TMALL GLOBAL
Alibaba’s Mission & Vision
FOUNDED IN HANGZHOU IN 1999
OUR MISSION To make it easy to do business anywhere
OUR VISION To build the future infrastructure of commerce
To be a company that lasts at least 102 years
The Alibaba Economy
MARKETING SERVICES & DATA MANAGEMENT PLATFORM
CORE COMMERCE LOCAL
SERVICES DIGITAL MEDIA & ENTERTAINMENT
CLOUD COMPUTING
PAYMENT & FINANCIAL SERVICES
LOGISTICS
Source: 1 & 3 eMarketer 2016, 2 Statista 2017, 4 Oliver Wyman 2016
The China Opportunity Today
In 2016 China became the world’s largest retail
market at
US $ 4.88 trillion
Retail Market Size
Online penetration of China’s overall retail market
will reach
33% by 2020
Retail Market Online Penetration
The proportion of online consumers in China who buy
foreign/ imported goods
40% of online consumers
Taste for Imported Goods
Source: China Internet Network Information Center - 39th “China Internet Development Statistics Report”
The China Opportunity Tomorrow
300 Million Middle-class Consumers.
The middle class population is set to double by 2020. Which is the economic equivalent of adding an economy the size of Germany.
Europe (739 M) US (326 M) ANZ (30 M)
731 Million Internet Users in China
Compared to
In 2020
Alibaba Ecommerce Key Milestones
Taobao (C2C)
Taobao Mall
1st Double 11
2003
2008
Nov 2009
Tmall (B2C)
Nov 2011
Feb 2014
Tmall Global (Cross border B2C)
Tmall Global Direct Import
May 2016
Nov 2017
9th Double 11
529m Monthly Active Consumers
60%+ Consumers are Under 30
Years Old
90%+ of Total Transaction on
Mobile
20m+ Comments and Sharing on the Mobile Everyday
China’s Largest B2C Platform – TMALL E-commerce in China: The Biggest Players % of B2C Sales
Source: The Market Mogul; iResearch China; US Department of Commerce
6.7
0.5
0.7
0.8
1.1
1.2
3.5
4.3
24.7
56.6
Others
Jumei.com
Dandang.com
Amazon.cn
Yhd.com
Gome.com.cn
Vip.com
Suning.com
JD.com
Tmall.com
2017 Double 11 Shopping Festival
812 million Delivery Orders Processed by Cainiao Network
~ 140,000 Participating Brands and Merchants
90% Mobile GMV
US$25.3 Billion Total GMV
1.48 billion Total Payment Transactions
39% YoY Growth
Provide what’s best for the family Try new experiences Buy directly from global
brands
(mini baby boom, birth rate 18m-20m p.a. in 2017-2020; second children (or above) may rise to 56% of newborns by 2020)
Chinese Consumers Love Imported Products
Source: Tmall Global & CBNData. 2016 Cross-border consumption report. Photo: Alibaba Group via Panorama, Unplash Nordwood Themes
75
128
181 221
249 272
292
2014 2015 2016 2017e 2018e 2019e 2020e
% of online shoppers
% of population
20.0 31.0 40.0 45.5 48.0 49.5 50.7
6.5 11.2 15.8 19.1 21.5 23.4 25.0
CBEC Market Size (US$ BN) 2016 $79 2017 $100 2018 $115
Cross Border Ecommerce – China By 2020, half of all Chinese online shoppers will have bought an item from cross border e-commerce
Source: Emarketer 2016; 2017. Internet users who have made at least one purchase from a foreign seller either directly or through an intermediate, excl. Hong Kong
Cross-border ecommerce buyers in China (millions)
Products & Brand from overseas
Chinese consumers
• Taobao Global, Tmall Direct Import (TDI) and Tmall Global – Help brands enter the Chinese market • TMALL – Help brands already in China. • Lazada and PayTM – Help brands expand to SEA and India
Customized Platform Solutions Suiting Brands Situation
Legal entity Outside of China In Mainland China (subsidiary or distributor)
In Mainland China (subsidiary or distributor)
Bank account In home country In Mainland China In Mainland China Payment In home currency In CNY In CNY Trademark registered In home country In Mainland China In Mainland China Warehouse Outside of China In Mainland China In Mainland China Shipping to Chinese consumers From overseas From within Mainland China From within Mainland China
Products & Brand already in China
Products & Brand already in China
SEA consumers
India consumers
Chinese consumers
Legal entity Outside of China
Bank account In home country Payment In home currency Trademark registered In home country Warehouse Outside of China Shipping to Chinese consumers From overseas
Export-to-China Solutions
Less known in China, Boutique / new brands or
Established companies testing a new brand
Brands
Somewhat known in China or Established brands with limited
SKU selection
Household names in
China
Different Platform Solutions Based on Depth of Brand Awareness
Seller Model
Enter TMALL Global if Your Brand is Well Known in China.
Is Your Brand TMALL Global Ready ?
Supplier Model
Enter TMALL GLOBAL to Expand Business
+ Offline presence
Business Value
Platforms
Marketing & Media
• Extend business volume by setting up China OMNI-channel strategy
• Build local presence and consumer connection
• CRM management
Step 2 Medium to High Brand Awareness
• Further grow through online distribution • Integrate sales from multiple channels
empowered by big data • Upgrade customer service and experience • Further build brand affinity and loyalty • Entry into Southeast Asia via Lazada
Step 3 Global Brand Awareness
+ Offline presence & Online distribution
• Build brand awareness & product acceptance
• Prepare for local market entry (trademark, set up Chinese subsidiary, etc.)
Step 1 Low to Medium Brand Awareness
ENTER
63 Countries
and Regions
3,700+ Categories
14,000+ International
Brands
TMALL GLOBAL OVERVIEW
Pho
to: A
libab
a G
roup
Beauty & Personal Care
Food & Groceries (incl. Health Supplements)
Mother & Baby
Apparel & Shoes
Daily Consumption
Other
Popular Categories on TMALL GLOBAL
Source: Tmall Global & CBNData. 2016 Cross-border consumption report
Beauty & Personal Care
Health Supplements
Mother & Baby
>10% 1-10% 0.1-1% 0.01-0.1% N/A
Popular Countries for Imported Products
Distribution of Products on TMG based on Country of Origin Top 5 Countries of Origin, 2016 (% share of Total TMG sales)
Source: Tmall Global & CBNData. 2016 Cross-border consumption report
Japan
United States
Australia
Germany
South Korea
Consumer Profile on TMG
Source: Tmall Global & CBNData. 2016 Cross-border consumption report.
Tmall Global consumers are mostly female, under 35.
Consumers under 30 years old are the fastest growing group.
70% Female
Annual Income Over RMB100,000
(US$14,500) 2014 2015 2016
<23 23-28 29-35 36-50 >50
Yearly split by age group
• Shanghai • Beijing • Hangzhou • Guangzhou • Shenzhen
Tmall Global consumers live in China’s wealthiest cities.
TMG Consumer Profile (Contd.)
Source: Tmall Global & CBNData. Popular products refer to products often bought by one consumer group but not others. Cosmetics & Food items are popular among all groups.
New Parents 1 Young millennial (<30 y.o.) 2 Generation Z (<23 y.o.) 3
Milk, Infant formula
Diapers
Baby food
Prioritize safety
Want the best for their baby
Spend 65% of their money on Mother & Baby products
Popular products
Celebrity-branded items
Cartoon stuffed animals
Model kits
Prioritize style
Fastest growing group
Follow celebrity & influencer (KOL) endorsements
Popular products
Sports shoes
Sports gear
Alcohol (wine)
Prioritize style
Want new experiences
Less price-sensitive than other groups
Popular products
BUSINESS MODEL
Supplier model Sold through TMALL Global TDI store
Fees (Deposit)
Import Lifestyle Supermarket • Platform to Sell High Volume Products • Channel to introduce mature products • Dedicated effort for new products on Flagship Store
Tmall Global – Educate/ Sell/ Engage
Flagship Store: Build Branding and Marketing Billboard
Direct Collaboration with a powerful distribution Channel: Supply Chain Depth / Risk Control
TMALL Global Ecosystem An Overseas Brand’s Ultimate Destination to
Invest in Brand Building / Product Introduction & Sales
FLAGSHIP MODEL TMALL DIRECT IMPORT
B2B B2C
Self managed Tmall Global flagship store Partner with TP to run store operations
Fees (Deposit, Annual, Commission, Service)
Discover New Lifestyle Introduce Brands, Product Variety •
A channel to educate, Customer Lock in • One stop hub to introduce a Lifestyle •
Merchant (together with TP) is responsible for the entire business chain including –
marketing/branding, daily operations, customer service, logistics.
1. Flagship Store Model
Bulk shipping
Bonded warehouse
Store operation
Sale Domestic delivery
Buyer
Managing TMG Flagship Store Via Third-Party Services (TPS)
3rd Party Partner (TP) • Leads execution • Leads daily store operations
Cainiao Logistics • Facilitates cross-border logistics • Provides logistics data & analytical tools
Tmall or Tmall Global • Supports IT and payment infrastructure • Provides access to store data & analytical tools • Provides support for digital traffic • Provides paid marketing solutions (Alimama) • Provides Key Account (KA) support if applicable
Brand Owner or Retailer
• Leads overall effort • Sets strategy • Secures marketing budget • Works with other stakeholders
TPs can be an operating agency on behalf of the brand OR a distributor who also takes inventory
TPs Manage Daily Store Operations
• Create operations plan
• Execute store opening
• Decorate store & input product information
• Operate store on a daily basis: Product management, campaign planning and execution
• Execute day-to-day marketing and promotions: Network promotions, daily consumer marketing, brand marketing
• Provide Customer Service to consumers
• Support logistic needs: Cross-border logistics, warehouse services, courier services
• Provide regular reports: Operations report and analysis
Brands pre-ship goods to Cainiao warehouses in one of six Chinese cities in anticipation of customer order. Fastest delivery option (max. 7 days)
Brands pack, label, and ship goods to Cainiao’s warehouses outside of China after a customer places an order. Cainiao consolidates with orders from other brands. It then ships to China by flight and to the consumer (max. 14 days)
Brands ship goods to Cainiao’s warehouses in Hong Kong or Australia before order takes place. Consignment model. Cainiao picks, packs, labels, and ships the goods once consumers place an order.
Brands ship goods directly from country of origin to the consumer. Brands could use non- Cainiao services (DHL, FedEx, etc.). Not recommended because delivery times cannot be guaranteed
Logistics Powered by
Bonded Warehouse 1 Consolidated Shipping 3
HK/AU Fulfillment Center (GFC) 2 Direct Mail 4
Branding
Merchant to ensure for delivery of goods to a warehouse of TMG
choice (Incoterms – CIF). Merchant is also responsible for branding and marketing on and off the platform.
Tmall Direct Import will be responsible for selling the products
on the TDI store and handle deliveries to end consumers.
2. TMALL Direct Import Model
Bulk shipping
Bonded warehouse
TDI Store Sale Domestic delivery
Buyer
MARKETING ON TMALL GLOBAL
. Marketing to Your Chinese Consumers SOME EXAMPLES OF THE TAOBAO APP HOME PAGE AND SELECTED CONTENT MARKETING CHANNELS IN THE APP
Interactive games Deals on
selected items Offline event in Shanghai Celebrity livestreaming In-App promotions
Co-branded with Ferrari Celebrity popular
with young consumers Taobao homepage “Catch the cat” & “Car racing” Deals on 20+ products
TMALL Global as a Marketing Channel • Tmall Global is not a pure sales channel, it’s a place to build your brand in China • Swisse combined cutting edge online and offline marketing for its Super Brand Day
One “Super ID” Personalized User
Experience Across all platforms
Taobao & Tmall Apps Shopping, Marketing, and Entertainment platforms
UC Web 2nd largest mobile web browser
and newsfeed
Youku Tudou (“Chinese Youtube”) Largest video site in China
Weibo (“Chinese Twitter”) Largest microblogging site
Entertainment Alibaba Pictures, Alibaba Sports, Alibaba Music, Tmall TV
Integrated Marketing Channels At Alibaba Digital Media and Entertainment are Completely Integrated into the Market Places
Selected Brands on Tmall Global Supermarkets Department Stores Beauty, Personal Care,
Cosmetics Fashion Mother & Baby
Food & Beverages Health & Pharmacy Fast-Moving Consumer Goods (FMCG)
GETTING STARTED ON TMALL GLOBAL
On-Boarding on TMG – Steps Involved
Assessment & Preparation
1
Store Application
2
Store Development
3
Operation & Optimization
4
Approval Launch
On-Boarding Timeline – Tmall Global
*Actual timeframes may vary
Store Development
Operation & Optimization
Assessment & Preparation
Store Application
1
2
3
4
Understand the platform
Provide TMG with brand and product
information
Find and select Tmall Partner (TP)
Develop detailed plan with TP
Submit Store Application Files
Register Alipay Global Account
Register Taobao Account
Receive Store Invitation Code
Submit Company/Brand
Qualifications
Upload information into Cainiao system
Managing TP Building brand awareness
Testing the market Fueling continued growth
Design store & upload products
Sign contract & register with Cainiao
TMG APPROVAL
Ship products (according to service)
2-4 weeks*
2 weeks*
3-6 weeks*
Ongoing
Alibaba: Making it Easy to do Business Anywhere
2 BILLION CONSUMERS
TENS OF MILLIONS OF MERCHANTS
GLOBAL BUY
GLOBAL SELL
GLOBAL PAY
GLOBAL TRAVEL
GLOBAL DELIVER
Alibaba: Making it Easy to do Business Anywhere
2 BILLION CONSUMERS
TENS OF MILLIONS OF MERCHANTS
GLOBAL BUY
GLOBAL SELL
GLOBAL PAY
GLOBAL TRAVEL
GLOBAL DELIVER
APPENDIX
TMG Flagship Store – Fee Structure
Tmall Global’s most recent fee structure can be found here: https://rule.tmall.hk/rule/rule_detail.htm?spm=0.0.0.0.34zhwp&id=1891&tag=self
A one-time of 150,000-300,000 RMB is used as collateral in case of
any damages of expenses incurred under the service
agreement with Tmall Global
An annual fee of 30-60,000 RMB,
depending on the category the store’s products belong to
A commission of 0.50% - 5% based on product
categories, plus 1% Alipay service fee per
item sold
Security Deposit Annual Fee Commission Fee
Fix fee and commission structure. Fee and
commission amount varies from TP to TP.
Depending on the mode of logistics,
prices will vary. Bonded warehouse being the
most cost efficient and direct mail the most
costly.
TP Partner Logistics
TMALL direct – Fee Structure
A one-time of 150,000-300,000 RMB is used as collateral in case of
any damages of expenses incurred under the service
agreement with Tmall Global
Security Deposit
East: Shanghai, Ningbo, Hangzhou
North: Zhengzhou
West: Chongqing
South: Guangzhou
6 cities
19 warehouses
400K sq. meters
1.5M packages/day
Bonded Warehouse
Sales forecast
Bulk shipping
Order Payment
Logistics
Electronic Clearance Domestic
delivery Buyer Order
Seller estimates potential sales of products
Seller ships to Cainiao* bonded
warehouse via sea/air using
own forwarder.
Buyer places order which goes to our
system. Warehouse picks, packs and ships out
System matches order, payment and logistics data for custom
clearance.
After clearance, product is delivered
nationwide
Buyer receives product
Once goods arrive at the bonded warehouse, Cainiao takes care of the rest
Bonded Warehouse
Cainiao* Network is Alibaba’s logistics arm
Disadvantages Advantages vs.
Suitable for • Products with stable demand • High turnover • Long shelf life
Bonded Warehouse
• Guaranteed Fast Lead Time Cainiao guarantees that every order will arrive within a week of consumer purchase
• Stable Inventory Inventory is stored beforehand to prevent stock-outs during promotion events
• Lower Total Costs Sellers can bulk ship to local bonded warehouse, resulting in lower transport cost per item
• Low Import Taxes Under the cross border scheme, taxes are at 11.9%
• Inventory Commitment Sellers must allocate a part of their inventory to be placed in China
• Expiration Products that are not sold quickly may expire and discarded
US: L.A & Newcastle
London
Frankfurt
Hong Kong
AU: Sydney & Melbourne
S. Korea Japan: Tokyo & Osaka
Taipei
NZ: Auckland
Consolidated shipping (warehouses outside China)
9 countries
13 warehouses
100K sq. meters
100K packages/day
Consolidated shipping
Order
Buyer places order
Order Payment
Logistics
Electronic Clearance
Domestic delivery
Buyer Overseas warehouse
Air freight Pick & Pack, Outbound
Seller packs, print label prepares product for ship
out
Product arrives at Cainiao
warehouse
Export custom clearance and
freight to China
System matches order, payment and logistics data
for custom clearance.
After clearance, product is delivered
nationwide
Buyer receives product
Once goods arrive at the Cainiao warehouse, Cainiao takes care of the rest
Consolidated shipping Disadvantages Advantages vs.
Suitable for • Seasonal demand • New products • High variety, low turnover
• Guaranteed Delivery Cainiao guarantees that every order will arrive within 2 weeks, if not we will compensate the consumer. [brands have to send order to warehouse within 48 or 72 hours]
• Domestic shipping Sellers ship to Cainiao warehouses in their home country (if applicable)
• Pilot Testing For new products, sellers can test market demand before committing to a bonded warehouse solution
• Low Import Taxes Under the cross border scheme, taxes are at 11.9%
• Longer Lead Time Lead time is double that of a bonded warehouse in China
• Higher Cost Higher costs compared to the bonded warehouse model
Order
Order Payment
Logistics
Electronic Clearance
Domestic delivery
Buyer
GFC
Air freight Stock,
Pick & Pack, Outbound
Bulk shipping to AU or HK warehouse
Buyer places order on platform
Warehouse receives order and prepares
ship out
Export custom clearance and freight to China
System matches order, payment and logistics data for custom
clearance.
After clearance, product is delivered
nationwide
Buyer receives product
Once goods arrive at the Cainiao warehouse, Cainiao takes care of the rest
Global Fulfillment Center (GFC) AVAILABLE IN AUSTRALIA & HONG KONG ONLY*
*As of March 2017
Global Fulfillment Center (GFC) Disadvantages Advantages vs.
Suitable for • Sellers with products in Australia or in Hong Kong • Sellers who prefer to outsource picking and packing • High variety, low turnover products
• Consignment service Cainiao picks, packs, and takes care of the order once goods are in the GFC
• Domestic shipping (AU or HK only) AU or HK based sellers ship to Cainiao GFCs in their home countries
• Pilot Testing For new products, sellers can test market demand before committing to a bonded warehouse solution
• Low Import Taxes Under the cross border scheme, taxes are at 11.9%
• Higher Cost Higher costs compared to the bonded warehouse model
Category
Tax Rate Tax-Free Order Threshold (RMB)
Direct Mail (Logistic Option 4)
Cross Border (Logistic Options 1, 2, 3)
Direct Mail (Logistic Option 4)
Cross Border (Logistic Options 1, 2, 3)
Mother & Baby 15%
11.9%
333
N/A
Food
Apparel & Shoes 30% 166
Electronics
Wine 60% 21% 83
Cosmetics 60% 11.9% – 26.35% 83
Price / Net Weight Average unit price >= 10RMB < 10RMB >=15RMB <15RMB
Classification (Tax Rate) High-end (26.35%) For the masses (11.90%) High-end (26.35%) For the masses (11.90%)
Cosmetics and Skincare category: High-end or for the masses?
Import Taxes by category
Note: Government regulations change often in China. Connect with your Cainiao contact person for the latest rates
On-Boarding on TMG – Steps Involved
Store Development
Operation & Optimization 3 4
Assessment & Preparation
Store Application
1
2
Launch Approval