The challenges that face a western company seeking China online market share are increasing in proportion to the size of the opportunity, and that opportunity grows daily.
China passed the 300 million mark in online shoppers last year, representing 25 percent year-over-year growth, while total e-commerce transactions rose 30 percent to $1.64 trillion.
Moving into the Chinese market is an enticing prospect, especially given China’s insatiable craving for, yet largely unmet physical access to western goods and services. But a number of substantial barriers exist, and I’m not just talking about the language and culture.
Hosting an online business in a restrictive, slow Internet ecosystem, and adapting to China’s mobile propensities pose daunting tech challenges. Meanwhile, Chinese e-commerce consolidation to a few massive platforms makes buying traffic ever more expensive, and conversion rates on a stand-alone site ever lower.
In my role at a Beijing-based digital agency, I’m constantly exploring strategies and tools for western businesses looking to launch in China. In the past, there hasn’t been one easy answer for every company, but recently, that’s changed, with Chinese ecommerce platforms solving many key challenges, and Alibaba’s Tmall presenting by far the wisest choice of these platforms.
Last year Tmall, Alibaba’s retail site, controlled half of China’s $300B business-to-consumer market by continually improving on two fronts: total transparency for the customer, and empowerment of the vendor.
The benefits of Tmall’s capabilities have been insufficiently clear-cut to convince brands with international cache to use the platform. Fears of gray market competition and subsequent brand dilution have kept top-tier brands such as Burberry and Estée Lauder away from Tmall. But such concerns have not dissuaded a host of other less-recognized western brands, with far smaller marketing budgets, from committing to the platform.
So what, exactly, does Tmall do?
Hosting a stand-alone ecommerce site inside the Great Firewall, for fast performance, necessitates a CDN and reliable server support. Both requirements are obviated by Alibaba’s state-of-the-art hosting, which ensures the fastest load times across the world’s third-largest country, with the world’s most online users.
Tmall also takes care of brands’ mobility concerns, leading the field in responsive design for all Chinese browsers and devices. A number of Tmall apps also exist that allow western companies easy access to online shoppers in this growing vertical, most under-reportedly Weitao, a social ecommerce app with millions of daily visitors who are actually seeking social brand messaging. Seamless integration with other massive Chinese social channels, such as Weibo and Wechat, are other Tmall benefits.
For brands worried that a move to Tmall means a race to the bottom, Tmall has put out a rich suite of tools that allow a verified brand to clear the gray market right out of the channel.
Micron’s memory maker, Crucial, provides a good example of utilizing new Tmall capabilities to that effect. The company has implemented a Chinese version of its memory selector on its new flagship store.
One objection to Tmall is the high standard of service customers expect on the site – live chat assistance during business hours, and preferably after hours as well. By the way, this is now standard practice for any successful ecommerce site in China.
However, Crucial adapted by not only training a crack customer service team but also by replicating the tool that made sales on its original site so seamless. A visitor to Crucial’s Tmall store can now quickly indicate her computer’s make, model, and desired performance upgrade, then see which product is best suited to the task. The store is now selling product in the middle of the night, with no live assistance needed to close the sale.
Interactive tools are by no means the only way in which Tmall keeps pushing the envelope on UX. Embedded videos and other multimedia capabilities deliver the kind of ecommerce experience Chinese online shoppers expect and give options for western companies to communicate their brand stories. Vans’ “Off the Wall” page , a gnarly series of pics and videos tying the brand to its roots in the California punk scene, is a good example of what’s now possible.
True, JD.com has 20% of China’s business-to-consumer market, but it’s primarily a retail platform, just beginning to mimic the individual vendor capabilities Tmall has pioneered. That kind of stand-alone approach to China’s ecommerce boom will be increasingly for the very deep-of-pocket or the very out-of-synch.
Ernie Diaz has been in China for 10 years, an avid participant in China’s online revolution who implements his research and insights as Marketing Director for Web Presence In China, a full-service digital agency headquartered in Beijing.
Alibaba.com is a B2B e-commerce company. Alibaba’s primary business is to serve as a directory of Chinese manufacturers connecting them to other companies around the world looking for suppliers. According to iResearch, it was the lar... read more »
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