Tmall and Tmall Global are both crucial e-commerce platforms in China, but how do they differ from one another and which one suits your cross border business best?
The Chinese e-commerce market is the largest single market in the world, far surpassing even the USA in terms of both the number of consumers and the annual revenue.
The Alibaba Group dominates the Chinese e-commerce market operating the largest e-commerce website in China, the C2C platform, Taobao.com. The largest B2C platform, Tmall.com, is also part of the Alibaba group and holds over 61% of the B2C market share. It is the most visited B2C retail website in China, with 97% of Chinese online shoppers using the platform. In a not entirely accurate comparison, Taobao can be likened to a Chinese eBay, a busy online marketplace with a large numbers of vendors. Tmall on the other hand is closer to Amazon, a more structured online shop, where the goods sold, come from quality brands and are either sold directly by the brand at a flagship store, or alternatively by reputable third party e-stores.
Tmall flagship stores offer brands an opportunity to exclusively sell their own products and connect directly with the customer through their own interface, as opposed to third party merchants selling their products. Establishing a Tmall flagship store is not dissimilar to creating your own website. Businesses can design, create and manage their flagship stores on the Tmall platform and are responsible to independently promote their brand and organise customer service and logistics. The key benefits of a Tmall flagship store is giving your brand a better degree of credibility and exposure to the vast consumer traffic that Tmall receives, recorded at over 500 million active monthly users in 2018.
Opening a Tmall flagship store exposes any business to an entirely new market with regular traffic of over half a billion potential customers. While this process could become hugely profitable for you business, there are a number of challenges that are worth taking into consideration.
There are a number of requirements that need to be met in order to set up a Tmall flagship store, these can take time, and could prove problematic for businesses seeking to engage in cross border trade. To be accepted onto the platform and begin trading, your company must have been a registered business in China for at least one year before your application is approved. It also must have a registered capital of at least 1 million RMB. Additionally your business must have an offline presence in China, meaning some sort of logistical arrangement where your products are stored and can be delivered within the Chinese mainland.
In addition to these prerequisites there are a number of different regulatory and licencing documents that must be obtained or produced to open flagship storefront. These are outlined in the table below:
As the graph below indicates Tmall generates remarkable revenues, and looks set to continue to grow at a substantial rate. Access to the huge consumer base and revenue stream, does come at a cost, and this depends on which products you are bringing to market. The initial deposit is either 50,000 or 150,000 RMB (approx. $7,000USD or $20,000USD). An annual fee of either 30,000RMB or 60,000RMB (approx. $4000USD or $8000USD) is also charged by Tmall.
Establishing a Tmall storefront may seem a daunting task and difficult logistically with the resources at your disposal, but do not despair! If tapping into the largest e-commerce market in the world seems like a valuable proposition for your business, take a look at our website which explains our various services that can be tailored specifically to your needs, and do not hesitate to get in touch.
Alibaba also offer Tmall Global a separate channel on the broader Tmall.com platform. It has completely revolutionised the cross border e-commerce market in China and makes entrance a more streamlined process and therefore a much more attractive prospect to many companies.
The platform allows businesses located outside China to take advantage of the huge and highly lucrative Chinese e-commerce market, by helping to solve many of the administrative, logistical and legal challenges they may otherwise face. You don’t need to be a registered business in China for a year nor do you need a warehouse in China, Tmall Global can organise bonded warehouses and its trusted partners, such as Cainiao, can fulfil the logistical requirements. Unsurprising for all this assistance there are higher financial outlays both initially and annually.
While Tmall Global somewhat simplifies the process of establishing and growing a foreign business in China, a significant barrier is the fact that entrance onto the platform works on an invitational basis. With customers paying premium prices, both the platform and its consumers desire only popular and premium brands and products. Unless you are a well established and highly sought after brand, it could be difficult entering the Chinese market via Tmall Global, though not be deterred by this, Up2China and its specialist partners are able to assist your business in the invitation process.
If Tmall Global sounds like it might be the right platform for your business find out more about the platform and the opportunities that it presents in the Chinese e-commerce market in our next article.