March 25, Ali announced that 1688 is to gain access to Taobao. Firstly, three shops will be opened, followed by the integration of a separate channel like Tmall Mart, and to launch “1688 strictly selected” label of the factory source goods. The relevant news has been confirmed by officials from Taobao and Tmall Group.

It is reported that the three shops are respectively 1688 Selected Taobao Shop, 1688 Enterprise Self-Sourced Tmall Shop, and 1688 Industrial Expert Tmall Shop. Moreover, the number of direct suppliers from 1688 entering Taobao this time may exceed one million. Merchants do not need to reopen a shop on Taobao, but can negotiate pricing with 1688 through a "semi-hosted model", connecting source directly to market, and being responsible for shipping and after-sales service after consumers place orders.

Breaking into "Postage-Free Zone"

It is obvious that 1688's breaking into Taobao is the latest move under Taotian Group's "low-price strategy". With the trend of consumer downgrading, consumers are no longer simply pursuing big brands and high prices, but turning to products that offer both good quality and value for money. Therefore, more and more young users are flocking to the 1688 platform to find "original sources" and "brand substitutes".

Public information shows that 1688 is one of the oldest businesses established by Alibaba and was listed on the Hong Kong Stock Exchange in 2009 along with Alibaba.com as B2B business. At that time, 1688 mainly operated as a trading intermediary, relying on membership fees charged to sellers as a way of making profits.

In 2012, Alibaba's B2B company was privatized and delisted, and 1688 and the international site gradually upgraded from information intermediaries to e-commerce wholesale platforms. In November last year, 1688, along with Xianyu, DingTalk, and Quark, was upgraded to a primary business of Taotian Group, also known as Alibaba's "Four Little Dragons".

Nowadays, Yu Yong, the president of 1688, is directing the business towards three major core tracks: To B, cross-border, and To C (consumer-end). The new middle class and Generation Z, with "brand substitution" as their core demand, are the two most typical consumer groups on the 1688 platform. However, despite its excellent value for money, the platform's service quality has always been criticized.

On March 8th this year, 1688 launched the "Buyer Experience Enhancement Plan," which includes services such as zero-cost ordering, free shipping for single items, return shipping fees covered, and delivery within 72 hours at the latest. Among them, the cost of "return shipping fees" is fully borne by the 1688 platform, and merchants do not need to bear any expenses, while the geographical scope of "free shipping for all" will refer to the To C platform.

After multiple service upgrades, 1688 has gradually achieved a comprehensive coverage of users on both B and C. According to official data, as of December 2023, the number of 1688 buyer members has reached 200 million, reaching a new record; among them, B-end buyers are 65 million, with an annual transaction volume of 8 trillion yuan.

Taobao as 1688’s Flow Pool

In recent years, the entire e-commerce industry has been experiencing a "sinking" trend. In this era of expensive marketing costs, user's natural flow appears extremely precious. Therefore, a high-quality supply chain has become the core competitiveness of e-commerce platforms.

1688 has always been the solid cornerstone of Alibaba's B2B business. Statistical data shows that millions of sellers on 1688 cover over 70% of the national first-tier industrial belts, with approximately 60 million buyers purchasing wholesale and factory customization on the platform each year.

This entry into Taobao signifies 1688's embrace of the C-end. In the era dominated by traffic, 1688's entry into Taobao will not only support its own factory-direct supply chain resources but also benefit Taobao back; for consumers, Alibaba's adjustment provides a richer and higher-quality selection of goods, entering a new consumption norm of "origin goods, factory prices, free shipping purchases, and free returns".

In summary, the dual strategy of 1688 aims to address weaknesses while simultaneously extending strengths.

However, given the late start and limited experience in the C-end business, some industry insiders believe that 1688's merchants will still mainly focus on the B-end, and C-end still need continue to strengthen the positioning, operation and even service, sellers on Taobao still need to carry out some extra rounds of run-in time.