Tmall vs WeChat, The Winner Might Surprise You.

James Love

Social Commerce, WeChat

March 15, 2019

Following Macy’s announcement that it will no longer sell its products on Tmall Global. May not have been a surprise to those who know understand Tmall Global. Macy’s had only been selling their products on the online marketplace for a little over three years. This has become a common trend for many foreign brands. Major brands like Coach and Lotte have also stopped selling their goods on Tmall Global. Despite the fact, Tmall Global allows foreign retailers use capture a large portion of the market. Being consistently overlooked by complaints of overcrowded market and high fees. Many weary retailers are beginning to switch from Tmall Global to selling through WeChat Mini Programs.

What Is Tmall Global?

Often mistaken as the Chinese version of Amazon. Tmall Global or as it is formerly known as Taobao Mall is an innovative online marketplace. Designed specifically for the needs of Chinese consumers and strictly available in simplified Chinese. Tmall is another successful venture of the influential Alibaba Group. The online marketplace allows brands from anywhere to sell directly B2C (business-to-customer). Tmall Global offerings span from everywhere from local Chinese to various international businesses. Focusing on selling their product in Hong Kong, Macau, Taiwan, and mainland China.

Since its initial launch in 2008, Tmall Global has experienced substantial growth. In fact, growing to become the world’s second-biggest e-commerce website. Falling closely behind another Alibaba Group powerhouse online marketplace, Taobao. As of February 2018, Tmall Global has over 500 million active monthly users and the eight most view website globally according to Alexa.

The innovative online marketplace captures a large percentage of the Chinese markets. This explains why so many foreign brands begun to flock to Tmall Global. The opportunity for doing business is seemly infinite. Due to China’sbooming economy and rapidly expanding middle class. Though business in China seemly has a bright future, many major global retailers and luxury brands are pulling out of the of Tmall Global.

What Makes Tmall Global So Different?

For starters, Tmall Global is specifically designed and marketed to the needs of Chinese consumers. The marketplace consists of a lot of Alibaba creative signatures features. The shopping experience in China is different from that of the United States or the United Kingdom, as their needs are different. Tmall Global seeks to create a virtual shopping center. Allowing brands create a unique experience for their customers.

There is major difference between Tmall Global and Taobao, Alibaba’s other online marketplace. On Taobao you can sell your merchandise to Chinese consumers without being a ‘trusted’ user. While on Tmall you must be a trusted brand or company to sell on Tmall Global. The products being sold on Tmall must also meet the needs of Chinese consumers.

Tmall Global is a great way for foreign brands to sell their merchandise through a trust online marketplace. Along with undeterred by global recognition and being a global in commerce. You might wonder why so many well-known brands are leaving the popular online marketplace. There are many factors that have slowed down the growth of Tmall Global. Here are the biggest hurdles for companies selling their product on Tmall Global.

Disadvantages of Tmall Global.

It’s hard to make a profit. One of the biggest hurdles for businesses selling on Tmall Global is being able to turn a profit. Many brands simply just aren’t getting proper exposure they should or the maintain priority they need to survive. When sales begin to decrease merchants have no way to target market to consumers because they do not own the customer database. Coupled with profit margins being compressed with discounts and the cost of maintenance of a digital store is higher than anticipated. Causing most stores not only to not make a profit but lose money through their Tmall Global store.

The fees are unsustainable. Rather commission or affiliation fees they’re simply too high for most businesses to be profitable. Companies must pay a high cost to stay affiliated with Tmall. Although every brand must pay the affiliation fees, some brands benefit more from it than others. Even with millions of repeat consumers with specific brand preferences, there is no strategic way to diversify options for those with no or limited brand preferences. As brands grown on Tmall Global, it becomes harder to make profit. Due to at the end brands end up giving up a huge portion of their revenue away in commissions.

Competition increased for Tmall Globall. As JD.com, Tmall’s archival grew in popularity Tmall Global has allegedly began treating its clients who wouldn’t sign an exclusive deal poorly. Following allegations of a U.S. clothing retailer, who claimed their sales who were expected increase 20 percent on average-went down. Falling 10 to 20 percent than they what it was projected to be. After refusing to sign an exclusive contract with Alibaba. Instead of opting to work with their rival, JD.com. TMD allegedly is taking their dislike out on their client by cutting their traffic to their storefront, two executives told The Associated Press.

How To Effectively Reach Chinese Consumers.

China’s booming economy and increasing accumulation of wealth has made it a desirable market for foreign investors and seeking to go global. To fully grasp how big China economy rapidly growing China is becoming you must look at the data. According to a recent report by Alibaba’s research subsidiary, AliResearch, and Boston Consulting Group, China is believed to add over $1.8 trillion USD in consumption by the year 2012. The country is currently the fastest growing country within the world. Driving this massive expansion is thriving technology/e-commerce businesses, the new generation with a strong value on consumers goods, and a large middle-class population.

One unique modern characteristics of Chinese culture is how much that embraced technology into their culture, seemly welcoming it with open arms. More comfortable than US customers to provide personal details online. Chinese consumers also prefer to buy goods and services online. However, for foreign businesses, this can be their way to effectively meet the needs of Chinese consumers. Social media apps and platforms WeChat Stores and Tmall Global, have now created an effective way for foreign companies in an entry into the market, with options for every budget.

For years China has had the repartition of being hard to navigate for various political factors, coupled with the language and cultural barriers. Although these problems are still there today the risk involved in going global are sustainably lower thanks to the internet. Before the internet, it was expensive to engage with foreign markets and fear of losing ownership when expanding into foreign markets.

Everything You Need To Know About WeChat.

WeChat is the most influential app in China. It is unlike anything ever seen in Western Culture. WeChat reach and influence on Chinese culture is nearly unfathomable to comprehend. As it is more popular than majority of Western apps. WeChat nearly reaches China’s entire population and has become a part of everyday life in China.

WeChat has innovative features such as WeChat’s Mini programs, that are essentially apps within the app. Many of their features are unlike anything ever seen in Western app. All seemly adding a since of joy or convivence to everyday life. Evolving to be much than more than just a messaging app. Users can seemly do relativity everything from: playing games, scheduling doctors’ appointments, ordering food, reading articles, creating groups chats, ordering a taxi to making phone and video calls.

With over a billion daily active users, WeChat has created a seemly untouchable ecosystem all within the confines of the ‘super’ app. Learning how to effectively target to reach a portion of WeChat’s billion users is a great opportunity for growth for a company. Rather big or small, creating a WeChat Store utlizing WeChat mini programs are a great affordable way to enter China.

WeChat Mini Program Tutorials

To better explain here’s a brief WeChat Program Tutorial. WeChat Mini Programs are simply embedded apps that are not required to be installed or downloaded. These programs allow business a new opportunity to organically connect with its’ users. When looking to create a successful WeChat Mini Program, you should be focused to the two things creating successful engagement and high retention rates. Offering an interactive mini program user experience is vital for the long-term success of your WeChat.

Creating your own WeChat Mini Program is super easy. To begin you’ll need to go mp.weixin.qq.com and register your account. If you already have an account, you can view the WeChat Mini Program’s App ID in the Developers settings. However, you cannot use an Service Account or Subscription Account App IDs to directly create a Mini Program.

Once completed and all the developer tools have been installed. Open and use the WeChat QR code to login. Select ‘Create Project’ and enter App ID obtained and create a project name. This won’t be the final Mini Program name so you can name it anything you would like. After you successfully completed this step. You can start coding and creating your very own WeChat program.

WeChat Mini Programs Are The Future.

In terms of apps in China, there is one that reigns supreme over all other apps. WeChat and its mini programs have redefined the possibility of a cross border business. WeChat’s mini programs has also made it significantly easier to tap into foreign markets. The app reaching nearly the entire population of China. All within the ten years since it was initially launched. WeChat’s mini programs are currently at the forefront of mobile e-commerce innovation since the launch of WeChat Store. Their new mini-programs have allowed brands to create apps within the store and sell directly to Chinese consumers. Creating a unique ecosystem within the confines of the app.

Currently, China’s number of internet users are nearing a billion. This is more than double both the United States and the United Kingdom. As the biggest online marketplace in the world, the growth potential for brands is like seen before. The opportunity is infinite as China has a large stake in global consumption and even larger digital footprint. Solidifying that future of business is digital, with a major focus on China’s most prized app- WeChat.

Learning from its competitors’ shortcomings, WeChat’s mini programs aren’t overcrowded. Allow for great marketing opportunities and allow brands to maintain ownership of their brand. Creating a great opportunity for both small and big brands to create organic customer following. WeChat also allows brands to utilize KOL (Key Opinion Leaders) or influencers. Shown to be an extremely effective way to market to your potential customers. Offering such a great opportunity with lucrative perks, more and more business are using WeChat Mini Programs to create a storefront on WeChat.

References:

https://www.ispo.com/en/markets/id_79707574/wechat-taobao-tmall-how-online-marketing-works-in-china.html

https://walkthechat.com/use-tmall-jd-com-enter-china-simple-guide/

https://populartimelines.com/t/2430273/Alibaba-Group

https://www.marketingtochina.com/big-brands-leaving-tmall/

https://expandedramblings.com/index.php/tmall-statistics/

https://open.wechat.com/cgi-bin/newreadtemplate?t=overseas_open/docs/mini-programs/development/brief-tutorial

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