Alibaba created a new application that turned 693 million Taobao users into “ merchants ”, shopping and selling without making any money.

Alibaba has just launched a new function on the Taobao app called Taoxiaopu – allowing 693 million of their annual active users to set up their own online store. This shop will be for sale of goods from other brands or wholesalers. For every sale, Alibaba will collect a commission.

The method of sale above is called "Dropshipping" – meaning that retailers (Taobao users themselves) do not need to store products sold in their warehouses. Instead, when they sell a specific product, there is no inventory product that will buy products from a third party and this unit will also be responsible for direct shipping to customers. As a result, Taoxiaopu sellers never actually see the product or process it. Their job is only as an intermediary, they only need to transfer orders to manufacturers or wholesale shops.

At the moment, Alibaba has not yet collected any fees for Taoxiaopu users. Alibaba will be responsible for shipping goods sold through Taoxiaopu.

Through Taoxiaopu – Alibaba wants to leverage the social relationships of hundreds of users to increase the amount of transactions through their website. Initially, those who set up their own stores through a new feature will select merchandise to sell on Alibaba's proposal. Commissions are at different rates. For example, a 5kg barrel of apples priced at 28.9 yuan will pay a commission of 5.2 yuan.

Taoxiaopu users will start with a trial version and have 30 products to post to their online store. Various items from fruits to cosmetics. After securing 5 transactions, they will become "L1" sellers and have access to over 10,000 products.

Taobao launched a trial of Taoxiaopu in April 2019, testing features with a small group of users. Currently, Taoxiaopu has become a standalone application with nearly 1 million users, half of which are in small cities in China. The Taoxiaopu introductory text states that their platform makes it possible for ordinary people to do business and help suppliers reduce operating costs.

Although Taoxiaopu is a new feature of Alibaba's e-commerce network, the model is quite similar to existing social e-commerce companies such as Yunji and Beidian. Therefore, e-commerce expert Li Chengdong commented that Taoxiaopu had entered the game too late.