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In Asia, where many countries are still knee-deep in the pandemic, the surge in furniture demand has reached an all-time high. Although western furniture brands have typically led home decor trends in the past, a new main player has emerged in the market.
Alibaba’s answer to Amazon, Taobao, is among the world’s most visited online marketplaces. Known for its highly affordable prices, it is widely regarded as a bargain hunter’s paradise. Taobao currently offers over 20 product categories, ranging from food to electronics, however home and living has become one of its most successful categories.
Just two years ago, Taobao took the leap and expanded its home and living category offline, establishing two physical stores in Southeast Asia. And thanks to the pandemic, the risk has paid off.
Taobao floods homes in Southeast Asia
Taobao’s website was initially developed only in the Chinese language and was only meant to cater to neighbouring Chinese-speaking countries. After its popularity grew in China, Taiwan and Hong Kong, Taobao began to develop a cult following amongst Chinese communities o Singapore and Malaysia, which prompted Alibaba to develop a new O2O (online-to-offline) strategy to bridge the distance between suppliers in China and Southeast Asian customers.
In late 2019, Taobao opened its first physical store in Funan Mall, Singapore. In a partnership with Virmall, a local firm that helps to curate and bring in products from merchants on Taobao, the two companies opened a 6,000 sq ft store, offering over 300 products, ranging from furniture to kitchen appliances and clothes. Nearly 80 per cent of the items in-store are from the home and living category, the fastest growing product category for Taobao in the Singapore market.
Staying true to its digital native roots, the store acts as more of a storefront for Taobao’s app. All of the items in store are fitted with QR codes which allow customers to scan the items, leading them to a product description page.
After checking out their online cart, customers can either have their orders delivered to their homes or the store for pick up. Other services provided in-store include a virtual reality 3D rendering program that allows customers to visualise how the furniture could fit into the layout of their homes.
While it may seem counterintuitive for customers to shop online inside a physical store, Taobao’s customer base have grown to accept this concept easily. Since Taobao began shipping to Southeast Asia in 2017, customers yearned for more accessible customer support internationally.
“Typically, home and living items are priced higher so shoppers may be a bit more apprehensive of buying big-ticket items, such as a sofa, online. Having a physical store allows them to see and touch before buying,” said Charlene Zhang, business development lead at Taobao Singapore.
As most of the furniture sold on Taobao are BTO (build-to-order) and directly imported from China, shipping these orders would still require a minimum of two weeks. Although, a handful of smaller items such as appliances are available for cash and carry in-store.
Following its first physical store in Singapore, Taobao partnered with another local retailer for a second physical store in Kuala Lumpur, Malaysia. At this particular store, Taobao’s merchants are displayed alongside other brands such as Panasonic, KitchenAid and a curated list of locally-sourced products.
A makeover moment
When phase one of the stay-at-home orders began to take place at the start of the pandemic, many people began searching for more comfortable and functional products for the home. Sales of desks and organisational items were the first to see an increase as working from home became the norm.
In phase two, consumers started investing in larger items such as living room furniture as the lockdown continued.
“We’re seeing people replacing sofas and living room furniture because they want their homes to be cosy and to upgrade to better-quality pieces,” explained Reham Fagiri, CEO of AptDeco, an online furniture resale marketplace.Beyond just functional purposes, another trend pushing consumers to redecorate is the rise of Zoom. With many of us still video conferencing from home, giving our co-workers a glimpse into our personal spaces with a stylish background has become a way to make remote working a little more fun.
Another component to the home decor trend was the record number of people moving house during the pandemic. While some saw lowering property prices as an opportunity to enter the market, unemployment and pay cuts have also forced many people out of the city, in favour of cheaper rent.
Is Taobao set for global domination?
Taobao’s O2O strategy is not limited to just furniture and clothes. In 2018, the group expanded its armada of online entities to include supermarkets, grocers and food delivery apps. Just last year, it partnered with a local supplier to provide same-day delivery of fresh groceries within Malaysia.
Taobao’s offline ventures outside of China indicates the e-tailer has big plans to reach new consumer bases and become a major contender to local online marketplaces or even Amazon. Despite the extra costs of physical stores, Taobao’s items are priced exactly the same as they are online. While most retailers are betting on a more digital future, Taobao’s brick-and-mortar stores seem almost regressive in the current market.
One of the biggest barriers that Taobao faces is language. The app and website are currently only available in Chinese. However, with the help of sales assistants who are present to translate and assist in navigating the app, Taobao hopes this will make the platform more accessible to a wider audience.