What Happened: In the past year, more than 5,000 new overseas brands have launched on Tmall Global and more than 2,000 small- and medium-sized businesses achieved annual sales of over one million yuan ($155,000). Alibaba’s Tmall Global is one of China’s largest cross-border online marketplace. It allows internationals without operations in the country to sell goods in China from their home country. As of November 2021, nearly 30,000 overseas brands have already entered Tmall Global, of which more than 80 percent entered the country for the first time.
The Jing Take: COVID-19, travel restrictions, and China’s growing middle class and consumer confidence have boosted domestic demand for cross-border e-commerce, with Gen Z identified as the fastest-growing consumer cohort of imported goods in China. In the 12 months ending March 2021, the number of shoppers born after 2000 grew by more than 70 percent on Alibaba’s cross-border marketplace.
In light of the surging demand, Tmall Global has set up six major procurement centers around the world, covering North America, Europe, Oceania, and Asia-Pacific regions, and has opened more than 1,300 cross-border logistics routes for sea, air, and land transportation. Plus, more than 1.7 million square meters of bonded warehouses have been built in the domestic bonded area, where dutiable goods may be stored without payment of duty. Thanks to this, the time limit for cross-border online shopping has been shortened to 2.5 days, allowing domestic consumers to easily purchase global goods without the need of traveling abroad.
Needless to say, the Alibaba branch has established a dominant position in the cross-border e-commerce sector. The rapid emergence of niche labels is now benefitting from the country’s booming cross-border e-commerce and the platform’s continuous elevation of cross-border supply chain capabilities.
However, new players are trying to snap market shares. TikTok Shop recently announced a support policy for cross-border e-commerce merchants from March to April this year: for newly registered accounts, the platform will provide traffic support and official operational guidance.
As the short-video platform primarily appeals to young consumers, it could pose a threat to Tmall Global’s share of this lucrative market. In time, no doubt, more companies with younger, cooler DNAs could enter the space. For now, Tmall Global’s rock-solid reputation and mature supply chain capability looks to be the safer pair of hands that both shoppers and retailers are looking for.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.