In August 2019, Tmall released a long-awaited solution for brands of all sizes wanting to test the Chinese market (See our Register on Tmall Global Guide).
Tmall open to (every) brands?
Tmall Global just launched a new application site aimed to attract more overseas brands. Nowadays Tmall Global has over 20,000 international brands.
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There are TREE different models for bands on Tmall Global:
- Tmall Global Flagship Store (TMG) – the most popular method: for hiring a Tmall Partner to operate the store and marketing, brands will need to invest.
- Tmall Direct Import (TDI) – is a model for top-selling lifestyle supermarket products.
- Tmall Overseas Fulfillment (TOF) – a retail model for brands with low China awareness.
Let’s have a look what is TOF, which became a good solution for low awareness business.
Tmall Overseas Fulfillment (TOF)
TOF is a consignment solution which let brands sale a small part of products on the Tmall Global platform, just need to place products at one of the TOF centers. So before making a full entry into China foreign business have a chance to try out and fine-tune their products. TOF centers now are available not only in China but in the US, South Korea and Japan, with plans to enlargement into Europe this year.
Cainiao Alibaba Oversea Logistic
Cainiao, Alibaba’s logistic network, will continue to empower its network of bonded warehouses in China to support these new initiatives. The goal is to triple its size to three million square meters for 3 years.
6 Warehouses over the world
Similar to TOF, there is a program which could be another effective way for international brands to achieve about 700 million active customers on Alibaba’s platforms. Brands and providers can take part in Tmall Global’s new Centralized Import Procurement program, which uses six storehouses around the globe to source goods for all the online and offline outlets within the Alibaba ecosystem, such as technology-driven grocery chain Freshippo and Tmall Supermarket.
This model was made for brands with low China visibility. After brands will send their products to Tmall’s overseas storehouse, the TOF team will manage the store and send the product to end consumers. It’s easy to configure the inventory if brands are not able to make a sale because the stock is kept in the brand’s home country.
While it looks like a good method to enter the Chinese market, without enough brand awareness, it’s improbable traffic from Tmall will bring many if any sales conversions, unless the product is a raw commodity (fruits, vegetables, raw materials). A trading floor isn’t the right platform to make brand awareness.
THREE important points of TOF
- TOF uses a consignment model to optimize assortment and simplify exchange of inventory in home country
- TOF uses foreign storehouses for direct implementation to consumers providing inventory flexibility and low logistic and storage expenses for suppliers
- TOF is a new collaboration model to contribute foreign brands target the increasing middle class custumer base and test China market for sale’s ability
TOF: Benefits for merchants:
- Easy exchange and refund of products in the home country
- No extra operational expenses and sales
- Full access to Chinese customers who are looking for foreign production
- Low expenses market entry to optimize and test product assortment
- Versatile calculation possibility: weekly or monthly (in home currency)