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You’ve most certainly heard about Amazon or eBay, and it’s very likely that you’ve made purchases using them. In fact, I’d be more surprised if you hadn’t. Perhaps your business has a presence on either of these platforms, but why are there no customers buying off your sites from China? That is because although these online retailers exist in China, neither took off nor threatened the dominance of established ones like Taobao or T-mall or JD.com. So, in order to succeed in China, forget about Amazon and eBay and focus on the Chinese alternatives that dominate the market.
Consumers are becoming more and more likely to purchase products online3. his trend for online shopping is seen in China too, with 467 million Chinese making an online purchase in 20161, that’s more than a third of the entire population of China. The online purchasing market in China is massive and is still booming,8because shopping online provides a simple, convenient and practical way to purchase products. It allows consumers to easily compare prices and have the product delivered to them, with minimal effort or hassle. Interestingly, 71% of shoppers believe they will get a better deal online than in stores2, which is the result of lower costs when selling online for manufacturers.
Not only is e-commerce an appealing proposition for consumers, it is just as rewarding for vendors and businesses. Selling online on websites like Taobao is a great way for your business to distribute your products and gain brand awareness while attracting a wider range of consumers from a variety of locations, without the same costs of having a physical store.
Additionally, selling online allows consumers to leave feedback and rate the quality of the product and customer service, which can be used as a great marketing tool to gain new customers and keep existing ones coming back. Just make sure you have good feedback! Negative feedback could harm your business, your credibility and the popularity of your brand, losing you customers and sales!
Let’s outline a scenario to help you understand how useful online purchasing can really be. Imagine you are at home and about to make yourself a cup of tea. But to your complete disarray you find out your favorite mug has cracked. You have lots of mugs, obviously, but this was your preferred; perhaps it has sentimental value or you simply just like the color. The option of leaving your house is unappealing and unnecessary, as you have the option to purchase the product online. You can browse the exact mug you are looking for across a range of different retailers, allowing you to easily find the cheapest, or best quality item – no afternoons wasted searching in physical stores or markets.
In addition to this, online shopping in China offers a variety of ways for collecting the item aside from home delivery. It can be collected from a post office or from large electronic collection boxes, which are often located at the bottom of apartment blocks or business buildings. The latter offers a lot more flexibility, meaning that you can collect your required mug at any time you please – simply scan a barcode or enter a code you have been sent prior.
Taobao, Tmall and JD.com
So, having the importance of online retail established, what are the Chinese alternatives to eBay and amazon that you should be aware of? There are many different sites that offer similar services, but the main three to consider are: Taobao, T-mall and JD.com. Unlike Amazon and eBay, each of these Chinese websites are very different; they sell different sorts of products and cater to different types of consumers.
There is no doubt that you would have heard of Taobao before. Taobao is operated by the tech giant Alibaba, being China’s largest ecommerce site8 and one of the largest in the world with 369m monthly active users9. However, in terms of gross sale volume, Taobao has outsold eBay and Amazon combined.
To understand the sheer size of Taobao in China, it is important to note that the retailer is China’s largest creator of jobs (9.7 million) since it was opened. Taobao is China’s third most visited website in China (after Baidu and QQ)5 and the 11th most visited in the world10. Their business model consists of mainly providing a C2C (consumer-to-consumer) e-commerce platform. Therefore, it allows individuals to open their own online store at a cost but only if they meet certain requirements. As a result, Taobao offers a wide variety of products with over 7 million vendors and 800 million items4.
Taobao offers a variety of features that allow for an easier shopping experience. Users can purchase products by using their phone camera, which will bring up a variety of vendors selling the same or similar products.
Users can also access the seller’s profile to view the ranking and feedback from other customers, assuring them in the buying process. To increase consumer confidence even further, it is possible to contact the retailer at any time before, during or after a purchase if any questions should arise. Therefore, to guarantee success in the online retailing market, excellent customer service and quality products to guarantee positive feedback is crucial – especially if you have direct competitors.
Looking back at our mug analogy, you will be able to find the mug with ease, generating an abundance of sellers offering that same product. Based on price comparisons and customer feedback, you place your order. That easy!
Due to the Taobao app’s high functionality, it is essential to properly design your Taobao store. This includes having high quality photos, so the camera function on the app can detect your product. It also means ensuring that you use the correct buzz words, in the correct language. Otherwise, as competition on Taobao is tough, slacking in those points will most certainly cost you sales and lose you potential customers.
Tmall and Tmall global
Many people consider Tmall (Taobao mall) and Taobao to be the same thing. They both dominate the Chinese e-commerce market while being very different, however. Tmall was set up by Alibaba as a separate platform to Taobao, with the intention of preventing the distribution of fake goods and increasing consumer confidence. This approach essentially removes the risk of unscrupulous sellers with products of dubious quality. Therefore, Tmall guarantees authenticity and high quality in the products sold on its site. This is supported by certificates of authenticity, which can be found on each seller’s page.
Unlike Taobao, Tmall solely offers a B2C (business-to-consumer) platform and is China’s largest third-party platform for brands and retailers8 and the most visited B2C platform in China17. To ensure that businesses aiming to sell on the website are of legal entity, they must provide an array of documentation and paperwork. With having a market share of 55%, there is no doubt Tmall dominates the Chinese B2C market; Only followed by JD.com, Tmall’s main competitor, with 33% market share7
Over 70,000 official stores exist on Tmall all owned by known brands such as Nokia, Adidas and Samsung. Therefore, Tmall and Taobao cater different customer needs, with Tmall offering less variety, but guaranteed authenticity.
The costs of selling on Tmall are inevitably higher, coming from using the Taobao infrastructure, investing more in marketing, offering authentic products and providing evidence of authenticity. Consequently, this means a premium for consumers, but it guarantees quality products. Even so, Tmall typically offers lower prices than physical shops due to lower costs of operating online rather than in physical stores.
Opening a Tmall account is considerably costly as it stands approximately at 160,000 RMB, in addition to the mentioned requirements above. Even though 100,000 RMB is a refundable deposit, 60,000rmb is the yearly fee to use the Tmall platform.
Tmall global was set up in 2014 to enable overseas brands to sell directly to Chinese consumers. The branch aims to remove the concern of Chinese consumers about fake goods by supplying products via direct mail or bonded warehouses as it offers international brands to enter China with lower barriers.
Tmall global’s platform truly is an all-in-one package for foreign brands. It allows them to enter the Chinese market in a comparably cheap way, not needing a Chinese business license or a Chinese legal entity to join the platform, nor being required to register a Chinese trademark or worry about warehouse and shipment logistics.
JD (京东 Jingdong), which is Tmall’s closest competitor, is also targeting the B2C e-commerce market. Initially offering only electronic products, JD has scaled and sells almost anything now, with 85% of JD.com's revenue still coming from electronics11.Therefore, JD is the go-to site for Chinese consumers looking to purchase electronic items to this day.
JD offers its own shipping platform and is linked to their own logistics company. This is fixed, meaning the seller cannot chose to distribute the product with another delivery firm. On the upside, the delivery service provided by JD.com is quicker than those of other online retailers, and goods are often delivered within a day.
JD.com generally charges slightly higher fees than Tmall, which is inevitable given the nature of its products and knowing the fact, that profits from electronic devices and home appliances is greater. Their transaction fee is between 5-8%, whereas the transaction fee for Tmall is 3-7%11.
Comparing each of these platforms to Amazon/eBay
Clearly, these online retailers offer greater functionality overall, but especially in their apps, which is something that appeals massively to Chinese consumers. The so called “super-apps” enjoy immense popularity in China, whereas the western websites offer simplistic and clutter-free sites with fewer functionality.
In addition to this, the Chinese counterparts typically offer a wider variety of products and services that are not available for online retail in the West. For example, on Taobao one can easily purchase digital services, but also large physical items such as an air conditioning system.
Overall, being successful on any of these platforms isn’t solely a matter of having your item listed, but rather of using the correct pictures, the correct key words and an effective marketing strategy, as well as excellent customer service and high-quality products. Do each of these things right and Taobao, Tmall or JD.com can be your ticket to the Chinese market, giving access to Chinese consumers and increasing your sales and brand awareness.
1 - https://www.statista.com/statistics/277391/number-of-online-buyers-in-china/
2 - http://www.seosolutionsindia.com/blog/2015/02/23/amazing-facts-about-worldwide-e-commerce-online-shopping/
3 - https://www.nchannel.com/blog/retail-data-ecommerce-statistics/
4 - http://www.wsj.com/video/what-is-taobao/69BD4B54-0417-4075-A54D-5FC895B5B3F3.html
5 - http://daxueconsulting.com/success-of-taobao-on-chinese-internet/
6 - https://www.chinainternetwatch.com/19289/online-shopping-q3-2016/
7 - https://www.chinainternetwatch.com/22338/online-b2c-retail-q2-2017/#ixzz4tlltOAtL
8 - https://www.chinainternetwatch.com/tag/alibaba/
9 - https://expandedramblings.com/index.php/taobao-statistics/
10 - http://goodyfeed.com/10-facts-taobao-probably-didnt-know/
11 - https://www.forbes.com/sites/ericjackson/2014/02/04/jd-com-isnt-the-next-amazon-of-china-its-the-next-dangdang-of-china/
12 - https://www.chinasalesco.com/services/exporter-tips/110-how-does-alipay-compare-with-paypal
13 - https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/
14 - https://www.chinainternetwatch.com/19551/alipay-2016/
15 - https://www.statista.com/topics/2411/paypal/
16 - https://www.forbes.com/sites/johnnyjet/2017/09/25/how-to-maximize-online-shopping-portals/#1af29dfb71c4
17 - http://ehubnordic.com/actual-difference-tmall-tmall-global-china/