Frugal Innovation in E-Commerce: A Case Study of Taobao

The emerging markets are experiencing high growths, have massive and still expanding market sizes, and huge labor forces, but they also face significant constraints such as resource constraints, immature infrastructures, and low purchasing power. The internal gap between huge unsatisfied demands for low-cost products from the bottom of the pyramid and the weak economic foundation in emerging markets has given rise to a new innovation paradigm-frugal innovation. Since many prior studies have looked at frugal innovation in products, our study rather focuses on frugal innovation of e-commerce platform from the perspective of value chain. We choose the case of e-commerce enterprise in China and research platform service provided by Taobao.