Scaling on Tmall and Beyond: How Online Retailers and Brands Are Winning in China

Global e-commerce leaders are winning in China by revisiting their early “hands off” strategies in favor of a more direct approach that includes a growing number of key players. Instead of just prioritizing growing sales, winners are stepping back to focus on profitably scaling online retail operations in China.

Via our China E-Commerce online survey and through one-to-one executive interviews, executives from the Global E-Commerce Leaders Forum (GELF) community tell us that they're rethinking first-generation China e-commerce strategies to drive more sustainable and more profitable growth.

The time has come to take a broader portfolio approach in China. It’s not just about selling through Tmall or Tmall Global anymore; other Chinese e-commerce platforms are playing a more strategic role, most notably JD.com and WeChat.

Leaders tell us that there’s no let up in traffic flooding their U.S. e-commerce sites from shoppers across greater China. Online demand for U.S. brands and Western products is growing as more Chinese shoppers seek authentic goods. They’re OK paying for international shipping because it’s like buying insurance against counterfeit products.

Cross-border e-commerce (i.e., capturing international orders on U.S. e-commerce sites and shipping from U.S. fulfillment centers) remains a key strategy in international commerce toolkits.

Key Early Findings From the GELF China E-Commerce Study

Our first glimpse at the survey data reveals useful benchmarks. For instance, over 60 percent of the survey respondents plan to launch (or relaunch) on WeChat in the next two years. Meanwhile, the executive interviews have provided strategic insights and colorful commentary. However, we’re far from done with the survey — and can use your help!

We’re pleased to partner with Total Retail to capture valuable benchmark data that we’ll share with the Total Retail audience after our Sept. 7 GELF NYC ’17 event, as well as our Executive Program on China E-Commerce during GELF LA @Shop.org on Sept. 25.

Big-picture leaders in the GELF community tell us they’ve been successfully riding China’s big e-commerce wave for years. However, the surf zone is getting crowded with competition and opportunities for easy sales are getting choppy.

How are winners reacting? Those selling via Tmall or Tmall Global are revisiting their relationship with their Tmall partners (“TPs” work directly with Alibaba to build storefronts on Tmall). Retailers want more control over their customers’ experiences and the brand experience; they know building direct relationships with Alibaba is key to successfully selling in China.

But it’s not just about getting closer to Alibaba. In fact, the smart money is doubling down on other Chinese e-commerce platforms like JD.com, Tencent’s WeChat, Netease’s Kaola, Baidu and large distributors like Suning with vast retail holdings.

Leaders are investing in their teams in mainland China to provide physical proximity to key Chinese players. They’re also prioritizing relationships with U.S.-based cross-border teams from Alibaba, JD.com and the like. In some cases, this “local focus” requires finding new TPs that act less as middlemen and more like active partners dedicated to building direct relationships with key Chinese e-commerce players.

Winners are also getting closer to Chinese consumers via partner-intensive marketing strategies increasingly focused on influencers and key opinion leaders (KOLs), who are extremely persuasive with Chinese consumers.

Perhaps the most important early takeaway from the study is “it’s different in China.” Leaders tell us that succeeding in China takes time and patience. The investment is worth it because today’s learnings about how Chinese consumers are shopping online is helping them understand what’s on the e-commerce horizon tomorrow in the U.S. and other Western markets.

Let us know more about your experiences with China e-commerce by completing our China E-Commerce online survey.

Kent Allen is a veteran e-commerce industry analyst and co-founder of the Global E-Commerce Leaders Forum (GELF), a community and series of events focused on cross-border and international e-commerce.