“Taobao Village” in Guangdong Province: Over 10,000 People in 3,000 Households Running Taobao Business

“Taobao Village”—-Making money online

Locating in Baiyun District of Guangzhou, Xiniujiao Village is mostly known for its involvement in Taobao business—-a “Taobao village”.

As an urban village of one square kilometers, the Xiniujiao Village is filled with more than 10,000 people working as sellers on Taobao.com. These Taobao businesses further bear nearly 30 express stations, 20 restaurants and other relative industries such as express bill and paper box manufacturing and photograph taking. It is estimated that averagely 150,000 online orders come out the village every day.

“Hubei Village”—-An Exclave of Hanchuan Farm

80% of the Taobao sellers come from Hanchuan, Hubei province. Hubei Dialect heard in corners and Hubei restaurants filling the streets, the village makes people feel like being in a “Hubei village”.

The cheap rent and convenient transportation make Xiniujiao Village geographically favorable for developing into a Taobao Village. It only takes 400 yuan to rent a 100 square meters’ room in the village a few years ago, and there is a bus offering direct access to the nearby Shahe Wholesale Market, one of the biggest women clothing distributing center in the country. Because of the market, Taobao sellers in the village mostly engage in the women clothing business, creating a lot of “hot selling” online.

Comparatively, the village just “happened” to become a Hubei village. The earliest sellers coming to the village were some young people from Zhongzhou Farm in Hanchuan, Hubei province. After tasting the sweetness of the business, these pioneers introduced other people from the farm to the business, and these people further brought their relatives and friends. People from this farm flooded into the village. “Whoever could use a keyboard came,” said a seller from Zhongzhou Farm.

The Golden Three Years

The golden age for Taobao sellers started from the end of 2007 to the year 2010. “Whoever working hard could make money in Taobao”.

Wang Li is one of the first sellers coming from Zhongzhou Farm to the village. During the golden age, he said, it was very common that people who came to the village empty-handed earned themselves a car after a year’s hard work on Taobao business.

From the year of 2011, the number of Taobao sellers has increased by a dozen times, making it much harder to make money from the industry. From then on, coming to Xiniujiao village to open an online store in Taobao is no longer a no-lose deal. The sellers in the village have also been renewed after that: some quitted after earning enough money, some stuck to the business bearing less profit, and some rose in a short time as a “dark horse”.

The myth of overnight-rich

With Taobao shopkeepers rushing into the Xiniujiao village, the rent has risen several times, pushing those unwilling or unable to afford the rent to the nearby village such as Dayuan village and Yushatan village. These villages are gathered with Taobao shop-owners as Xiniujiao village did years ago.

Yang Kui, a Taobao seller, thought that it was getting harder for those newcomers to create myth of overnight-rich, for the reason that after going through start-up stage and thriving period, the number of sellers in the village now tends to be saturated. More and more people expecting to get rich through Taobao online-store have to return disappointed. About the future, he said it is still complicated and confusing of the e-commerce environment and the trend of wholesale market. “I think we will stay for at least five more years,” said Yang.

Photography, express, restaurants and landlord — Constituting the ecological chain of Taobao village

In this small place of one square kilometers, Taobao is the core of the ecological chain.

The main street is messy yet vigorous, densely packed with restaurants, food stalls, express stores, photographic studio, and computer consumables shops. Walls are pasted with advertisements of training for Taobao sale, help improving “credit mark” and removing the negative feedback. Given birth by the mass Taobao groups, these businesses make up a whole ecological chain of Taobao industry.

Photography: Over 10,000 yuan for photograph-taking one time

Unlike entity stores where customers can see and touch the goods, people shopping on Taobao.com mainly rely on photos of the stuff to decide whether they like the store or want the stuff. Therefore, whether the goods are “good-looking” is extremely crucial. It determines the “clicking rate” of the store, that is, whether people would “walk” into the virtual store. The emphasis on “looking” spawns photographic studios that take photos for commodities sold online.

Photographers in studio use professional equipment and scenery to take appealing photos of these goods, and retouch these photos. These studios also provide models for sellers.

The price of models is expensive, and it costs even more to hire a foreign model. According to an owner of a large-scale Taobao store, the charge for one photograph-taking of his commodities could reach up to 10,000 yuan.

In the village, photographing one item takes about 50 yuan. If model involved, it takes at least 85 yuan, and for underwear model, the price goes up to 150 yuan. And these are just the basic price. Any additional requirements ask for more charges.

Express Service: Crowded with competition

Supported by well-developed express industry in the village, Taobao shopkeepers could sell their products towards the customers all over the nation.

“There are at least 30 express stations within the village, and over 150,000 orders of goods are delivered out”, estimated by one in the express industry.

Express stores have a fierce competition here, even much tougher than the online sellers. If one delivery lowered the price, the other would immediately follow up. Most express companies charge 7 yuan for an order in the first half year of 2013, and down to 6 yuan in the latter half. As for this year, the price is lowered to 5 yuan. As competition turns white-hot, there is hardly any space left for profits.

Besides the low price, the fierce competition brings better services. For example, offering pickup-from-patron services for items outnumber 50; express stall opening till 24:00 and delivering the goods before 2 a.m.

Restaurants and food stalls: Hubei cuisine restaurants thickly distributed in the streets

Yu has opened the first Hubei cuisine restaurants in the village. Outcompeted by the young people in Taobao industry, he saw opportunity in offering hometown cuisine for people of Hubei. He hired cooks from Hubei province, and made his restaurant a not expensive but authentic tasted one.

The success of Yu’s restaurants leads to the open of other Hubei cuisine restaurants. Now there are over 20 Hubei restaurants packed densely in the street. Busiest time for the restaurants is when Taobao sellers go out for meal after one day’s work around midnight. These restaurants open for them till 3 or 4 a.m.

Landlord: Sitting around and gathering rents

Liang Qiang owns a 7-storey house for renting and gets about 17,000 yuan rental each month. He believes the rental will continue to rise and bring him more income in the future.

Before these Taobao sellers come, there are few people rent the house in the village, though the rental was really low. With sellers flushing into the village, rental houses soon become inadequate, and the price starts to rise quickly. For now, a 100 square meters house is rented for 1,800 yuan each month.

The other privilege brought by these Taobao sellers is the improvement of public order. In the past, security staff of the village always had to deal with incidents overnight. And now, with the sellers and staff engaged themselves in doing Taobao business, the village’s security affairs sharply decline.

Original post on Sina.