How to drop ship your products to China?

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In countries where Amazon.com is available, brands are able to drop ship their products to the end customers and local retailers. This practice has been commonly used as a way to expand sales and awareness of a brand which is not yet well stablished in other regions. Amazon was available in China, however the local competitors could not be beaten by the American giant which ended up leaving the country. Nevertheless, it is possible to do drop shipping to China by using its local storefronts, and one of the most significant and reliable is TMALL. In this article, Jademond’s senior account manager Joy Gao, will explain three different models of how you can sell your products in China by using TMALL.

 

In 2021, China remains the world’s largest online retail market, at value over USD$1.50 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.

For foreign brands, Tmall may be considered one of the key marketplaces to any overseas goods, once its imported goods sales represents 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 and validate the 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 is aiming to invest on this model, since this year it plans to bring over 100 brands to China consumers. Currently, there are TOF centers in the US, Japan, South Korea and European Union, which are supporting brands that have low awareness but good potential.

 

Test China Market with Minimum Investment

 

The TMG and TDI modes require investment on the platform. In the table of content below you can verify the fees for a TMG store:

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. In comparison TOF is a much cheaper model to test out the Chinese market, once brands only need to pay the TOF warehouse fee to start the activities.

 

Hassel-free Solution for SMEs

 

Many obstacles are on the way of brands doing cross border business, such as: taxes, custom clearance, shipping, 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 the TOF center. The TOF team will take care of other issues.

The payment settlement can be done weekly or monthly in merchants’ home currency. Tmall Global is responsible for the product return while the remaining inventory will be returned to suppliers every 3 months.

 

Big Opportunity for Certain Categories

 

The TOF model adopts an invitation method to bring brands on board. All invited suppliers who  wants to register accounts on the Alibaba-VO system must submit the company’s documents and be qualified in order to pass the Tmall Global verifications to become certified partners and start selling. In 2019, Tmall prefered to bring 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. To the other brands, It is an opportunity to engage with TOF team and start exploring the market and its potentials.

 

Need help to sell your products in China? Contact us by clicking on HERE.

Joy is the Account Manager in Jademond,. She writes about all subjects from China online marketing practices to the latest Chinese technology unicorns.

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