Alibaba is the world’s largest ecommerce company. It owns Taobao and its subsidiary, Tmall, which are the Chinese equivalent of Ebay and Amazon, respectively. It is reported that Alibaba achieved a turnover of RMB 1 trillion (USD 106 billion) for Taobao in 2012. Ecommerce sites like Taobao (consumer to consumer) and Tmall (business to consumer) offer brands the opportunity to sell products to consumers anywhere, without the need for bricks-and-mortar stores. What this means for companies is that their products’ brand image and pricing strategy need to be well-defined in order to avoid a ‘price war’ with the many local resellers that operate on Alibaba’s retail websites. Below are points that foreign brand should consider following in order to achieving Ecommerce success in China:
- You should set up an official store on Tmall to protect your brand’s intellectual property. It is highly likely that people are already buying and selling your products on Tmall.
- You will enjoy a cost benefit from establishing an official ecommerce retail presence on Tmall, as you will have access to the site’s substantial customer base. It is however vital in the long term that you launch your own ecommerce site, to collate a valuable CRM database of customers who have bought your products and services.
- You can run PPC marketing campaigns on Taobao and Tmall, just like on a search engine. There is also a wealth of customer insights you can glean from Taobao and Tmall data in the same way that you would discover trends in market and customer behaviour by analysing Google data.
- Make sure to define your brand strategy clearly and build your products’ equity on Taobao and Tmall. Your products run the risk of being seen by consumers as ‘Taobao brands. Your products may fail due to a lack of brand identity after selling well on Taobao and Tmall for a short period of time. This problem arises because Taobao presses will press you to give massive discounts on your brands. This demand is unsustainable, as you will be competing against other resellers’ ‘discounted’ prices. You will therefore need to emphasise your USPs: for example, ‘authenticity’ is a compelling benefit for Chinese consumers who struggle to differentiate between the many ‘fake’ products on sale in the marketplace. In order to avoid having a price war with discount resellers, you can offer ‘one-off’ branded products for a limited time or produce tailored packaging options that are hard to replicate.
- Tie your products into popular trends. If you can link your brand to a topical news area, a favourite movie or a successful television show, your products can be an instant success.
- Just as you would recommend Western retailers to prepare for a rise in Demand around Christmas, make sure you target some of your digital marketing spend on ‘Singleton’s Day’ (11 November). This annual generic event is the largest online sales day on Chinese ecommerce with Alibaba boasting that it took just twenty minutes in sales to reach the $1billion sales mark in 2014. In total, the Alibaba group sold over $9.3billion worth of products on the ‘Singleton’s Day’ in 2014.
This article is released as part of China digital marketing mini-series. Please follow our link to learn about the opportunities in Chinese Ecommerce or contact us via the the contact information details below.