30-12-2022

7 minutes to read

How to sell on TMall Global

I. The Chinese e-commerce market is undoubtedly the largest in the world

China's e-commerce revenue is expected to grow to $1,095.5 billion in 2023, making it the world's first trillion-dollar e-commerce market.

Although the growth rate in this industry is slowing down, it still sees an impressive 18% every year, whereas in developed countries this figure is 10%.

By 2022, almost 70% of the Chinese population will buy online, and each user will spend approximately 984.91 dollars annually, thereby giving companies a chance to tap the available opportunities (for comparison, today the average user of online stores in China spends a smaller amount - about 899.06 dollars a year).

Rapid economic growth, an increasing middle class with greater purchasing capacity and a high degree of Internet use have contributed to the rapid integration of online shopping into the life of the Chinese consumer.

Any company that intends to expand and capitalize on the Chinese market should undoubtedly invest in its e-commerce strategy and understand its essence.

II. Overview of the e-commerce market in China

When we talk about the e-commerce market in China, Alibaba should definitely be mentioned. Alibaba is China's largest e-commerce company that created various platforms:

Alibaba.com is the largest B2B e-commerce platform in the world
Taobao.com is the largest C2C platform in China
Alipay is the largest online platform for electronic payments in China
Aliyun is China's largest cloud data processing platform
AliExpress is a shopping platform that helps Chinese companies sell their products in foreign markets
AliHealth is the largest online pharmaceutical products store in China
Lazada is the leading e-commerce platform in Southeast Asia

Tmall has the leading position in the Chinese B2C e-commerce market. It is a part of Alibaba Group, founded by entrepreneur Jack Ma and its closest competitor – Jingdong(JD.com ). Together, they account for more than 80% of the total e-commerce market share in China.

Several other companies that mainly specialize in certain categories of goods account for the remaining share.

The cross-border e-commerce market is now on the rise and is more fragmented.

As purchasing power increases, Chinese consumers are increasingly looking for high-quality products from reputable international companies.

According to the Ministry of Commerce of the People's Republic of China, the total volume of imports to China in 2018 reached $ 2.14 trillion, which is 15.8% higher than in the previous year.

However, the requirements for opening an online store on such domestic platforms as Tmall or JD are quite complex. They range from having a physical warehouse and a physical store in China to other provisions for opening a physically present business in China, which is impossible for many foreign startups, as well as for small and medium-sized enterprises.

In order to circumvent this obstacle, Alibaba Group and JD.com opened Tmall Global and JD.com Worldwide respectively, as a new entry into the Chinese e-commerce market, where foreign firms will be able to sell their products without a Chinese business license.

In addition to Tmall and JD, smaller and newer companies such as Kaola, VIP.com, YangMaTou and XiaoHongShu account for a significant share of the Chinese international e-commerce market.

III. Tmall Global Sales Guide

How to sell products on Tmall Global?

Register your company on Tmall Global
Open a store and create a page with an attractive design
Advertise your products through the Taobao & Tmall search engine using the PPC advertising model
Promote your product on social networks in order to attract customers (mainly through the Weibo service)
Attract key opinion leaders from China to promote your products
Taoke: live broadcasts on Taobao and partner marketing - CPS (price per sale)

1. TMALL VS TMALL Global

As already noted, Tmall is the largest Chinese B2C online platform.

Thus, Tmall enables companies to sell products directly to millions of customers across China. As an open online shopping platform, Tmall provides the infrastructure to host your online storefront, as well as unlimited access to hundreds of millions of buyers.

Managing an online storefront is similar to managing your own B2C e-commerce website.

In turn, Tmall Global enables international businesses to create online stores based on its platform and take advantage of a huge market of consumers who are looking forward to making online purchases. In order to open an online store on Tmall Global, a company does not have to be physically present in China – this means that it does not need to have a physical store or warehouse in China, registration from the Chinese authorities is not required, and a Chinese business license is not required.

2. More about Tmall Global

Tmall Global is the main international platform for e-commerce and the best option for well-established companies that intend to sell their products to China.

At the moment, Tmall Global hosts more than 20,000 firms in 4,000 categories from 71 countries and regions.

The goal of Tmall Global is, on the one hand, to provide the Chinese consumer with the latest and most popular foreign goods, and on the other hand, to help foreign sellers take advantage of the growing demand of the Chinese consumer for imported products.

3. Who can sell on Tmall Global?

All companies on Tmall Global are non-mainland Chinese corporations that specialize in retail. Companies with a turnover of at least 100 million yuan are given priority attention.

The goods sold on Tmall Global are initially manufactured and sold abroad, and then legally imported into China.

A Chinese buyer can use Alipay or other methods available on the domestic Taobao platform to pay for goods on Tmall Global. Meanwhile, the seller receives payment in the seller’s national currency directly through the bank account in the country of the seller.

4. Business models provided by Tmall Global

Tmall Global allows firms that are not Chinese commercial enterprises to sell products directly by opening their exclusive flagship stores based on the platform. However, since March 2015, companies are required to use authorized third parties engaged in the provision of services, the so-called "TP" - Tmall partner agencies (Tmall Partner).

The local TP’s help foreign firms to open an online storefront on Tmall using business partnership structures. The company is responsible for products, branding and marketing strategy, while delegating to TP the daily activities related to the functioning of the online storefront.

Various cross-border e-commerce services provided by TP:

Customer service
Digital marketing and design
Warehousing and storage
Online store maintenance

For some companies unable to open their own store in China, opening a flagship store on Tmall Global is a good way to reach their goal - the Chinese consumer

The platform also offers firms a range of marketing tools available through Alibaba's ecosystem like Livestream in order to create content that attracts Chinese consumers born after 2000 (or “Generation Z"), which are the fastest growing consumer base on Tmall Global.

Requirements for sellers to work with the flagship Tmall store:

Goods: Products originally manufactured and sold abroad must be genuine and must be accompanied by a certificate of origin. Thus, the products must pass through the Chinese international customs and Tmall Global security system.
Online page and labels: the product description along with the labels should be provided in Chinese. The international metric system should be adopted as a unit of measurement.
Moreover, an accessible customer support service in Chinese is needed, for which Tmall recommends using the Chinese Alitalk service.
Logistics: goods must be shipped within 120 hours and delivered to the consumer within 14 days.
After sale: the seller is obliged to establish places for the return of the goods in mainland China, Hong Kong and Taiwan, if he sells products in these regions.

More recently, online storefront registration on Tmall Global can be accomplished by sellers directly using new Tmall Global website in English (more details on this subject below).

After you have invested considerable time and money in preparing to enter Tmall Global, the opening of the store will take 4-8 weeks.

5. Cost structure

Security deposit

Before you can open a store, you need to pay a $25,000 security deposit. Please note that this is exactly a deposit

The money will be returned if you decide to close the store. Tmall may also withdraw the funds from the security deposit pay compensation to customers.

Annual fee

Tmall charges fixed annual fees depending on the category of product you are selling.

For most categories, these payments range from 5 to 10 thousand dollars per year. If you want to sell products of several categories, the amount of your fee will be calculated based on the cost for the most expensive category.

TMALL commission

In addition to the annual payment, Tmall also charges a commission on the cost of the order. This commission is calculated as follows:

Tmall commission = X% x (product price + transportation costs)

The commission also depends on the product category and usually varies from 2% to 4% of the cost.

Payment for ALIPAY services

In addition, Alipay, which is a payment processor for Tmall.hk, charges a service fee of 1%.

For example, if you sell an item for 1000 yuan, you will thus have to pay a transaction fee of 10 yuan.

A few days ago, Tmall Global launched two key initiatives that will further support Alibaba's ambitious intentions to bring the number of foreign goods in China to $200 billion in the next 5 years and help businesses of all sizes enter the Chinese market.

Initiatives: Tmall Direct Import (TDI) and Tmall Overseas Fulfillment (TOF) are solutions offered by Tmall Global to help foreign firms accelerate their entry into the Chinese market and take advantage of the high demand for high–quality products.

TMALL OVERSEAS FULFILLMENT (TOF)

TOF is a solution to the problem of the delivery of batches of goods, which allows firms to place a small number of goods in one of the TOF centers in order to then sell on the Tmall Global platform.

This gives businesses around the world a chance to test and refine their product range before entering the Chinese market.

TOF centers are now available in Japan, South Korea and the USA. Expansion to Europe is also planned this year.

Also as part of the TOF initiative, the Tmall Global team provides companies with marketing consulting and tools to raise company awareness.

The platform analytics including such metrics as sales volume and consumer preferences, can help firms make more informed decisions as part of their strategy for China.

One example is Evereden, a company that deals with skin care products for children, used TOF while considering the possibility of entering the Chinese market. Using celebrity ads and live broadcasts (as advised by the TOF team), Evereden increased its brand awareness and found the right combination of products for Chinese consumers. 3 months after signing the contract with TOF, Evereden opened a flagship store on Tmall Global and later its rate of conversion of the number of purchases per visit reached the range of 15% and 20% in the first months after joining the platform.

TMALL DIRECT IMPORT (TDI)

In addition, companies and suppliers can participate in Tmall Global's new centralized import procurement program, which uses 6 warehouses around the world to purchase goods from all online and offline outlets of the Alibaba ecosystem, including the technological grocery store chain Freshippo (also known as ”Hema" in Chinese) and Tmall Supermarket.

The Italian oil company Clemente was able to place its products in Alibaba stores using TDI program. 2 months later, Clemente Olive Oil became the No. 1 seller on Freshippo and Tmall Supermarket.

6. Good news: a new English-language website speeds up the registration process for companies

Tmall Global has recently launched an English-language website to simplify the registration process for international companies that want to place their products on the platform.

Easy to use, this portal will tell companies about Tmall Global and about sales in the world's second largest economy, and will also allow them to apply for the opening of a flagship store on the site.

Tmall Global business development teams usually identify companies that they think will be successful on the platform and then work with them to open a flagship store. With the new website, sellers get the opportunity to make a step directly to Tmall Global.

Companies just need to fill out a questionnaire, describe their business and within 72 hours Tmall Global will contact successful candidates and discuss the registration process with them. Previously, this process took many months.

Do you want to learn more how earn more by selling your products in China and how to start? Write to us and get a free consultation and a guidance today.