How Tmall Overseas Fulfillment Helps You Succeed in China

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In 2019, China is to be the world’s largest retail market, at value over USD$5.64 trillion. Tmall Global is regardless the most preferred choice of platform for foreign brands. Up to now Tmall is hosting more than 20,000 brands in over 4,000 categories on the platform, covering from 77 countries and regions. In future 5 years, Tmall plans to expand and cover 8000 categories from more than 120 countries and regions.

In cross border realm, Tmall’s sales volume tops the rank and takes 31.7% of the market share, larger than the sum from No.2 to No. 4, by the end of 2018.

To sell on Tmall Global, there’re 3 store models, suiting different brands.

  • Tmall Global Flagship Store (TMG) – the B2C mode and most costly option. Brands need to pay deposit, annual service fee and sales commission.
  • Tmall Direct Import (TDI) –a direct import model. Brands need to invest on marketing and shipping.
  • Tmall Overseas Fulfillment (TOF) – a retail model for not well known brands to test market.

TOF utilizes overseas warehouses for direct fulfillment to consumers. It applies a consignment model to optimize assortment and facilitates easy exchange of inventory. Tmall aims to invest more on this model. This year it plans to bring over 100 brands to China consumers. Currently TOF center is available for US, Japan, South Korea and Europe region. New TOF model brings great news for brands that have low awareness but good potential.

Test China Market with Minimum Investment

TMG and TDI modes require investment on China market. Fee for a typical TMG store can be shown from the following:

Platform Deposit to Platform Platform service fee (annual) Commission (%) Tmall Partner Onsite Event and Promotion
Tmall.hk USD
8,000 to
25,000
USD 5,000 to 10,000 2%~5% Commission TBD

The high cost for boarding Tmall Global has kept many brands from trying out this platform. By comparison TOF is a much cheaper model to test out China market. Brands only need to pay a TOF center warehouse fee to start the activities.

Hassel-free Solution for SMEs

To run cross border business there can be a lot of problems, tax, custom clearance, shipping and warehousing, return and delivery. Another advantage of TOF is that it provides brands a package option where merchants only need to handle the bulk shipping from your factory to TOF center. TOF team will take care of other issues.

Settlement can be per week or per month in merchants’ home currency. Tmall Global will be responsible for the returns from our end customers. Unsold products will be returned to suppliers every 3 months.

Big Opportunity for Certain Categories

TOF adopts an invitation method to bring brands on board.Invited suppliers register accounts on the Alibaba-VO system, submit qualification documents and pass Tmall Global verifications to become certified partners and can then start submitting product offer information in the system. In 2019, Tmall prefer bringing more street fashion, hair care, and women care products to the platform. Therefore brands running business in these categories are very likely to win on TOF platform. For other brands there also is an opportunity to engage with TOF team and start exploring for more potentials.

Joy is Digital Account Manager in Jademond,. She writes about all subjects from China online marketing practices to the latest Chinese technology unicorns. Linkedin or Tweet with her to get the latest updates.

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