms while keeping introducing new features to the website during the years of development. It solved the problems of flooding information, regulating the ways traders make deals on the platform and connecting consumers with sellers in a direct way. The design is also affected by social background, regulations and cultural factors.

Taobao doesn’t have to be designed in this way, and in fact, there is no specific way to design a specific thing. Design is not born from necessity. What leads Taobao to the design we see today are a set of ways of thinking, including design thinking, computational thinking and socio-technical thinking. By deblackboxing Taobao, people can find useful clues in perfecting the conceptual model of e-commercial platform.

 

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