Chinese E-commerce Guide for Global Brands and Sellers (2019) Part 1
Maria Krisette Capati, Author
16 June 2019
Editor’s note: This is the first installment of a two-part blog series about Chinese e-commerce and platforms.
Chinese e-commerce can be tricky if you don’t know much about the market.
You can read and do your little research here and there, but knowledge isn’t enough.
It would help if you had a team who sees a holistic approach. You need a team who knows the audience and willing to explore all possibilities to keep things going. Actions anchored with a local’s perspective, unlock these possibilities and opportunities.
China’s online ecosystem is fast moving. Consumers have a short attention span. You’re competing against a ton of local and global platforms and marketing campaigns. However, e-commerce remains one of the fastest growing sectors. The sector’s exponential growth made China a world leader in e-commerce.
According to Kantar Worldpanel, “By 2025, 31% of fast-moving consumer goods on China’s mainland will be sold through online channels.”
The numbers are more than double in 2018. Are you willing to take the next step for your business? If you’re ready, here’s our Chinese e-commerce guide to jumpstart everything.
Explore the popular Chinese-commerce platforms and see which one suits your business needs.
There are 610 million online shoppers according to the latest data via China Internet Watch in 2018. 592 million of them are using mobile devices to shop. The online retailing market, according to Forrester, is expected to reach $1.8 trillion in 2022. Alibaba and JD, the two tech giants, are leaders in the industry.
Tmall, Alibaba’s e-commerce arm recently had its 168 mid-year shopping festival. It surpassed the targeted gross merchandise volume (GMV) within less than an hour of the shopping festival last June 1 from midnight to 1:00 AM.
Recent data also showed another trend among internet shoppers. According to CIW, 80% of their unplanned shopping comes from social e-commerce.
In a nutshell, consumers prefer using social e-commerce platforms these days. Community-based e-commerce platforms like Little Red Book, Look, and Dealmoon are some examples. CIW said that these types of platforms are growing at a compound annual growth rate of 100.6%.
An Overview of Tmall Global by Alibaba
Alibaba’s Tmall is one of the most popular and the largest e-commerce platform in China. It’s a haven for local and global brands to sell their merchandise. The online market place, Tmall Global serves foreign brands that want to sell and set up online shop.
It’s one of the most effective ways to gain exposure and of course, rack up more sales. Foreign brands can sell imported goods without a physical store in Mainland China. But there’s a catch.
Tmall Global is stringent when it comes to foreign brands and sellers. The company has an invitation-only policy for eligible international brands that meet the requirements. The process of setting up an online store can be tedious for small or startup businesses.
Baby food, healthcare, and luxury items in the United States, Germany and Australia are popular among shoppers. Meanwhile, they shop for Japanese and Korean cosmetics and skin care. Generally, skin care products are popular among shoppers.
How to Apply on Tmall Global as Merchants and Sellers
To qualify, you must meet the retail and trade qualifications overseas and the brand owner. If you work with an authorized agency, you must have the purchase voucher plus the stock certificate.
Tmall Global targets mostly corporations that are operating for more than two years with annual sales of more than USD 10 million. If
Most of Tmall Global’s target are corporations that are operating more than two years with annual sales of more than USD 10 million. If you’re a B2C branded retailer or business or brand owners, you’re in the list, too.
TMall Global guarantees more exposure than any other e-commerce platform in China. However, as a merchant, your logistics will be a burden for you and requires a cumbersome process. You’d be the one to take charge of the shipping of packages straight from your place to China.
Another option is setting up a warehouse to store your products in the Mainland to speed up the process. But you need a local address for the shipment and returns. To compensate for the gap, TMall Global has a list of recommended logistics companies. The bottom line is, it’s your responsibility to ship items.
How Much Does it Cost to Set up a Store on TMall Global?
TMall Global targets corporate brands and big companies. Expect that you’d be shelling out around $2000 up to $24,000 USD for the online store. Prices vary as well, and it also depends on the categories of items you’re selling.
Cosmetics have higher rates compared to others. The security deposit cost of about $25,000 USD, and you also need to pay for the technical fee of about $5,000 – $10,000 USD. The commission is around 0.5%-5%, and also you need to consider 1% Alipay fee for transactions.
You will be the one to design your store and set up customer services. Think of it as you’ll be in charge of digital marketing, promos and campaigns, and many more. You can work with local suppliers to outsource these tasks or hire in-house employees.
The cost will be around $1,500 – $15,000 USD per month if you’ll be working with four members. In-house can go about $5,800 USD as salaries. Keep in mind that tech support, rent, and operating expenses aren’t yet included.
Customers pay via Alipay as the primary payment mode. Thus, Alipay will be linked to your online store, too.
Are you thinking of exploring TMall Global? Let us know how we can help in setting up your online store. Whether it’s campaign management, Chinese digital marketing and copywriting, or translation and localization strategies, let’s get things done.
We will discuss how JD WorldWide and VIP International work on our next post. So, stay tuned for out next Chinese e-commerce guide!
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Maria Krisette Capati
Krisette or "Sette" for short is a professional writer and copywriter who loves to cover disruptive technologies, digital trends in China, and a myriad of geeky and innovative topics. She's the Content Strategist at AZ-Loc and currently manages the English website and in-charge of the social media channels. She has been writing about China markets, business, and startups since 2012. She has gained her expertise as a China internet specialist and is fascinated by its business ethics, language, and culture. She's a major of Business Management and Entrepreneurship and an advocate of faith-based non-profit organizations. When she's not writing or dabbling with Sophie and the team, she satiates her wanderlust as a digital nomad.