The biggest mistake brands make on Tmall: PwC

The biggest mistake conglomerate brands have made when setting up online stores on Tmall, the Alibaba owned B2C retailer, is treating it as China's version of Amazon, according to Tom Birtwhistle, senior manager of digital strategy with PwC Hong Kong. 

Speaking at the unveiling of a report titled Ecommerce in China—The Future is Already Here yesterday in Hong Kong, Birtwhistle said Chinese consumers use Tmall as a search and discovery engine for products, much in the same way Western consumers use Google.

"Since consumers are beginning their consumer journey on the Tmall platform, they want much more than product information," said Birtwhistle. "They want to be entertained.They are using online shopping much like offline shopping in [expecting] social and lifestyle experience."

PwC's Total Retail 2017 survey shows that 97 percent of Chinese online shoppers use Tmall, while 61 percent said they start their product search on Tmall. In comparison, only 39 percent of global consumers use Amazon in the same way.

Birtwhistle said blurring of the lines between engagement and commercial on online retail platforms is what drove Alibaba to livestream eight hours of fashion shows on Tmall during the Singles' Day sales last year.

Meanwhile, imported food presents another opportunity for grocery sales online, with the emergence of cross-border ecommerce. PwC's survey shows that 62 percent of Chinese consumers prefer to shop for groceries online, while food safety issue is a huge motivator for Chinese consumers to buy imported products.

A Mintel study released earlier this year revealed that one out of three Chinese consumers who shopped for imported goods bought food products from Australia and New Zealand due to the safety and high quality reputation from these two countries. 

"Globally, online grocery has been very challenging proposition, but it is much more attractive and has a bigger potential in China," said Birtwhistle. At least six Australian food brands, including Devondale and Blackmores, have set up stores on Tmall. 

"The only reason it is different than before is now they can do it without setting a physical store, and without a Chinese entity," he said. "This allows them to enter the China market much quicker, with a much lower investment profile compared to what they have been able to do five or 10 years ago." He added that blockchain technology has been used by some food and luxury brands to enable tracing of products all the way from production through the supply chain to the end consumer in order to guarantee authencity and safety. 

In Hong Kong, 2016 was the most difficult out of the last seven years for retail, with an 8 percent decrease in sales. However, Michael Cheng, retail and consumer leader with PwC Asia Pacific and Hong Kong/China, said retailers can expect the market to bottom out in 2017 and recover gradually, with better economic prospects and a rebound in the number of mainland tourists. The value of total retail sales in March this year increased by 3.1 percent year-over-year, marking the first increase after 24 months of continuous declines since March 2015.