Alibaba ramps up drive to woo more Western brands to Tmall Global marketplace
Alibaba - China's equivalent to Amazon and eBay - has struck a tie-up with online trading platform Neteven to help it attract more Western brands to its Tmall Global marketplace.
Tmall Global launched last year as a way for Western brands to better reach Chinese consumers. Bypassing the need for a mainland business licence, which it would require if setting up a physical presence, brands can set up a store on the platform, settle payments in preferred native currency and ship orders from outside of China. The offering has already attracted a number of luxury brands such as Burberry, Estee Lauder, and L’Occitane.
However, Ken Ardali, director of international e-commerce at Alibaba told The Drum that while the opportunities in China are on the radar for most Western brands, there is still a gap in understanding between accessing that market in traditional means, like offline distribution agreements, compared to Alibaba’s online offering.
“Generally speaking it’s not something that’s broadly understood. That’s one of the main reasons we set up partnerships with companies like Neteven as they have the access to merchants and can explain the opportunity [of Tmall Global],” he said
Neteven already works with Tmall Global rivals ebay, Amazon and Rakuten. It works to maximise the growth of brands' online businesses, offering information, tools such as translation, guidance, order management, and relevant insight.
Ardali explained that luxury and super-luxury brands have achieved the most notable cut-through with the Chinese consumers so far, but Alibaba is seeing a new wave of interest from “the emerging middle class” in China, who are young, e-commerce savvy and have more disposable income.
“But they don’t necessarily want to spend money on luxury brands,” he said. “We can see demand data of searches where a Chinese buyer is looking for a particular product and not finding it, and they are the brands and the products which we really are actively trying to encourage to come to the market.”
Currently, these young, affluent consumers are looking for “aspirational, good quality, international brands”, according to Ardali, many of which remain unavailable in the East.
However, driving visibility on the platform has proved difficult for some brands who have already entered the market through Tmall Global. According to a review commissioned by the Wall Street Journal last year, 70 per cent of the stores are doing “almost no volume.”
Marketing on the site is challenging. Alibaba made an early decision to exclude paid advertising on the site but brands are able to advertise elsewhere and link back to their Tmall Global storefront, for example.
While Alibaba is working on ways to make it easier for shoppers to find Tmall Global merchants, Ardali explained: “It’s just an opening to the market, a successful one at that. But really it’s down to the brands to represent themselves.
"It’s important they understand the market, adapt their products and pricing to suit the market and that they basically tailor the offering for the China consumer. If you do all of those things, Tmall as a portal is the best.”