This article entails a comprehensive guide for international brands to access Chinese consumer market via TMALL.com and TMALL Global. Prospective companies and brands will be able learn about step by step process for establishing an online store on Chinese largest e-commerece platforms. They will also be able to choose more suitable e-platform in between (TMALL.com and TMALL Global) to enter Chinese e-marketplace.
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TMALL.com is a Business to Customer platform of Alibababa Group. It was launched in 2008 to support the Chinese brands and businesses partaking in Customer to Customer website Taobao. Taobao is also owned by the same group. Since then TMALL.com has become one of the most popular online sales channel in China. Currently TMALL.com claims of 53% of market share, with 334 million active buyers and 70,000 different online stores.
Participation in TMALL.com is only possible if a brand holds a business entity in China with a legal license as a retailer. Along wit this the retailer must have physical inventory in China, to be able to meet the maximum delivery period of 72 hours, and able to return within 7 days.
Foreign companies were amazed by remarkable success of Chinese e-commerce landscape and wanted to access this channel to sell their products in the growing Chinese online market. In 2014, Alibaba group launched another “similar” platform known as TMALL Global. This e-platform was similar in function but had different policies. For convenience of foreign brands it didn’t require a physical entity (company) in China. Also,the companies didn’t need to have products in China and were able to accept payment in their local currency.
TMALL.com or TMALL Global?
Both platforms are tailored to Chinese audience with respect to language. As previously indicated TMALL.com need foreign brands to have storage facility. TMALL.com also preferred all transactions through Chinese bank account along with all transactions done in Chinese Renminbi. The advantage of this procedure is, it is convenient for the local buyer to make transactions in local currency and receives the products sooner. This encourages higher sales.
However, foreign customers don’t need to establish the whole setup if not in place already. Foreign companies can identify local partners to promote their products on the platform, or opt for TMALL Global, in order to experience the e-marketplace.
TMALL Global permit foreign companies to operate from their respective country of origin. Companies can also hold stock in their own countries and can ship them with preferred logistics company. Companies can have bank accounts in their own countries and receive payments in local currency thanks to the availability of e-marketplace’s international payment system. The only disadvantage to operate via TMALL Global is, the buyers need to take one more step in purchasing process. The Customer needs to agree with the policy of receiving goods from outside the country. This can cause longer delivery periods. However, more and more Chinese consumers are now interested in purchasing foreign labels and products from outside China, even if this means waiting for a longer period of time to receive delivery.
This is the first step in selecting suitable platforms according to company’s business strategy.Both the e-commerce platforms have their own pros and cons. Companies are highly advised to select suitable e-platforms, according to their business strategy.
Types of store on Chinese e-commerce platform
Both TMALL.com and TMALL Global offers three different types of online stores based on the type of company that wishes to embark on it. The three types of store are; Flagship store, Authorized store and Specialty store.
The Flagship store is offered to companies, that are stand-alone brands. These brands or companies exclusively sells their own products. Firstly, for TMALL Global the companies need to register in Hong Kong then the companies must provide suitable documents to become an authorised vendor and sell products in local market.
The Authorised stores are proposed to those companies that already have permit to sell products, but do not sell company’s products exclusively, as in case of Flagship store. Such brands also require to be registered in Hong Kong and be able to provide the required documentation for the approval.
Window shopping has now taken a whole new level. Global consumers prefer to look for products on various online platforms, which includes search engines, social media, retail websites and even email- marketing. Online platform preference are varied by the country but research shows that search engines are the most popular medium for most consumers, followed by social media platforms.
Specialty Stores are for vendors that offer several brands under one umbrella or maximum two categories of different products. These can either be their own brands or partnering with other distributors.
Initial deposits and commissions
An annual technology and service fee is applied depending on the type of product sold. This can cost between 4,000 to 8,500 euros. This is to authenticate the quality of the vendors. TMALL.com has a policy of returning 50% or the entire amount, depending on the seller’s rating (DSR) and annual sales.
On each transaction, commission ranging between 0.5% and 5% is charged which again depends on the category of the products sold.
Tmall.com also takes commission of 0.5% for the customer loyalty program, which is dedicated to future discounts given to shoppers on the platform. Such commission doesn’t apply in TMALL Global, it only charges 1% commission on each transaction for using Alipay payment method.
Steps for registration
The registration process in both e-commerce platforms i.e. TMALL.com and TMALL global is similar. Although, it is an important step to start operating in Chinese e-marketplace smoothly.
Preparation for registration on TMALL.com and TMALL Global
First and foremost, the prospective company needs to acknowledge the technical requirements in order to integrate in the e-marketplace, according to the API supplied for the payment platform (POS) provided by Alibaba Group. This can be achieved with the help of a skilled programmer, who has the right skill set to install this system.
Secondly, a logistical plan needs to be in place to manage deliveries. Thirdly, the company needs to recruit internal and external staff to handle orders made in Chinese language on the e-marketplace.
Lastly, all paperwork must be compiled in a structured method to apply for formal registration. After installing all physical procedures, the company need to be extremely proficient in their Digital Marketing efforts. This involves creating brand awareness, generating and converting leads. Consumer from all around the world are interested in shopping from e-commerce platforms and use search engines to look for products. For example, consumers in Germany (46%) like to buy products online and use search engines to find products, closely followed by Japan (40%) and India (39%). Retailers that wish to sell in these markets need to make greater effort in their global strategy on gaining traffic through search engines.
Formal registration on TMALL.com and TMALL Global
After the preparation procedure, companies can sign the agreement and open a compatible bank account linking Alipay as payment method. 44% of global shoppers choose to visit retailer’s website to search for products they wish to buy online. This trend is particularly common among consumers from US (52%), Canada and India (both 51%). However, consumers in South Korea (28%) and Japan (25%) are far less likely to search on the retailer’s website directly. This shows how important it is for some retailers to have points of sale beyond their virtual store.
Establishing the online store
After registration process is completed successfully, the prospective company is eligible to create the online store. For an online store, it is highly advisable to plan the product offering beforehand, along with the preferred product categories, price model and customer service.
At prelaunch, it is important for the company to decide about the launch strategy. Details regarding any possible promotional offer to attract buyers must be communicated. It’s a good idea to upload the store’s pages to TMALL online store and review the online integration of the API provided by the Alibaba group.
When launch is finalized, the last task is to activate the visibility of the online store on the TMALL.com or TMALL Global. The company needs to indicate its promotion plan listing all method of how it is going to attract the greatest possible number of consumers. For any companies interested, both TMALL.com and TMALL Global are two great opportunities for accessing this potential market of over 300 million consumers. Although, the successful establishment of an online store highly depends on the successful registration process and good planning to ensure a winning strategy.
Need an e-Commerce Agency for China?
Gentlemen Marketing Agency is a specialised Digital Marketing firm based in Shanghai. It has expertise and experience in establishing online stores for foreign companies on TMALL.com and TMALL Global. For any questions or help needed in establishing online store in China’s e-marketplace, please contact us, we’ll be happy to guide you.