Tmall Global GMV up 1,000 percent Since February Launch
Alizila By Melanie Lee | Dec 29, 2014
Tmall Global, Alibaba Group’s e-commerce platform that provides a streamlined channel for Western retailers to sell directly to Chinese consumers, has seen sales increase by more than tenfold in its first 10 months of operation, the company said today.
Total gross merchandise volume (GMV) for retailers hosted by Tmall Global was up in excess of 1,000 percent in November compared with results from February, the fledgling service’s first month of official operation, according to Alibaba Group. The monetary value of transactions was not disclosed.
The number of overseas brands featured on the Tmall Global website now totals some 5,400 hailing from 25 countries and regions—and more merchants are on the way. Alibaba said five of the top 10 European supermarket chains, among them Germany's Metro Group, are preparing Tmall Global storefronts, while more than 100 global merchants are lined up to join the platform.
The company added that 30 retailers operating Tmall Global virtual storefronts each registered sales exceeding RMB 10 million ($1.6 million) since opening their online shops, while more than half of all Tmall Global merchants have sold more than RMB 1 million ($161,000) in goods.
China, the world’s largest Internet market by number of users, has seen a surge in cross-border e-commerce as mainland shoppers increasingly buy products directly from overseas websites, sometimes through online marketplaces such as Tmall Global. According to a Borderfree e-commerce report last year, the top three reasons Chinese shoppers gave for online shopping overseas were lower prices, greater variety, and better quality.
Tmall Global, an extension of Tmall.com, China’s largest business-to-consumer e-shopping marketplace, was launched to tap this trend by allowing Western retailers that don’t have an established presence in China a sales channel to reach the country’s growing consumer class.
In addition to providing a Chinese-language marketplace where foreign goods are on prominent display, Tmall Global provides logistics solutions that simplify international shipment of orders as well as options for marketing in China. Merchants on Tmall Global can get brand exposure via Alibaba Group’s Chinese online marketplaces, which had 307 million annual active buyers at the end of September. Merchants have the additional option of offering payments through Alipay, China’s largest e-payments provider, giving them access to hundreds of millions of Chinese consumers with Alipay accounts.
On the logistics front, brands can also pre-ship their products to bonded warehouses in China, enabling faster customs clearance, deliveries to consumers in less than a week, and in many cases lower customs duties and taxes. Tmall Global merchants can ship to consumers through bonded warehouses in five cities: Shanghai, Guangzhou, Zhengzhou, Hangzhou, and Ningbo.
To watch a video on China's bonded warehouse program for cross-border e-commerce, click here.
“The typical Chinese consumer is becoming more international and savvy about their product choices,” said Maggie Wu, Head of Tmall Global. “We want to grow with them and at the same time help global brands access and understand this business opportunity.”
Several Tmall Global merchants have said they have seen strong results since joining the platform. Among them is U.S. members-only warehouse chain Costco, which launched its Tmall Global store in October. During Alibaba Group’s 11.11 Shopping Festival, a 24-hour online sale held Nov. 11 (China's Singles Day holiday), Costco sold RMB 22 million ($3.5 million) in merchandise.
“Our performance on Singles Day shocked and surprised our management and it totally transformed our annual business plan,” Costco said in a statement. In coming months, the company plans to expand the number of product categories it sells through Tmall Global’s bonded warehouses. “In 2015 we hope to offer Chinese consumers a richer variety of products through the platform and also improve their overall shopping experience,” Costco said.
Among the first to launch on Tmall Global was Taiwan-based candymaker Sugar & Spice, which plugged into the platform to sell direct to mainland China consumers for the first time. Officials for the company said their Tmall Global store now sells three times the volume of Sugar & Spice’s standalone online shop.
After opening a Tmall Global storefront in August, Nature’s Bounty sold $700,000 in goods through the platform in November, according to the U.S. nutritional-supplements company. Nature’s Bounty officials said Tmall Global slashed the amount of time it took to enter the China market, a process that can take several years through the traditional retailing routes of acquiring distributors or setting up brick-and-mortar shops.
“What we realized was that there’s that group of very educated Chinese consumers looking for us, especially some of our hero products that have sold well in the U.S. market,” Nature’s Bounty said in a statement. “You just can’t really find any other platform that would provide you such growth opportunities.”
According to Alibaba, five of the top 10 European supermarket chains are preparing Tmall Global storefronts, including Metro Group, one of the the world's largest retailers and hypermarket operators.
Also expected to roll out storefronts soon are Homeplus, one of South Korea’s largest supermarket chains; Holland and Barrett, a U.K. healthcare retailer; Doppelherz, Germany’s leading health-supplement company; and Japanese cosmetics firm Cosme.
Currently some of the most sought-after products among Chinese consumers shopping on Tmall Global are in the food, cosmetics, maternal products and small electronic appliances categories. To help brands figure out which products will most appeal to consumers, Tmall Global pairs up merchants with special teams to give them advice on their product offerings.
This curated approach has led to a proliferation of niche and unique brands on the platform. “Before Tmall Global, we knew that a young, trendy demographic who would like our brand existed in China, but we didn’t know the size and distribution of that base and its brand preferences,” said officials for Sneakerhead, a Los Angeles-based company that sells high-end athletic shoes and joined Tmall Global in September.
“We are really excited because the Chinese market response has surpassed our expectations,” Sneakerhead officials said in a statement. “Our brand proposition and Tmall Global’s guarantee of a product’s authenticity has really helped our store expand.”
Więcej: Alizila By Melanie Lee | Dec 29, 2014
Five Reasons Why China Leads the World in E-Commerce
Alizila. By Frank Lavin | Dec 12, 2014
The successful Alibaba IPO put the spotlight on one of the most significant business trends in the world today—the rise of China e-commerce. According to Bain, China e-commerce shoppers spent $390 billion in 2013 and this will reach $530 billion in 2015. This means that by next year, China e-commerce will be about 50% larger than U.S. e-commerce, itself projected to then reach $350 billion, according to Statista. What are the driving factors behind this impressive growth?
1) Disposable income is on the rise. According to a McKinsey study, private consumption by China’s upper middle class will experience a 22% compound annual growth rate from 2014-2022. As China reaches middle income, personal consumption shifts away from necessities and toward discretionary purchases. It is no surprise we see a surge in demand for international lifestyle brands. For example, Levi’s, Uniqlo, and Esprit have all met a favorable response in China, together reaching over $100 million in online sales in 2013, according to Internet Retailer. E-commerce allows companies to tap this growing consumer base almost immediately, all while maintaining control over brand image.
2) Physical retailers can lack quality, consistency and customer service. In tier-one cities such as Shanghai, Beijing, and Guangzhou, finding a quality shopping mall or grocery store is an easy affair. But for much of China’s population, accessing high-quality retail stores can be a challenge. Even when outlets are available, many lack product selection, can run low on inventory, or offer poor customer service. E-commerce gives the broader population access to quality brands that had previously been limited to China’s larger cities. For this reason, companies like Nike, Gap, and P&G thrive in China e-commerce. Websites with a dedicated customer service team and product-availability metrics further contribute to a more enjoyable experience.
3) China’s leading B2C sites have a deep grasp of what their consumer base demands. Through peer reviews, creative promotions, and return policies, China’s leading B2C sites offer an experience that fosters trust and comfort. China’s largest B2C site, Alibaba-owned Tmall.com, allows users to participate in real-time messaging with customer service reps, and gives them the freedom to return goods within seven days of purchase, no questions asked. This type of flexibility and transparency has earned Tmall a 57% market share in China B2C e-commerce, according to iResearch.
4) Online marketplaces can have greater integrity than offline outlets. China’s larger B2C sites guarantee authentic goods and offer a model that ensures brand integrity. Only the brand owner or authorized agent may operate their own proprietary flagship store on Tmall. This gives brands direct engagement with consumers and complete control over brand position, product slate, and pricing. Brands like Estee Lauder, Burberry, and Clarins utilize this trust and build an image through Tmall flagship stores. Merchants on JD.com, China’s second-largest B2C site, also go through stringent pre-screenings before opening shop to ensure that customers receive authentic goods.
5) Smart phones are prevalent and have become the channel of choice for Internet shoppers. There are now over 700 million smartphone users in China, meaning most Chinese consumers carry a shopping mall in their pocket. According to TechInAsia, in 2013 mobile shopping registered 164% year-on-year growth, and some 69% of Chinese consumers have made a purchase from their phone, compared to 45% in the U.S. Mobile phone users can seamlessly make purchases through apps such as Alipay, Alibaba’s online payment platform, knowing that their money will be escrowed until they confirm satisfaction of the delivered goods. Digital marketing efforts that carefully target mobile phone users have much to gain.
We know that two of the most powerful business trends in the world are the rise of China’s consumers and the rise of e-commerce. Putting those trends together, we can postulate a third trend: the increasing success of global lifestyle brands in China e-commerce.
Frank Lavin is the CEO and Founder of Export Now, a U.S. firm that launches and operates e-commerce stores in China for companies from the U.S. and around the world. He previously served as U.S. Undersecretary of Commerce for International Trade and has worked on China business issues for over twenty years. None of the companies mentioned in this essay are clients of Export Now.
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Raport Alipay: Zakupy online poprzez urządzenia mobilne stały się w Chinach głównym kanałem e-handlu, zwłaszcza w rejonach oddalonych od wielkich centrów miejskich.
Alipay Report Shows Mobile Commerce Booming in China
By Melanie Lee | Dec 08, 2014 | Alizila
Online shopping via mobile phones has become the main way Chinese people spend their hard-earned dough, with a large number of those living in rural areas jumping on the m-commerce bandwagon, said an Alipay report today.
The Alipay Annual Spending Report is a report the e-payment firm releases each year that documents the spending trends of the Chinese consumer. According to this year’s report, mobile payment in China is on a major upswing. In the first 10 months of the year, payments through mobile phones accounted for 54 percent of all transactions conducted over Alipay, while for the full year last year, mobile payments made up only 22 percent of total payment volume.
This rapid growth is also seen in the country’s remote Western regions—Tibet, Shaanxi and Ningxia—which had the highest share of mobile payments in China, at 62 percent, 60 percent and 58 percent respectively. Mobile commerce grew in these areas due to the lack of broadband telecommunications infrastructure and the high costs of desktop computers.
For a video on rural mobile commerce, please click here.
In contrast, the wealthy Chinese cities of Beijing, Shanghai, Guangdong, only saw 29 percent, 24 percent and 27 percent of transactions conducted through mobile phones.
The falling costs of smartphones means that mobile is now the No. 1 way Chinese people access the Internet, according to a report released in July by the China Internet Network Information Center (CNNIC). According to the report, about 83 percent of users surveyed said they accessed the Web on their mobile phones, compared with 81 percent who said they accessed the Internet on a personal computer. At the end of 2013, 42 percent of those surveyed said they had used their phones to shop online.
In terms of raw spending power, China’s trading and consumer hubs ruled, with Guangdong province, Zhejiang province, Jiangsu province, Shanghai and Beijing combined accounting for 55 percent of total China-based Alipay payments. In terms of highest average spending per capita amongst Chinese cities, Hangzhou came up tops with RMB 44,197 ($7,179) spent per head. Individuals living in Yiwu county spent the most in all of China, totaling an average of RMB 65,160 ($10,585) per capita.
Rural cities in Tibet and Xinjiang were among the places where online spending is growing fastest, said the Alipay report. Over the past decade, average annual online spending in the Tibetan cities of Lhoka and Shigatse grew 600 times and 145 times respectively.
Alipay, an Alibaba Group related company, allows Chinese consumers to pay for their online shopping purchases, utility bills, credit card bills and top up their mobile phones. In the 10 years since its launch in December 2004, some 42.3 billion payments have been settled via Alipay. A subsidiary of Ant Financial Services Group, Alipay also lets users invest their spare cash through the Yu’e Bao financial services platform, which includes a popular money market fund. According to Tianhong Asset Management, the fund that co-manages Yu’e Bao, at the end of September, Yu’e Bao users had earned more than RMB 20 billion ($3.2 billion) in interest income since its inception in June 2013.
Alipay has over 300 million real-name registered users in China and handles more than 80 million transactions daily. Alipay’s mobile application, Alipay Wallet, has 190 million active users.
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Taobao Boosts Mobile Offerings as 12.12 Sale Approaches
By Susan Wang | Dec 03, 2014 | Alizila
Taobao Marketplace, Alibaba Group’s giant Chinese shopping website, has been enhancing and expanding the services it offers to mobile users in the run-up to the site’s annual 12.12 online sale.
At a press conference held today in Hangzhou, China, Taobao President Zhang Jianfeng said the company is developing its mobile-shopping app to make it easier for consumers to search among products offered by some eight million small merchants hosted on the C2C site so they can “discover the exact items they want.”
In addition to a better searches, the app, Mobile Taobao, has been upgraded for faster order placement and e-payment settlement. It also has a new function to enable consumers to quickly search for a particular piece of clothing online by taking a photo of the physical item using their smartphones.
Mobile Taobao is the largest m-commerce platform in the world, Taobao officials said. During Alibaba’s 11.11 Shopping Festival held Nov. 11, transactions over mobile devices reached RMB 24.3 billion ($3.95 billion), representing 42.6 percent of total GMV (gross merchandise volume) recorded for the sale. Most of the mobile orders were generated through Mobile Taobao.
Taobao is hoping to maintain momentum from the 11.11 Shopping Festival, which features slashed prices on products sold by big, well-known Chinese and international brands, through its upcoming 12.12 online sale.
Held annually by Taobao Marketplace, the 12.12 sale is a lower-profile promotion geared to boost revenue for the website’s small- and micro-merchants, who have a hard time competing amid the din and discounts of the hugely popular 11.11 Shopping Festival.
Taobao expects more than one million virtual stores offering 10 million products and services will participate in the Dec. 12 sale this year. The website plans several special promotions, among them:
• Some 150 independent designers and 130 contract manufacturers that help produce goods for top brands will use the event to showcase their own low-cost products.
• More than 500 real estate developments are partnering with Taobao’s real estate channel to offer 40,000 discount-priced properties. Homebuyers can make appointments online to visit the properties in person before buying.
• Taobao’s auction platform will be putting up for bid several unusual items on Dec. 12 with the proceeds to be donated to charity. Listed items include a date with Chinese actress Lin Zhiling and admission to next year’s Academy Awards slated to be held Feb. 22 in Hollywood.
• To highlight Taobao’s expanding variety of “life services” offered online, cleaning services will be offered in 27 cities at a discounted rate of RMB 5 per hour. Laundry services will also be available at RMB 9.90 for coats and sweaters.
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