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Taobao Elite

Valet Service

China’s leading online shopping platform Taobao has over 100,000 high-end consumers with special shopping privileges. Will the group help to drive the company’s service upgrades?

By NewsChina Updated Mar.1

APASS gathering in Shanghai, organized by Alibaba, May 20 / Photo by CNS

The moment when the clock struck midnight, 24-year-old “Tingtingjiang” made her first order of the day on Taobao, China’s biggest online shopping platform. Her shopping spree did not stop until 3am. It was November 11, China’s “Single’s Day,” which has transformed into an e-commerce festival.  

Tingtingjiang’s shopping basket had 70 items that day including more than 20 pairs of shoes, 20 items of clothing and some snacks – at a cost of over 30,000 yuan (US$4,350). The most expensive order was a tourist package to Europe that cost nearly 10,000 yuan (US$1,450). She had been preparing for the shopping day since September.  

Every day, Tingtingjiang spends at least two hours on Taobao, and says that she feels relieved when her goods are about to arrive. She asks delivery staff to leave the goods at the pick-up spot in her neighborhood before picking them up in her car.

 Top User 

Since registering in November 2012, Tingtingjiang has spent over 1 million yuan (US$145,000) on Taobao, making her probably the highest spending user in her home city of Bengbu, a mid-sized city in the eastern province of Anhui. She runs several private businesses, and does 70 percent of her shopping on Taobao and 20 percent overseas. 

Her shopping activities were soon noticed by the firm. On May 10, 2014, Tingtingjiang received a message from Taobao inviting her to join the Alibaba Passport (APASS) Membership. It was not until 2015, when she was invited to an offline activity organized by Taobao, that she realized that she was part of an elite group of users who got special privileges. 

“I was thrilled to learn that I had become a VIP member of Taobao after many years of shopping online,” she told NewsChina. “It was an awesome reward for my shopping.” 
Since the inception of the APASS service in March, 2014, Taobao had, at the time of writing, issued more than 100,000 memberships – out of millions of active users. 

Taobao provides a button for APASS users to call special service managers on their app – a service not available to the common herd. This manager will call back within three minutes to solve the customers’ problems including payments, returning goods and even dealing with their private issues. In addition, users are entitled to quick refunds if the shopping item is priced under 10,000 yuan (US$1,450). 

Taobao users are not able to apply for APASS membership themselves. Instead, the privilege is issued by the company after customers meet more than 50 selection criteria, including spending at least 100,000 yuan (US$14,500) on Taobao each year, having a good credit score, and a wide range of goods on their shopping lists. 

According to statistics from Alibaba, 11 percent of APASS users spent more than 10,000 yuan (US$1,450) and 6 percent spent over 50,000 yuan (US$7,280) on Singles’ Day in 2016. An APASS member surnamed Yao spent 1.91 million yuan (US$277,000) that day. The spending per person among APASS users is more than seven times that of ordinary Taobao users. 

In May 2016, Alibaba released a report on its high-end online customers, stating that APASS users are mainly made up of four groups – major Taobao users, middle-class mothers, business elites and self-starter entrepreneurs. Taobao statistics show that 30 percent of APASS users’ shopping lists are cross-border goods, suggesting both high-end purchases and re-sale possibilities. 

Personalized Service 

Xin Yao is a customer manager for APASS users. On the night before November 11, 2016, all managers were required to be on hand in the office from 10pm to midnight save for two staff who were on maternity leave – and they had to stay online at home. Working until 3am, she replied to more than 30 inquiries. When she entered the office in the morning, she saw the slogan on the wall “Let’s boom.”  

Xin joined the APASS department in June 2014 after rounds of internal selection from the company’s general customer service staff. She was told that her job would be to provide the best service to the most valuable users. She was even asked to sign a confidentiality agreement to protect their privacy. 

In early 2016, an APASS user booked a flight to the United States with her parents but his mother failed to get a visa – and they had only nine days until departure. The second visa attempt would take roughly a week and he asked Xin for help. 

Xin was caught off guard. She sought help from Zheng Dongyang, director of the APASS department. Zheng said that all the documents, including the bank balance sheet and property ownership certificates, required by the visa officer were for the purpose of assessing the applicant’s credit. Zheng sent an e-mail to the consulate testifying to the applicant’s credit with Taobao. Within three days, the applicant got the visa. 

“A customer manager’s most basic job is understanding their clients’ real demands,” he told NewsChina. “What the client cared about most was travelling with her parents, not the cost.” 

In another case, an APASS user went to Greece to celebrate his 30th wedding anniversary with his wife but when the couple came back they found that their SD card was broken and all the pictures were inaccessible. He contacted the manager who immediately found a member of IT staff to fix the problem before printing out all the pictures for the user. 

According to company rules, customer mangers do not need to report a case to their superiors if the problem can be fixed at a cost below 2,000 yuan (US$290). For the APASS users at the very top of the pyramid, Taobao tries to cater to their needs regardless of costs. 

A senior APASS user booked a trip to Koh Samui in Thailand for his honeymoon but shortly before departure, he cancelled his holiday. The manager then arranged a full refund for the customer. But the customer didn’t know is that the company paid the penalty of 20,000 yuan (US$2,900) for the cancellation. 

“We were told that no matter what happens and whatever the reason, APASS members’ demands should be satisfied unconditionally,” Xin Yao told our reporter. 

During an interview with the BBC, Wang Hai, deputy director of customer service department of Alibaba said that the APASS group spent over 30 billion yuan (US$4.4b) in 2015, or more than 300,000 yuan (US$43,600) each user on average. 

Xin Yao told NewsChina that their goal is to keep 80 percent of APASS users maintaining their membership annually but the actual proportion is a little lower. She said that some members emigrated to other countries and some couples share a membership before breaking up. One member, she said, asked the company to terminate the membership for fear that his personal information might be leaked. 

Business Needs 

According to a report released by McKinsey in June 2016 on the power of Chinese consumers to reshape global consumption, China’s consumption pattern has become increasingly similar to that of developed countries. By 2030, the proportion of Chinese families’ spending on food will drop by 18 percent and their spending on optional items will grow substantially. It added that in the coming 15 years, China will account for 30 percent of the increase in global consumption. 

A report on high-end consumption online released by Alibaba claimed that by 2020, online channels will play the leading role in the retail field in China with a market potential of US$1.6 trillion, exceeding Australia’s GDP in 2014. Online channels, the report said, will account for 42 percent of China’s increase in consumption, and 90 percent of that spending will be through mobile devices. 

Zheng Dongyang told our reporter that APASS members are the backbone of the growing sales on Taobao and analyzing the big data produced by the group has been driving the company to continuously upgrade its service. 

“It is a great opportunity to reform, innovate and boost our service pattern and capacity,” he said. “We can only meet the demands of more customers and expand the market share after we can perfectly satisfy APASS users. It will be a gradual process.” 
Zhang Qin, a deputy manager at Taobao, said that two changes indicate consumption upgrades. First of all, consumers are beginning to ignore low quality products even though they are inexpensive. Second, she said that demand for tailored services will rise, which could result in explosive demand for tourism, education, and entertainment.  
On November 11, 2016, APASS members’ spending grew by 45 percent year on year and 19 categories saw growth of over 100 percent such as hotel bookings, flower sales and home renovations. Spending on education and training recorded a spectacular increase of over 400 percent. 

Zheng Dongyang told NewsChina that when shopping, a growing number of consumers are highly concerned about whether a product is safe and pollution-free, showing that consumers not only care about their material needs, but also safety.  

Consumption in recent years has targeted high-quality goods rather than just luxury items. 

“Consumption upgrades are just around the corner and what we need to do is to try to meet the demands,” Zheng said, predicting that by the end of 2017, 200,000 to 300,000 consumers will be eligible for APASS membership, a faster rate of growth than previously expected.