China is an ever-growing power and most importantly the buying power of its middle class is increasing. Consumers are willing to spend their money and can you guess what is their favorite place to shop?
Yep, you are right: Taobao, T-mall and JD.
If you are looking forward to developing your e-commerce business in China, you’ve probably already done some researches and read about this 3, but do you know in what aspects they differ?
Let’s get into it.
What you should know about Taobao
Taobao is the biggest e-commerce platform based in China, is owned by Alibaba and was launched in May 2003. The Taobao Marketplace is China’s largest C2C shopping destination. Merchants on Taobao are primarily individuals and small businesses, they are more than 10 million of them.
You’ll literally find anything you need but you should know the app is only available in Chinese. You can get clothes, accessories, gadgets, computer hardware at very low prices, you can even buy pets and second hands stuff. There is around 800 Million products listed and in June 2017 there were more than 189 million daily active users on taobao’s app and the numbers are still growing.
It is worth mentioning, it is relatively easy to create a seller account on Tabao even for small businesses.
- Looking into Taobao’s future
According to its chief marketing officer Chris Tung, Taobao is becoming the Chinese millennial platform to pursue success “The trend we are observing is that for the younger generation, Taobao has become a platform that they identify with, can pursue their dreams […] over the last few years, those in the post 90s generation and even generation Z, have taken strides to open stores on Taobao and become owners and CEO of their own companies, growing their own brands.”
In short, there is a willingness to change the image of the platform, Taobao does not want to have its reputation linked to counterfeit product anymore and is, therefore, putting the accent on its young generation of passionate merchants looking forward to making a name with their creations.
Taobao has successfully embraced its new “making” culture and seduced a younger audience looking for unique products and is even promoting its new philosophy trough festival such as Taobao Makers Festival.
If Taobao customers come from everywhere in the country and are from all ages, it seems clear that the company marketing effort is focused on a younger generation of both sellers and consumers. They are engaging their customers into communities and offering them a personalized experience with the help of their huge database.
Tmall & JD.com: Powerful Chinese E-commerce Platforms
Looking at the numbers, this two marketplace really are giant but if they are both e-commerce platform their models differs on a fundamental basis.
- What is the difference between the 2 Alibaba Platforms?
Tmall and Taobao, after all, are both operated by Alibaba. Tmall or Tian-mao was launched in 2008
As the two apps are linked to each other it can be very confusing to distinct them at first. To be fair when shopping on Taobao you are likely to be sent to a T-Mall store, but never the opposite and that is because the main difference lies on who sells on each of these platforms. T-mall is the biggest B2C e-commerce platform in China (it owns more 55% of China’s b2c e-commerce market shares) and counts as much as 18 000 international brands with an incredible percentage of 80% of them have never done business in China before using T-mall.
When shopping on Taobao customers tends to look for best deals and unique products, while on t-mall customers are looking for brands, this is a place where they can buy with their eyes closed.
Interesting fact: 70% of T-mall customers are between 24 and 32 and have an increasing purchasing power with a taste for imported products.
- What are your options when opening the Tmall Store?
First of all, as we just mentioned, Tmall is a marketplace for trusted brands and products in demand with Chinese consumers, you will need to match some criteria to be able to open a tmall store as well as pay storage fees.
- There must be a business entity located in Mainland China holding a Chinese retail business license.
- The product should also be located within Mainland China to quickly fulfill and ship orders when placed.
On t-mall as a seller you’ll have the option:
- To manage your own store and while it may feel troublesome you also have the possibility to personalized your storefront as you would like to.
- To work as a wholesaler, meaning that your product will be displayed by Tmall Store and have high visibility.
It is up to you to decide which option fit your business objective the most but keep in mind in both case your product will have to match the quality standard of the marketplace.
- Not as Famous as Tmall and Yet
JD or Jing Dong is the largest self-operated e-commerce enterprise in China. As for Tmall and Taobao you can find about everything on JD with a strong focus on electronic devices.
What is setting it apart from Alibaba’s Taobao and Tmall is its fulfillment service. JD has the most advanced fulfillment infrastructure among all Chinese e-commerce companies allowing same day delivery. This is largely due to JD buying and storing goods which according to Dennis Hong, the investor at JD.com in an interview with Forbes, could be beneficial to the company growth: “JD takes on inventory risk, it could achieve procurement scale over time and guarantee product quality in a country rampant with fake goods”
- Why should you consider JD?
In 2013 JD and Tencent announced the launched of a “Jingteng” plan. In other words, the two Chinese giants basically merged their database offering a considerable advantage to JD’s merchants in terms of marketing. Targeting consumers have never been that efficient.
Not only being present on JD is a door to Chinese e-commerce world but the platform also allows the international company to sell to Chinese consumers without the necessity of a physical presence in China.
Since 2017, JD.com has opened in South East Asia and is planning to go global in the near future.
The company with its focus on technology is always on top when it comes to using it at its advantage. For instance, JD is currently working on developing a more performant drone system to ensure an even faster fulfillment service.
Tmall VS JD: interesting facts
- In 2016 Tmall made up a little more than 55% of the sales while JD was around 25%
It is impossible to miss that if JD is a clear second, it stills hold more stakes than the rest of its competitors all together (25% vs 18% for the rest) .
- Different Focus We have mentioned it quickly earlier, JD’s focus is on technology. Meaning that the tow target different markets. Buyers will generally go to Tmall for clothes, cosmetics and F&B purchases, while JD.com will be the number one choice for purchases of home appliances and electronic equipment.
- Management fees are pretty similar, however T-mall is cheaper (For a year ~ $1000 US vs ~1 to $10 000 Us on JD.)
- The payment method differs. You’ll pay with Alipay and Bank Card on T-Mall and use Wechat Pay, JD Pay or Bankcard on JD.
- Both Tmall and JD.com have their own cross-border platforms enabling foreign businesses to sell directly to China: Tmall Global and JD Worldwide.
Why you should seriously think of one of this option?
If you are still not sure whether or not you as an e-commerce company you should join one of this marketplace let us reminds you that we are talking about daily visits of millions of users, with an average conversion rate close to 30%. Some well-optimized store can even reach an insane 50%.
What is the benefice
- The platforms already exist and have consumers trust.
- The payment method is already set up and thanks to Wechat payment and Alipay it has never been so easy for a customer to place an order.
- High visibility and easy targeting thanks to the huge customer database of these platforms.
- Assistance 24/24.
To sum up, these companies have made shopping online an ultra easy process and being present on such a platform can offer better visibility to a confident customer ready to convert.
That said, being present on 1 of these marketplaces is not always enough to succeed in China, in short, your success is going to depend on how well you understand the Chinese consumers and how you apply this knowledge into your marketing strategy.
Gentlemen Marketing Agency
You still aren’t sure and would like personalized expertise on your e-commerce project in China? Contact GMA and meet with our Chinese e-commerce specialists.