The E-commerce market in China is the largest in the world. Forbes reported that “the e-retail market is estimated to grow to over $1 trillion by 2018”, it could therefore become larger than the e-commerce markets of the U.S, Britain, Japan, Germany, and France all combined. There were more than 360 million online shoppers in China in 2014, a greater number than the entire population of the U.S.
This spectacular growth is due to a high internet penetration rate (just under 50%) and an increasingly affluent and sizeable Chinese middle class who look to purchase international products online. It is important to understand Chinese e-commerce practices in order to capitalize on this lucrative market.
Tmall Global is the most important e-commerce site for international brands desiring to penetrate the Chinese market.
Tmall has become a popular e-commerce platform where Chinese shoppers are able to purchase both international and local brands.It is a popular marketplace online in China with many international brands opening stores in order to increase the size of their customer base.
Tmall is owned by Chinese internet giant ‘Alibaba’, the e-commerce platform consolidated its success through an IPO on the New York Stock Exchange, increasing its popularity and recognition abroad. The site was created by Taobao, the largest online sales platform in China. It was launched in 2008 as an e-commerce website with the exclusive aim to host official brand ‘shops’.
Tmall Global was then launched in 2014 with the purpose of promoting foreign brands and facilitating their access to the Chinese market. Nowadays, Tmall has more than 70,000 brands in 50,000 stores.
Chinese consumers seek authentic products
The launch of Tmall Global reflects the high demand in China for authentic, western brands.
These ‘official’ accounts particularly give western brands the chance to offer their products in China and reach the largest number of potential consumers. The key is authenticity, in a market flooded with counterfeit goods consumers want to ensure they are purchasing genuine brand products.
Bayern Munich have revolutionized the process of selling official football merchandise in China, they now have an account on Tmall Global. Dedicated football fans can ensure that the merchandise is official, they want to support their team and not purchase the fake, poorer quality copies which circulate. “Making our fan merchandise accessible is crucial to connect with our fans in China,” said Bayern Munich Chairman Karl-Heinz Rummenigge.
What opportunities does Tmall present for companies?
Firstly, create a Tmall store account, this validates a business the eyes of the Chinese consumer. It is the perfect tool to reach Chinese high-end online shoppers. Additionally it is a simple way of maintaining an important presence in the Chinese market. With the growth of e-commerce it is no longer necessary to open stores in every city.
Tmall uses Alipay as a payment system, this is a very popular, trusted method in China. As Tmall only includes verified, official stores consumers can trust a product’s quality and validity.
Tmall includes analytic tools such as “Daily Update” which provides daily sales reports. These tools facilitate sales analysis and are useful for marketers who look to make strategic decisions based on this data.
Tmall has three different store formats.
– Flagship Store: this kind of e-shop is an exclusive shop with the trademark (either ® or ™). To open a flagship store, the owner has to be a formal representative of the brand or have exclusive authorisation documents provided by a formal representative of the brand.
– Specialty Store: E-shop owners who have the required authorization from a brand to distribute on their behalf in China.
– Monopolized Store: marketers who want sell two or more brands within one of Tmall’s product categories.
How to open a Tmall store?
In order to set up a Tmall store certain requirements have to be met. Firstly, the brands have to be registered outside China and have good credit. The company has to have been running for over 2 years and annual sales must be greater than US$10 million.
Tmall require a deposit between US$8,000 to US$25,000 depending on the store format. The e-commerce platform also charges an annual service fee, these vary according to the product category and could be between US$5,000 or US$10,000.
Marketers have the opportunity to avoid paying either half or the full service fee if they reach Tmall’s predefined sales targets for the product sold. In addition, Tmall keep 5% of the sales value as commission.
– Foreign products must be vetted by Tmall Global security and go through Chinese international customs.
-Products must have descriptions in Mandarin language and international units of measurement.
Tmall prefers products from industries such as maternal and child apparel, health care products, clothing, shoes and accessories. The majority of goods sold on the website fall into these categories.
Creating an online store on marketplaces such as Tmall Glolbal is an easy and effective way to start your business in China. Many well-known brands have already launched shops in Tmall and seen their revenues increase.
If you are interested in being part of the Chinese market, don’t hesitate to contact us, we will boost your presence in China.
For more information about our agency see here.
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