For merchants looking to sell online in China, there’s plenty of good news— with a few caveats.
On the positive side, China continues to get more attractive as a target market. Our upcoming 2017 Global Ecommerce Report found that a staggering 96% of digitally-empowered Chinese shoppers make purchases online daily or weekly—more than any other country. As one ecommerce expert noted, “In other countries, ecommerce is a way to shop, but in China, it is a lifestyle.” And for Chinese consumers, this ecommerce lifestyle revolves around marketplaces. According to eMarketer, 85% of online purchases in China occur on digital marketplaces.
The leader in the Chinese online retail marketplace race is Alibaba’s Tmall, owning a 57% share of all retail ecommerce transactions in the country. At an annual gross merchandise value (GMV) of over $430 billion, Alibaba earns more than the top 10 U.S. online marketplaces combined. While Alibaba’s reach includes payments, digital media and television, its core retail businesses are Tmall, Tmall Global and Taobao. Tmall is the domestic marketplace, Tmall Global for international brands and Taobao a consumer-to-consumer ecommerce site. Together, these marketplaces process a staggering number of transactions, with Tmall bringing in close to 493 million monthly active users in 2016.
Tmall Global presents a growing opportunity for new foreign retailers looking to enter the Chinese ecommerce market. Around 14,500 foreign brands sell into Tmall Global, but more than 80 percent of those companies sold on the site for the very first time in 2016. In total, brands from 63 countries sell on Tmall Global, with Japan and the United States leading the way.
Retailers Who Sell Well on Tmall Global
Female shoppers have traditionally been the most active on Tmall, but its segment of new shoppers skews male and young, particularly between the ages of 16 and 28. Regardless of demographics, Tmall Global shoppers typically look to buy products in two categories:
Fashion – Big-name international fashion brands from North America and Europe manage to enjoy plenty of mindshare in China despite the population’s limited exposure to Western culture. Tmall Global shoppers especially like to buy handbags, luggage and women’s apparel and shoes on this site.
Personal Care – Chinese shoppers are flocking to cross-border marketplaces to buy beauty products, cosmetics, non-perishable nutritional supplements and baby food. News headlines are a big reason why: over the past several years, a series of health scares over the quality of domestic products have encouraged many buyers to seek out foreign brands.
Keys to Selling on Tmall Global
Before any brand opens shop on Tmall Global, it’s important to take several key cultural considerations into account.
01. The popularity of domestic marketplaces in China is well beyond what it is in North America and Europe. Marketplaces are the place to shop for Chinese consumers, with 85 percent of online sales in the country occurring through marketplaces. Take a marketplace-first strategy. Don’t make it a secondary priority to a direct retail website.
02. Localization is crucial to success for selling in China. That doesn’t just mean translating your web copy or marketing materials, but rather, understanding the unique nuances of Chinese culture. For example, in Western cultures, minimalism is a popular design aesthetic, and many retailers reflect that with simple websites that feature whitespace, large-format imagery and sparse text. In China, meanwhile, digital storefronts resemble supermarket flyers: as much information packed in as possible, with an emphasis on bold, type and illustration-led design.
03. Buying cross-border is not new to the Chinese shopper. Our upcoming Global Ecommerce Report found that 74% of Chinese online shoppers have purchased cross-border. Chinese buyers have found plenty of reason to buy cross-border in the past, the most recent involving the quality of their own domestic personal health products. Shoppers simply haven’t found the supply of foreign retailers to match their demand.
04. Marketplace marketing is an iterative process, and one that requires understanding the dynamics of China’s shopping culture. For example, China has a growing number of shopping holidays that differ significantly from Western promotional calendars. Singles’ Day (11/11), for instance, is the single largest shopping day in the world, with more than $17.6 billion sold in a 24-hour period last year. Marketers should craft unique promotions for each of these holidays while leaning on other strategies, such using celebrities and the concept of product scarcity, to create sales momentum.
05. Chinese customers expect a high amount of engagement and interaction. They love to use online chat for customer service, and they rely heavily on Tmall Global’s merchant ratings and shopper reviews, which are presented front and center on each storefront. Shoppers also track rating trends (e.g. is this retailer’s rating improving or falling?) and expect constant conversation with merchants.
These five factors underscore why foreign retailers need a local team to sell into China. Getting onto Tmall Global requires working through its network of Trusted Partners (TPs), which are third-party consultancies or system integrators. And while TPs are crucial, most are based in China and focus on serving operational needs. Retailers commonly experience challenges in contracting, technology platforms, logistics, marketing and ongoing storefront optimization. Pitney Bowes’ Complete Marketplace solution takes on the burden of contractual, technology, logistical, marketing and customer service management off your shoulders, and put you in a better position to hit the ground running in China on day 1.