Tmall 101

How the Chinese B2C Website is Revitalizing Retail & Why It Matters

Key Takeaways

  1. The Chinese business-to-consumer website is responsible for UX innovations like live streaming and personalization that appeal to Chinese consumers from the nation’s exploding middle class.
  2. Independent labels must establish a presence on Tmall in order to demonstrate credibility and build brand awareness in China’s eCommerce industry.
  3. Brand creators that implement proven techniques on the platform can capitalize on the phenomenon of dizzying shopping sprees and potentially sell out their products in minutes.

The retail industry has been forever altered because of the COVID-19 pandemic. As we enter 2021, e-commerce has emerged as the de facto means by which consumers are able to procure their goods without having to set foot into brick-and-mortar establishments. The market has shrunk with nearly 12,000 store closures in 2020 according to Business Insider. While street-side business has been on the decline for several years since the introduction of online retailers such as Amazon, the move towards social distance practices have further accelerated this phenomenon. Brands positioned for global growth must understand the vastly different landscape of foreign markets, particularly China. For creators that have found success in their domestic marketplace, it’s crucial that they understand that this is not a predictor for success abroad. By understanding  Alibaba’s (‘the Amazon of China’) Tmall platform, labels have the opportunity to tap into a notoriously selective yet loyal consumer base of 500 million users (DMR). 

So what is Tmall? Short for the Chinese word “Tianmao,” the name literally translates to “sky cat” in Mandarin (South China Morning Post).  Tmall is a business-to-consumer channel that brings global brands such as Kim Kardashian West beauty and the North Face into the homes of China’s middle class. Meant to evoke feelings of something playful and fresh, Tmall is structured much like a digitized upscale mall, with each brand helming its own store. In exchange, Tmall takes a cut of each store’s sales.

Chinese consumers have direct access to products from abroad in ads that are optimized especially for them. These brands—everything from American baby formula to Korean beauty products—are authentic (China produces 80% of the world’s counterfeits), described in their native language, with prices converted to RMB, and delivered without the use of third-party shipping—a seamless user experience. In just over a decade since its inception, Tmall has become one of China’s most trusted platforms and the gateway to this financial powerhouse.  

Labels that establish a residence on the platform have the opportunity to capture astounding sales growth selling out quickly, a strategy now known as the ‘Tmall phenomenon.’ Recently, Kim Kardashian’s video event attracted 13 million users and sold out her perfume in minutes. “If you’re a small brand and you’re not on Tmall, Chinese consumers might question your credibility,” says Sherri Wu, who is Chief Revenue Officer for VoyageOne, a tech company that helps American brands to sell online in China (Egon Zehnder). A presence on Tmall is not merely beneficial for small brands seeking success in China, but crucial for long term success in the globalized economy. 

The website has continued to advance its user experience by live-streaming online shopping events with influencers (KOLs)  who answer questions in real-time, simultaneously selling to customers and engaging with them. Sales from these live events during Singles Day have reached $3 billion between Tmall and Alibaba’s other platform Taobao, accounting for 7% of the site’s total revenue ( McKinsey and Associates).

This is the iteration of Alibaba’s proposed “new retail.” By incorporating CRM features that are personalized for customers by tracking their gender, age, and previous purchases, the platform is able to reach a broad array of consumers. Brands are able to leverage this data towards stocking off-site shops based on the demands of their users creating a synergy between e-commerce and physical stores.

 While traditional retail is struggling everywhere, China’s luxury market may be on the road to a quicker recovery. A trend dubbed  “revenge shopping,” or the practice of wealthy Chinese going on shopping sprees in response to the 2-month mandated lockdowns from the early months of the pandemic has been reported across the country. China’s growing middle class, often from second and third-tier cities (versus top cities such as Beijing and Shanghai with a reported 85% usage)  such as Jiaozou, Baoding, Quanzhou, and Xuzhou has seen dramatic growth in usership over the last several years. These cities have seen usership grow to 40% in recent years. These customers watch live-streaming events in order to learn about—and then buy—luxury products in order to keep up with their more affluent neighbors. For brand creators seeking longevity abroad, tapping into this burgeoning market can spell strong sales. Yet, simply understanding Tmall’s unique sensibility does not translate into guaranteed success on the platform (McKinsey & Associates).

Independent brands that are positioned for sales growth on Tmall are attuned to the needs of the Chinese consumer. Unlike the influencers that drive sales in the West, in order to appeal to Tmall users, brands must focus on developing a professional image. Many KOLs film and broadcast from studios, while content creators in the US often shoot from home. Customers want to be captivated while they learn about a brand’s products through interactive videos. Access to adequate resources is necessary in order to develop and hire a creative team to produce content for such selective clientele. For labels lacking brand recognition, innovation is necessary in order to get noticed in such a dense marketplace. By understanding the nuances of both Tmall’s infrastructure and the discerning Chinese consumers who make up the portal’s consumer base, brands can attain year over year growth in a market that is predicted to become the world’s largest this year, surpassing the United States.