The announcement of Alibaba’s first official Australian headquarters in Melbourne earlier this year was met with much enthusiasm by local media. To industry observers the opening of a physical presence for the e-commerce giant in the region doesn’t come as a surprise. In fact, Alibaba’s B2C arm, Tmall Global has been busy working with bigger local brands such as Woolworths and Chemist Warehouse to build their presence for almost a year now.
And the results speak for themselves. Chemist Warehouse sold almost $2 million worth of stock in the first 13 minutes of the 24-hour sales frenzy that is Single’s Day. To date 1500 Australian brands do already have a store on Tmall China and Tmall Global, and Australia is among the top 5 nations selling on the platform.
The commercial success of these early adopters confirms that there’s never been a better time for ANZ brands to capitalise on the opportunity presented by the rising Chinese consumer demand for high quality international products. Yet, how will having a local Alibaba presence help brands succeed in a notoriously difficult market?
Brands can expect a more streamlined experience for their Chinese customers and themselves
Whenever Alibaba concentrates its efforts on a new region, there’s a big focus on enabling a positive end-to-end experience for consumers in China, as well as making it easier for brands to sell and distribute their products to China. For instance, the speed, ease and cost of shipping, customs declaration and returns has a big impact on the international online shopping experience for both brands and Chinese customers.
If these infrastructure challenges cannot be addressed effectively, customers will be deterred to buy from international brands due to the hassles it may cause for them. What’s more, expansion plans for smaller brands might turn out to be unsustainable due to the resources required to manage these processes.
Alibaba eases some of this pressure and works on building strategic partnerships with key players in China and internationally to improve the logistics infrastructure and smoothen the overall process, not just for bigger brands on an individual level but for the region as a whole.
It’s about enabling a positive customer experience from a buying perspective and a smooth, streamlined selling process from accepting payments and dispatching products, all the way to managing customer reviews. Only recently, Alibaba signed a deal with Australia Post to move in this direction.
Smaller brands will benefit from access to local support
While local agency partners already offer brands help with navigating the Chinese market, understanding Chinese consumers and the digital ecosystem, a physical Alibaba presence will mean that it will become easier for smaller brands to get hands on support directly from the eCommerce giant. This could happen on two levels:
- Through physical training: up until now Alibaba’s resources in the region have been very limited and the focus has been on enabling high profile brands to enter the Chinese market successful. A local headquarter will mean more staff on the ground and locally based Tmall Partners to support smaller brands and guiding them every step of the way.
- Through a more internationalised Alibaba interface: right now Alibaba’s seller hub is predominantly in Chinese, making it difficult to impossible for international brands to run their Alibaba presence by themselves. It is conceivable that Alibaba will work on internationalising their brand by offering their resources in multiple languages to further reduce the barrier to entry for overseas brands.
Expect the Chinese market to become more competitive for international brands
On the other hand, just because Alibaba now has a local presence, it doesn’t mean entering the Chinese market will be all smooth sailing for Australian brands. In fact, it’s becoming more and more competitive. Currently there are already 14,000 international brands on Tmall Global, including industry giants such as Costco and Macy’s. Australian brands will have to stand out against competition from the US, Japan, the EU and South Korea.
In order to be successful in China, brands need to invest time upfront to learn as much as they can about their target audience in the local market and develop their value proposition to meet local demand. As the failure of Asos in China shows, having a big presence in Western markets does not guarantee success. Brands will need to invest in building up their brands locally to generate awareness and foster customer loyalty through both on- and offline channels.
The good news is that - as Jack Ma rightly says - Chinese consumers associate Australia with nature and health. Australian brands that play their card right can leverage these positive connotations to their advantage.
Dandan Cheng is COO of Sinorbis, a Sydney-based firm helping brands tap into the Chinese market