Opening a shop on any major B2C platform in China is an effective way to sell to Chinese consumers, as this will not only help investors reach potential customers directly, but also avoid the hassle of obtaining approval from different departments. Conversely, most B2C platforms require that the company have at least a presence in China, and thus a China-based team is necessary to provide pre-and-after sale support.
Here, we compare three of the principal third-party e-commerce platforms that foreign sellers can choose from: Tmall, Jingdong Mall (JD), and Yihaodian.
Tmall is China’s largest online marketplace dedicated to domestic and international branded merchandise. Owned by Alibaba Group, Tmall provides a marketplace for foreign brands to open exclusive shop fronts.
JD is China’s largest online direct sales company. It owns and operates seven fulfillment centers and 166 warehouses in 44 cities, with a further 4,142 delivery stations in 2,043 counties and districts across China. JD allows merchants to open individual shop fronts and is licensed to import food, beverage products, apparel and shoes directly from overseas.
Yihaodian is China’s largest online retailer of food and beverages, stocking over 8 million SKUs. The platform is wholly owned by U.S. retail giant Walmart and is licensed to import food and beverage products directly from overseas. With a similar logistics system to JD, Yihaodian owns seven warehouses and operates more than 200 distribution centers in 40 cities.
Compared to Tmall, JD and Yihaodian are not only online malls but also hypermarkets, allowing independent merchants to list products or operate shopfronts. Online hypermarkets are vertically integrated, functioning as multi-category marketplaces that purchase directly from suppliers for sale through their own network. These hypermarkets operate a proprietary online e-commerce platform and an in-house logistics network, offering same-day delivery. Selling to a hypermarket is done via negotiation with a procurement manager. Exporters are not required to manage distribution or a shopfront, but must provide official marketing collateral to promote their products.
For international brands without a physical presence in China, Tmall launched a new business unit called “Tmall Global” in 2013, providing various marketing tools to help increase traffic and allow foreign products to be sold directly to Chinese consumers from overseas. However, Tmall Global now operates via an invitation-only policy where only qualified merchants are either invited to join or can apply through a certified third party agency (TP).
Consequently, the necessity of TP cooperation has complicated the process of setting up a store on the Tmall Global platform. There are also various other entry requirements, including:
- Must be a registered corporate entity outside of mainland China
- Possess retail and trade qualifications overseas
- Must be the brand owner or authorized by the brand, or have the official invoices showing purchase from legal channels
- A point for returned products in mainland China
JD has also opened a similar service – JD Worldwide – which distinguishes itself from Tmall Global via active global promotion (particularly in the U.S. and Australia), and provision of a leading in-house logistics service.
Image source: China Briefing