Tmall Global: Towards “unique, interactive shopping experiences online”

She told BW Confidential Editor-in-Chief Oonagh Phillips: “We are evolving our Tmall business model to help brands reach their Chinese consumers. We shifted from an invitation-based model to an open platform in 2019. Authorised brands can launch on the platform in three ways. They can use the Tmall Global Platform to sell directly; Tmall Direct Import, where Tmall is the distributor or buyer, and Tmall Overseas Fulfilment, a consignment model allowing brands and suppliers to benefit from our global warehouse network and test the China market.” She discussed the rise of livestreaming and influencers in selling to Chinese audiences. “Livestreaming is an incredible tool. Originating in China, it is among the most popular ecommerce platforms. For brands, livestreaming is a vehicle for education and launches, not only sales. “Today, brands are using KOLs in conjunction with celebrity ambassadors and creating viral social moments using livestreaming. Most sales are skewed towards top KOLs such as Austin Li, but other smaller ones are developing their relevance and popularity among the Gen Z audience. In coming years we’ll see a healthier balance between top and smaller KOLs.” A key question for many brands is how best to use Alibaba’s online shopping festivals to engage with new consumers and build their existing audiences. Jun said: “Shopping festivals have been a key part of the consumer psyche for a decade now and show the clear strength of China’s retail consumption. For brands the rewards will only come from significant planning to understand the target consumer. This is a competitive time for brands so they must have a clear strategy. For consumers, while value plays a role, other factors include personalisation and exclusivity of product,” she added, citing special editions launched for recent festivals by L’Oréal’s Shu Uemura and 3CE brands. “Promotion is a driving factor, as that’s how these festivals came into being. But now consumers are asking for more. Many brands now see it as a chance to introduce new innovations.”

Addressing how brands can better understand the digital eco-system in China, Jun said: “Brands need to invest in research. Marketing and consumer behaviour differ greatly from the West. That’s a stumbling block for many companies that apply strategies that work in Europe or the US. Consumer confidence is there [in China] and that can translate into strong sales. Also there is no such thing as being too small. Being niche is positive if it aligns with consumer demand in China. But it must be tailored to the ecommerce and livestreaming market.” She reinforced the message that smaller, emerging brands could succeed in the Alibaba eco-system without huge budgets. “There is a support system for brands, large or small. Our focus is to make it easier and increase participation in our festivals and serve the Chinese consumer. We have arranged events with large and smaller KOLs, to help them learn about the niche brands. We have a team to teach those brands about what they need to do to operate in the eco-system. Over 1.2 million new brands were offered last year through shopping festivals to Chinese consumers. We help them reach new consumers.” Within the key beauty categories sold through Alibaba, Jun noted the rise and rise of anti-aging serums (+320% year-on-year during the 2020 Global Shopping Festival and +88% in Q1 2021). Basket size in the beauty sector has leapt by +20% over the past year, with a focus on “premium priced brands that have taken off post-COVID-19.” Importantly too, she highlighted the emergence of fragrance as a fast-growing sector within beauty, notably among younger consumers.

“The tide is turning for fragrance,” she said. “Its price point is accessible for the new middle class and the world of perfumes still offers an open playing field. But brands should consider logistical problems that arise. Perfume suppliers are often refused by air carriers; maritime is the most common option but hard for smaller brands to ship by sea at smaller volumes. Tmall’s global logistics unit has launched its first perfume route, a dedicated flight for perfume from Europe and China daily. “Gen Z is the group that is willing to try new brands and new categories so they are interested. Fragrance is smaller than the other major beauty categories but we have seen it among the fastest growing in the past 12 months.” Skincare, including face masks and moisturisers, is another growth sector, with lipstick & beauty also driving growth. Men’s cosmetics, buoyed by KOLs such as Austin Li, are building on that trend. Overall, she noted, “since COVID-19 the trend of wellness and self-care is on the rise”.

Asked about the rise of Chinese brands, Jun said: “There is demand as these brands address value for money; social awareness and after sales service. But there will always be strong demand for international brands due to provenance, brands’ DNA and their quality.” A further trend is penetration among consumers in lower tier cities in China. Jun said: “These are an important business strategy with potential for growth. Consumers can make frequent purchases; we had 1 million new users during Shopping Festival 11.11 from lower tier cities, where China’s biggest consumption growth is coming. The off-season bargains from brands at competitive brands could be used to help international brands penetrate the market in lower-tier cities.”