In 2017, Alibaba broke all the records on singles day, with sales supasing $25.3bn, x sales every second. We thought we had seen it all, and that surely this giant was going to slow down a little after this. 12 months later, they did it again, reaching new heights: $30,8bn sales in 24hours, making a staggering $1bn in the first minute. In western Market we look upon Amazon as the global Giant for eCommerce, but to put things into context Alibaba sold in 1 day over 15% of Amazon’s annual revenue.
Now I am a fundamental believer of the strategic role Amazon plays for Brands, and the fact that playing to win with Amazon is a non negotiable, however I urge Global Brands to take the China opportunity seriously as well.
Cool facts about Alibaba: Alibaba, like Amazon, is so much more than a retailer: Alibaba is an entire encosystem of consumer touchpoints (video, media, search, social, retail), to capture and engage with consumers at all stages of the Brand conversion funnel. Through their incredibly robust and state of the art data architecture, they are able to assign all the consumer events throughout their ecosystem, back to one single unique ID, giving them the richest view of consumers in the whole of China, and allowing brand to engage with consumers throughout every stage of their customer value journey. Although Alibaba is the global leader in eCommerce, they are also investing significant amounts into offline as well, creating a new connected stores concept called New Retail, through partnerships (e.g. with Auchan) or new ventures (e.g. Hema). This gives them full visibility of all omnichannel interactions.
Although I talk a lot about Alibaba, as it epotomises the giant that is china ecommerce, JD.com, another strong china player, rapidly expanding across the region is also worth mentioning. JD.com owns 25% of the China eCommerce market, operating a retail model, rather than a market place model. JD has partnerships with Walmart, Google, and Tencent (owner of Wechat), allowing them to build their own eosystem to engage with and convert consumers.
Easy to say that Alibaba’s all the way over in China, and so not a priority until we are looking to conquer the Far East. However, successful startups and small companies start with the Chinese potential always in Mind. (Katy to add some examples if possible). There are a number of reasons behind this: 1) China consumers love high quality and trusted international brands 2) China is the biggest market for eCommerce, with over $1trn through eCommerce this year, meaning you can avoid more complex route to markets, and dealing with hundreds of regional distributors to service physical stores 3) If you get the proposition right, China can be a very profitable market, with shoppers paying an excess for the best International products, and willing to shoulder the cost of delivery. 4) These big chinese players are not just in China anymore. Alibaba is the majority stakeholder in Lazada, the number 1 ecommerce company in South East Asia, and also has strong investments in India companies, such as PayTM and Bigbasket. JD.com is present across South East Asia, and growing share every month.
It’s very hard to ignore a 1.4bn population - That’s a massive market opportunity for any brand.
During my time at Danone, I’ve worked a lot with China, and was responsible for eCommerce strategy for our international label Brands in China, a massive part of Danone’s business. I learned a great deal about what it takes to be successful in China, in a sustainable way.
I see a lot of companies investing hundreds of thousands in China advertising, usually with channels they know nothing about, trying to establish their Brand. Actually, the china consumer is incredibly savvy, and will research the product in country of origin, either digitally or through their friends and family out there.
Actually for me a brand’s success in China relies on three elements: 1) Having a brand with high levels of equity, quality and authenticity in the country of origin 2) Having a trusted route to Market that gives the China consumer full visibility and traceability on the products’ journey to them, all the way through to last mile - a tmall global store is definitely a route to consider 3) Have an excellent network of Partners to manage fulfilment, logistics and customs, and to manage the Brand presence and touchpoints in China.
Adversing is a completely different ballgame in china, with Wechat, and Baidu being channels to conquer, but also newer social commerce and advocate channels opening up.
If you go down the Tmall route, it’s always best to work with an expert agency and distributors (called Tmall partners), who know all the ins and outs of driving traffic and conversion.
I know this all makes selling in China seem like a no-brainer, but I don’t want to downplay the complexity of selling in China, in particular from a regulatory perspective. China eCommerce and Trading laws are evolving constantly, and brands need to be aware of regulations around Consumer Data Management, logistic routes (e.g. mass import), and Brand and product registration. Due diligence upfront is key to ensure you don’t invest highly in an operating model, that will be heavily regulated within a year of two. Finally, although Chinese Consumers do tend to prefer global brands, that doesn’t mean a certain localisation isn’t required, in particular in the messaging and the channels.
If you would like advice on selling your brand in China, and leveraging the reach and impact of some of the China giants like Alibaba and JD.com, feel free to reach out to me.