Taobao opens largest store in Malaysia to extend customer reach

• Customers visit physical store but order through their app
• E-commerce giant seen to be reaching out to late adopters

IN A time when Malaysian brick-and-mortar retails stores are coming to terms with what it means to "go digital", the Alibaba Group has gone in the opposite direction by opening the largest Taobao store in Malaysia at MyTOWN Shopping Centre, promising goods by local manufacturers, warranties and - perhaps most surprisingly - the same prices as what's available online.

"Profit is not always our main concern," said Jess Lew, Tmall World Malaysia marketing manager. "The best shopping experiences are always our goal." And by the "best shopping experiences", Lew explained they they want to "teach customers how to Taobao."

Officially named the Taobao Store by Lumahgo, Lew said that part of the objective is to make real for customers the range that is available online. "What you see in this store are many of the best-selling (products), the most quirky and creative ones that we want to introduce to Malaysians."

Specifically, shoppers visiting the store will be able to physically examine the goods on offer, and then use the Taobao app on their phones to order and pay for them, even if the store doesn’t have the products in stock. In that case, the goods will be delivered directly to the home, or customers can collect them at a later date from the store.

The store is in fact literally a physical storefront for an online shop. Even the electronic price tags are automatically updated to reflect the prices that are available online, both in Malaysian Ringgit and Chinese Renminbi.

Indeed, the fact that Taobao is a China-based company is not just accented by the price tags, some of the descriptions seem to only be in Chinese, and the Taobao app itself is not currently available in English. In that case, Lew said that shop staff will be on hand to help translate descriptions and order goods.

Regardless, there is no clear indication when an English version of the app will be available. "We are happy to explore that," confirmed Lew, "But not right now."

Brand visibility and acquiring customers

"It's about brand visibility, and to also acquire customers," said Kendrick Wong, the founder and chief executive officer of Omnilytics, an online shopping data analytics company. Specifically, he was referring to customers who take some persuading to go online. "These are the people who are late adopters. They want to feel the physical product, they want to see the product in action," he explained.

In fact, these are customers who may never actually be persuaded to go online. "(Some) customers want to see a thing offline, tell the kids this is what they want... and then the kids will buy them online!"

To him, it's not a surprise that Taobao are willing to take a hit in profit to reach a wider audience. "It's cheaper to acquire a customer offline, (although) not making any money or profit from the customer, but (instead) getting the retention of the customer," he clarified.

Wong gives an example of a fashion company in Thailand that sets up small pop-up stores even though they mainly sell online. "They want the customer to wear their product once, understand the product, and then they will buy it."

He also believes that Taobao are not too concerned that their app and signage appeal to only one demographic of the public. "It's the clientele they're going after," he said, presuming "for Taobao, it's about the Chinese population."

Malaysian-made goods on offer

But perhaps apart from customers, Taobao also wants to reach out to Malaysian retailers and manufacturers. Among the new lines that will be made available in the shop are selected items by Malaysian electrical companies Khind, Panasonic and KitchenAid, and furniture companies Natural Signature and Lorenzo. Additionally, warranties will be offered for selected electrical appliances by participating brands. These items will also be made available through the online Taobao shop, opening a global market (including China) to these manufacturers.

Lew makes no bones that understanding (and presumably retaining) the customer is key to their strategy. "Whatever you purchase through the app is already on the algorithm, based on your previous order history."

As to whether Taobao plans to open even more such outlets in Malaysia, she is a little more cautious. "We are happy to explore, but currently let's just focus on this store."