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Tmall Global Launched Cross-Border Direct Delivery Service

Due to Covid-19 outbreak quarantine/isolation measures in China, the trend of daily buying products globally online has steadily increased. According to the National Bureau of Statistics [1], the national online retail sales reached 6.079 trillion yuan from January to July, a year-on-year increase of 9.0%. The online retail sales of physical goods were 511.8 billion yuan, an increase of 15.7%. McKinsey's "White Paper on China's Cross-border E-commerce Market" predicts that e-commerce retail in China will grow to more than $956.488 billion (about 6.578 trillion yuan) by 2022 [2].

Though the epidemic has ceased outbound travel of Chinese people, the consumer demand for overseas products has never faltered, especially for global new products, limited editions, and personalized products. The accelerating consumption upgrading has put forward higher requirements for cross-border e-commerce and offered global brands opportunities to seize the lucrative Chinese import market.

On September 1, Tmall Global announced it would upgrade its overseas warehouse business and officially released the cross-border direct delivery service "Overseas Direct Procurement," focusing on importing overseas niche products. It also introduced five consumer rights and interests:

  • Buy Hermes without rationed goods,

  • Free shipping over 299 yuan,

  • Air delivery worldwide within seven days,

  • Synchronous update with overseas market,

  • Direct purchase of original overseas version (of the product).

"Overseas Direct Procurement" Features

Unlike bonded warehouses that bring people common and popular imported products, the "Overseas Direct Procurement" business targets segmented consumer group’s long-tail niche needs. Long tail is used to refer to large number of products that sell in small quantities.

According to Tmall Global, the "Overseas Direct Procurement" business has three distinctive features of rich product portfolios, avant-garde styles, and fast delivery. It has organized a strong buyer team in more than 20 countries and regions worldwide, exploring and purchasing the trendiest products for Chinese consumers. It has also established five overseas warehouses in the United States, Europe, Japan, South Korea and Hong Kong, China to ensure that the products would be delivered within 3 days.

Opportunities for Overseas Niche Brands

The "Overseas Direct Procurement" business has provided substantial opportunities for overseas niche brands due to the enormous Chinese market size. According to Liu Peng, the President of Tmall Import and Export Business Group: “Any niche brand will have a consumer group equivalent to the population of a European country.”

For overseas niche brands, the "Overseas Direct Procurement" model is more friendly and convenient because they do not need to open stores, only to place their products in the overseas warehouse of the Tmall Global. The Tmall platform will provide one-stop services, including warehousing, front desk operations, sales, logistics, and customer service. Brands are free from inventory and operation troubles and as such can quickly familiarize themselves with the Chinese market reaction with lower cost and faster speed.

Tmall Global has begun testing the "Overseas Direct Procurement" business from June 2020. During the Tmall 618 mid-year shopping festival, more than 100,000 products from 1,600 overseas small and medium-sized brands have entered the Chinese market through the "Overseas Direct Procurement" model, and the transactions have increased by 220% year-on-year. The South Korean and European warehouses has increased over ten times year-on-year, in addition to significant increases in transactions for Japanese/U.S warehouses [3].

For example, the South Korean cosmetics brand JUNG SAEM MOOL had entered the Tmall Global South Korean warehouse with sales increasing by 50 times year-on-year during the 618 shopping campaign [3]. The excellent sales performance has prompted the brand to officially open the Tmall Global flagship store in July 2020.

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Tmall Global Expedites the Importation Business

The first one, the brand makes a presence on the platform as an overseas flagship store. In this model, the brand has to bear all operational expenses for the store.

The second one is the official self-management and self-procurement, which means the products go directly to China's bonded warehouses.

The third one is the newly launched "Overseas Direct Procurement" model, in which the warehousing and logistics are overseas-based, and products enter the Chinese market through direct shipment. The third one is more flexible and convenient and has more room for growth and optimization in comparison to the other two methods.

The global epidemic has made China a highly anticipated market for global brands. Over the past six months, overseas brands have accelerated their presence on Tmall Global. Since April, the number of new overseas brands on Tmall Global increased by 125% year-on-year, and turnover has increased by 113% year-on-year [4]. According to Alibaba results for the quarter ended June 30, Tmall Global GMV increased by more than 40% year-on-year [5].

Tmall Global has more than 25,000 overseas brands from 92 countries and regions worldwide, covering more than 5,100 categories, of which more than 80% of the brands entering China for the first time [3]. It has set the goal of over a one million products coming from 10.000 new brands in the coming year [6]. It also expects to double the number of brands with over RMB 100 million turnovers and bring 2000 items with sales exceeding one million yuan in this year’s Double 11 shopping festival [4].

***Disclaimer: All images used in this article are from the internet.

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