Tmall Global is the leading Chinese cross-border e-commerce app and is booming in both China and abroad. If you’re a marketer or brand looking to reach out to this audience, it pays to know the ins and outs of how Tmall Global works and how foreign merchants can create a Tmall Global store and start selling their products on the Chinese market. So let’s do that!
China’s e-commerce is undoubtedly the largest in the world
E-Commerce revenue in China is expected to grow to 1,095.5 billion U.S. dollars in 2023, making it the world’s first trillion-dollar e-commerce market. Although the growth rate is slowing down, it still boasts an impressive 18% annually compared to 10% in developed countries.
More than 70% of the Chinese population shops online and each person spends approximately $984.91 USD annually compared to $899.06 USD as of current, waiting for brands to capture the opportunity.
The rapid economic development, increasing middle class with strong purchasing power, and high penetration of the Internet have fuelled such fast adoption of online shopping among the Chinese. Any brand owner, who wants to expand and gain fruit in China market, should definitely understand and invest in its e-commerce strategy.
There are dozens of Chinese marketplaces and both consumers and sellers will find the one that works best for their needs. The Chinese eCommerce market is one of the most innovative and dynamic in the world but also a very competitive one. This competition is one of the reasons for the success of online shopping in China, as it encourages Chinese e-commerce groups to come up with offers that profit brands and consumers.
The Alibaba Empire
When you talk about China e-commerce you have to mention ” Alibaba“. Alibaba is China’s largest e-commerce group which founded different platforms:
- Alibaba.com, the largest B2B e-commerce platform in the world
- Taobao.com, China’s largest C2C platform
- Alipay is China’s largest e-payment platform
- Aliyun which is China’s largest cloud computing platform
- AliExpress which is helping Chinese companies sell to foreign buyers
- AliHealth is the most comprehensive online retailer of pharmaceuticals in China
- Lazada is the leading e-commerce platform in South East Asia
The domestic B2C eCommerce market is dominated by Tmall, part of Alibaba Group founded by entrepreneur Jack Ma, and its closest competitor Jingdong’s JD.com. Together they account for over 80% of the total China eCommerce market share.
A few other players account for the remainder of China eCommerce market, which typically is more specialized in particular product categories. Big players include JD.com, Kaola, Pinduoduo, Wechat etc.
Chinese cross-border e-commerce landscape
As their spending power climbs, Chinese consumers are increasingly looking for high-quality products from reputable international brands.
However, the requirements for opening an online store on domestic platforms like Tmall or JD are difficult, ranging from having a physical warehouse and physical store in China to other regulations of opening a physically present business in China, which is out of reach for many international startups and SMEs.
In order to overcome this obstacle, Alibaba Group and JD.com opened Tmall Global and JD.com Worldwide respectively as a new gateway for foreign brands to sell their products in the Chinese e-market without Chinese business licenses.
On top of Tmall and JD, smaller and newer players such as Kaola, VIP.com, YangMaTou, and XiaoHongShu are also taking on a significant share of China’s cross-border e-commerce market. We would talk about these smaller sites in part 3 of the series.
What should you know about selling on Tmall and Tmall Global?
Tmall and Tmall Global are the definite leaders in the market when it comes to B2C shopping so it’s best to get to know those platforms, so you can decide whether it’s worth it for your brand to start selling on Tmall Global.
Tmall vs Tmall Global
The Tmall vs Tmall Global question is one of the most commonly asked questions by companies that contact us. And it is a legit one! Tmall, as mentioned, is the largest domestic B2C online platform in China.
So Tmall enables businesses to sell directly to millions of customers throughout China. As an open platform marketplace, Tmall provides the infrastructure to host your storefront and unfiltered access to hundreds of millions of shoppers.
A storefront is much like operating your own B2C eCommerce website.
Tmall Global, on the other hand, allows international businesses with no physical presence in mainland China – that is you don’t need to have a physical store or a warehouse, you don’t need to be registered with the Chinese authorities, and you also don’t need to have a Chinese business license – to set up an online store on the platform and tap into a huge and profitable consumer base who are excited about online shopping.
Tmall Global: a link between foreign brands and Chinese consumers
Tmall Global is a dominant cross-border e-commerce platform, the first choice for many well-established international brands to land if wish to sell in China.
It currently hosts more than 20,000 brands in over 4,000 categories from 77 countries and regions.
The aim of Tmall Global is to source the latest and most popular overseas products for Chinese consumers and on the other hand, help overseas vendors capture Chinese consumers’ booming appetite for imported products.
Who can sell on Tmall Global?
All the companies in Tmall Global are corporate entities outside of mainland China, with overseas retail qualifications. Merchants with a turnover of at least 100.000.000 RMB are prioritized.
The goods sold on Tmall Global are originally produced and sold overseas, then imported legally into China.
Domestic consumers can use Alipay or other methods that are used on the domestic platform, Taobao, to buy goods on Tmall Global. Meanwhile, merchants will receive payment in their local currency directly in their home country bank accounts, if they don’t have their own Chinese bank account.
Business models offered by Tmall Global
Tmall Flagship Store
Tmall Global allows foreign brands without a Chinese business entity to sell to consumers directly by opening their exclusive flagship stores. Though, since March 2015 companies are required to use authorized third-party service providers, also called ‘Tmall Partners’ – GMA for instance is a TP.
Via the ‘Partnership Business Structure’, a local TP will help the foreign brand to open a Tmall shopfront. The brand is responsible for the products, branding, and marketing strategy whilst it outsources daily operations of the storefront to the TP.
For some foreign brands which are unable to open their own retail store in China, opening a Tmall Global Flagship store is a good way to reach their target, Chinese customers.
The platform also offers brands a number of marketing tools available throughout the Alibaba ecosystem such as livestreams to create content that appeals to Chinese consumers born after 2000, or Generation Z, the fastest-growing customer base on Tmall Global.
Requirements for merchants to operate a Tmall Flagship Store:
- Commodities: products originally produced or sold abroad must be genuine and come with a certificate of origin. Therefore, products must pass Chinese international customs and Tmall Global security.
- Webpage & Labelling: product descriptions, as well as labels, must be provided in Chinese, with the international metric system adopted as the unit of measurement.
- Chinese language customer support: must be available, for which Tmall recommends employing Chinese Alitalk customer service.
- Logistics: products should be dispatched within 120 hours and be delivered to customers within 14 days
- After-sales: merchants are required to set locations for handling returns in mainland China, Hong Kong, and Taiwan if they sell commodities to those respective regions.
After investing considerable time and resources into entry preparations, setting up a shop will take 4-8 weeks.
How much will you need to pay?
Before you can open the store, you need to pay a US$25,000 security deposit. Notice that this is a deposit. The money will be refunded if you decide to close the store. Tmall may also deduct from the security deposit, to compensate customers.
Tmall also charges a fixed yearly fee, based on the product category you want to sell in. Most categories cost around $5,000 to $10,000 per year. If you want to sell in multiple categories, you will pay for the category with the highest fee.
In addition to the yearly fee, Tmall is also charging a commission based on the order value. The commission depends on the product category and normally varies between 2 to 4%.
In addition, Alipay, which is the payment processor for Tmall.hk, charges a 1% service fee.
Tmall Overseas Fulfillment (TOF)
TOF is a consignment solution that allows brands to place a small batch of products at one of the TOF centers to be sold on the Tmall Global platform.
This gives businesses around the world a chance to try out and fine-tune their product assortment before making a full entry into China.
TOF centers are currently available in Japan, South Korea, and the US, with plans to expand into Europe later this year.
As part of the TOF solution, the Tmall Global team provides brands with marketing advice and tools to help boost brand awareness.
Analytics generated from platforms, such as sales performance and consumer preferences, can help brands make more informed decisions about their China strategy.
One example is Everden, an American baby skincare brand that leveraged TOF when it was considering a move into China. By using celebrity endorsements and live streaming as suggested by the TOF team, Evereden increased its brand recognition and found the right mix of products for Chinese consumers. Three months after first signing up for TOF, Evereden opened a flagship store on Tmall Global and later achieved a visit-to-purchase conversion rate of between 15% and 20% in its first month on the platform.
Tmall Direct Import (TDI)
In addition, brands and suppliers can participate in Tmall Global’s new centralized import procurement program, which leverages six warehouses around the globe to source goods for all of the online and offline outlets within the Alibaba ecosystem, including technology-driven grocery chain Freshippo (also known as “Hema” in Chinese) and Tmall Supermarket.
Similar to TOF, this program is another efficient way for international brands to reach nearly 700 million active users on Alibaba’s platforms.
Through the TDI program, the Italian olive oil brand Clemente was able to place its product in Alibaba-owned outlets. In two months, Clemente Olive Oil had become a top seller in Freshippo and Tmall Supermarket.
We are a Certified Tmall Partner ready to help you get started!
We hope this first part has successfully given you an overall understanding of China’s e-commerce market as well as Tmall Global specifically.
We are a growing team of marketers with a passion for China, e-commerce, and digital marketing. We are constantly looking for new ideas in order to renew our solutions packages and always be on top of the market trends.
What do we offer?
E-COMMERCE PROJECT AUDIT (for New Comer)
- What is your place in the market?
- What is the best solution for your specific project and budget?
REGISTRATION & SHOP DESIGN/WEBSITE (for New Comer)
- Paperwork and store development don’t have to be a burden. Hand it to our dedicated team and get done with it.
SHOP MANAGEMENT & CUSTOMER ACQUISITION
- Upload, update & manage content following your guideline
- Set up KPIs for Acquisition, and running eCommerce campaign.
PROMOTION & LOYALTY MANAGEMENT
- Create & manage campaigns following the various events of the China E-commerce Calendar.
- Work on Branding, because in China Branding is everything
MULTI-CHANNEL MARKETING STRATEGY
- Brand awareness with PR, Kol, Seo, and Packaging design … We make sure consumers know who you are.
- We offer our customer performance Marketing
- We are Results Driven and are focused on real results
Don’t hesitate to leave us a comment or contact us, so that we can schedule a free consultation and learn about your brand. Let’s get you started on Tmall!