tmall global intro deck · • further build brand affinity and loyalty • entry into southeast...

TMALL GLOBAL

Alibaba’s Mission & Vision

FOUNDED IN HANGZHOU IN 1999

OUR MISSION To make it easy to do business anywhere

OUR VISION To build the future infrastructure of commerce

To be a company that lasts at least 102 years

The Alibaba Economy

MARKETING SERVICES & DATA MANAGEMENT PLATFORM

CORE COMMERCE LOCAL

SERVICES DIGITAL MEDIA & ENTERTAINMENT

CLOUD COMPUTING

PAYMENT & FINANCIAL SERVICES

LOGISTICS

Source: 1 & 3 eMarketer 2016, 2 Statista 2017, 4 Oliver Wyman 2016

The China Opportunity Today

In 2016 China became the world’s largest retail

market at

US $ 4.88 trillion

Retail Market Size

Online penetration of China’s overall retail market

will reach

33% by 2020

Retail Market Online Penetration

The proportion of online consumers in China who buy

foreign/ imported goods

40% of online consumers

Taste for Imported Goods

Source: China Internet Network Information Center - 39th “China Internet Development Statistics Report”

The China Opportunity Tomorrow

300 Million Middle-class Consumers.

The middle class population is set to double by 2020. Which is the economic equivalent of adding an economy the size of Germany.

Europe (739 M) US (326 M) ANZ (30 M)

731 Million Internet Users in China

Compared to

In 2020

Alibaba Ecommerce Key Milestones

Taobao (C2C)

Taobao Mall

1st Double 11

2003

2008

Nov 2009

Tmall (B2C)

Nov 2011

Feb 2014

Tmall Global (Cross border B2C)

Tmall Global Direct Import

May 2016

Nov 2017

9th Double 11

529m Monthly Active Consumers

60%+ Consumers are Under 30

Years Old

90%+ of Total Transaction on

Mobile

20m+ Comments and Sharing on the Mobile Everyday

China’s Largest B2C Platform – TMALL E-commerce in China: The Biggest Players % of B2C Sales

Source: The Market Mogul; iResearch China; US Department of Commerce

6.7

0.5

0.7

0.8

1.1

1.2

3.5

4.3

24.7

56.6

Others

Jumei.com

Dandang.com

Amazon.cn

Yhd.com

Gome.com.cn

Vip.com

Suning.com

JD.com

Tmall.com

2017 Double 11 Shopping Festival

812 million Delivery Orders Processed by Cainiao Network

~ 140,000 Participating Brands and Merchants

90% Mobile GMV

US$25.3 Billion Total GMV

1.48 billion Total Payment Transactions

39% YoY Growth

Provide what’s best for the family Try new experiences Buy directly from global

brands

(mini baby boom, birth rate 18m-20m p.a. in 2017-2020; second children (or above) may rise to 56% of newborns by 2020)

Chinese Consumers Love Imported Products

Source: Tmall Global & CBNData. 2016 Cross-border consumption report. Photo: Alibaba Group via Panorama, Unplash Nordwood Themes

75

128

181 221

249 272

292

2014 2015 2016 2017e 2018e 2019e 2020e

% of online shoppers

% of population

20.0 31.0 40.0 45.5 48.0 49.5 50.7

6.5 11.2 15.8 19.1 21.5 23.4 25.0

CBEC Market Size (US$ BN) 2016 $79 2017 $100 2018 $115

Cross Border Ecommerce – China By 2020, half of all Chinese online shoppers will have bought an item from cross border e-commerce

Source: Emarketer 2016; 2017. Internet users who have made at least one purchase from a foreign seller either directly or through an intermediate, excl. Hong Kong

Cross-border ecommerce buyers in China (millions)

Products & Brand from overseas

Chinese consumers

• Taobao Global, Tmall Direct Import (TDI) and Tmall Global – Help brands enter the Chinese market • TMALL – Help brands already in China. • Lazada and PayTM – Help brands expand to SEA and India

Customized Platform Solutions Suiting Brands Situation

Legal entity Outside of China In Mainland China (subsidiary or distributor)

In Mainland China (subsidiary or distributor)

Bank account In home country In Mainland China In Mainland China Payment In home currency In CNY In CNY Trademark registered In home country In Mainland China In Mainland China Warehouse Outside of China In Mainland China In Mainland China Shipping to Chinese consumers From overseas From within Mainland China From within Mainland China

Products & Brand already in China

Products & Brand already in China

SEA consumers

India consumers

Chinese consumers

Legal entity Outside of China

Bank account In home country Payment In home currency Trademark registered In home country Warehouse Outside of China Shipping to Chinese consumers From overseas

Export-to-China Solutions

Less known in China, Boutique / new brands or

Established companies testing a new brand

Brands

Somewhat known in China or Established brands with limited

SKU selection

Household names in

China

Different Platform Solutions Based on Depth of Brand Awareness

Seller Model

Enter TMALL Global if Your Brand is Well Known in China.

Is Your Brand TMALL Global Ready ?

Supplier Model

Enter TMALL GLOBAL to Expand Business

+ Offline presence

Business Value

Platforms

Marketing & Media

• Extend business volume by setting up China OMNI-channel strategy

• Build local presence and consumer connection

• CRM management

Step 2 Medium to High Brand Awareness

• Further grow through online distribution • Integrate sales from multiple channels

empowered by big data • Upgrade customer service and experience • Further build brand affinity and loyalty • Entry into Southeast Asia via Lazada

Step 3 Global Brand Awareness

+ Offline presence & Online distribution

• Build brand awareness & product acceptance

• Prepare for local market entry (trademark, set up Chinese subsidiary, etc.)

Step 1 Low to Medium Brand Awareness

63 Countries

and Regions

3,700+ Categories

14,000+ International

Brands

TMALL GLOBAL OVERVIEW

Pho

to: A

libab

a G

roup

Beauty & Personal Care

Food & Groceries (incl. Health Supplements)

Mother & Baby

Apparel & Shoes

Daily Consumption

Other

Popular Categories on TMALL GLOBAL

Source: Tmall Global & CBNData. 2016 Cross-border consumption report

Beauty & Personal Care

Health Supplements

Mother & Baby

>10% 1-10% 0.1-1% 0.01-0.1% N/A

Popular Countries for Imported Products

Distribution of Products on TMG based on Country of Origin Top 5 Countries of Origin, 2016 (% share of Total TMG sales)

Source: Tmall Global & CBNData. 2016 Cross-border consumption report

Japan

United States

Australia

Germany

South Korea

Consumer Profile on TMG

Source: Tmall Global & CBNData. 2016 Cross-border consumption report.

Tmall Global consumers are mostly female, under 35.

Consumers under 30 years old are the fastest growing group.

70% Female

Annual Income Over RMB100,000

(US$14,500) 2014 2015 2016

<23 23-28 29-35 36-50 >50

Yearly split by age group

• Shanghai • Beijing • Hangzhou • Guangzhou • Shenzhen

Tmall Global consumers live in China’s wealthiest cities.

TMG Consumer Profile (Contd.)

Source: Tmall Global & CBNData. Popular products refer to products often bought by one consumer group but not others. Cosmetics & Food items are popular among all groups.

New Parents 1 Young millennial (<30 y.o.) 2 Generation Z (<23 y.o.) 3

Milk, Infant formula

Diapers

Baby food

Prioritize safety

Want the best for their baby

Spend 65% of their money on Mother & Baby products

Popular products

Celebrity-branded items

Cartoon stuffed animals

Model kits

Prioritize style

Fastest growing group

Follow celebrity & influencer (KOL) endorsements

Popular products

Sports shoes

Sports gear

Alcohol (wine)

Prioritize style

Want new experiences

Less price-sensitive than other groups

Popular products

BUSINESS MODEL

Supplier model Sold through TMALL Global TDI store

Fees (Deposit)

Import Lifestyle Supermarket • Platform to Sell High Volume Products • Channel to introduce mature products • Dedicated effort for new products on Flagship Store

Tmall Global – Educate/ Sell/ Engage

Flagship Store: Build Branding and Marketing Billboard

Direct Collaboration with a powerful distribution Channel: Supply Chain Depth / Risk Control

TMALL Global Ecosystem An Overseas Brand’s Ultimate Destination to

Invest in Brand Building / Product Introduction & Sales

FLAGSHIP MODEL TMALL DIRECT IMPORT

B2B B2C

Self managed Tmall Global flagship store Partner with TP to run store operations

Fees (Deposit, Annual, Commission, Service)

Discover New Lifestyle Introduce Brands, Product Variety •

A channel to educate, Customer Lock in • One stop hub to introduce a Lifestyle •

Merchant (together with TP) is responsible for the entire business chain including –

marketing/branding, daily operations, customer service, logistics.

1. Flagship Store Model

Bulk shipping

Bonded warehouse

Store operation

Sale Domestic delivery

Buyer

Managing TMG Flagship Store Via Third-Party Services (TPS)

3rd Party Partner (TP) • Leads execution • Leads daily store operations

Cainiao Logistics • Facilitates cross-border logistics • Provides logistics data & analytical tools

Tmall or Tmall Global • Supports IT and payment infrastructure • Provides access to store data & analytical tools • Provides support for digital traffic • Provides paid marketing solutions (Alimama) • Provides Key Account (KA) support if applicable

Brand Owner or Retailer

• Leads overall effort • Sets strategy • Secures marketing budget • Works with other stakeholders

TPs can be an operating agency on behalf of the brand OR a distributor who also takes inventory

TPs Manage Daily Store Operations

• Create operations plan

• Execute store opening

• Decorate store & input product information

• Operate store on a daily basis: Product management, campaign planning and execution

• Execute day-to-day marketing and promotions: Network promotions, daily consumer marketing, brand marketing

• Provide Customer Service to consumers

• Support logistic needs: Cross-border logistics, warehouse services, courier services

• Provide regular reports: Operations report and analysis

Brands pre-ship goods to Cainiao warehouses in one of six Chinese cities in anticipation of customer order. Fastest delivery option (max. 7 days)

Brands pack, label, and ship goods to Cainiao’s warehouses outside of China after a customer places an order. Cainiao consolidates with orders from other brands. It then ships to China by flight and to the consumer (max. 14 days)

Brands ship goods to Cainiao’s warehouses in Hong Kong or Australia before order takes place. Consignment model. Cainiao picks, packs, labels, and ships the goods once consumers place an order.

Brands ship goods directly from country of origin to the consumer. Brands could use non- Cainiao services (DHL, FedEx, etc.). Not recommended because delivery times cannot be guaranteed

Logistics Powered by

Bonded Warehouse 1 Consolidated Shipping 3

HK/AU Fulfillment Center (GFC) 2 Direct Mail 4

Branding

Merchant to ensure for delivery of goods to a warehouse of TMG

choice (Incoterms – CIF). Merchant is also responsible for branding and marketing on and off the platform.

Tmall Direct Import will be responsible for selling the products

on the TDI store and handle deliveries to end consumers.

2. TMALL Direct Import Model

Bulk shipping

Bonded warehouse

TDI Store Sale Domestic delivery

Buyer

MARKETING ON TMALL GLOBAL

. Marketing to Your Chinese Consumers SOME EXAMPLES OF THE TAOBAO APP HOME PAGE AND SELECTED CONTENT MARKETING CHANNELS IN THE APP

Interactive games Deals on

selected items Offline event in Shanghai Celebrity livestreaming In-App promotions

Co-branded with Ferrari Celebrity popular

with young consumers Taobao homepage “Catch the cat” & “Car racing” Deals on 20+ products

TMALL Global as a Marketing Channel • Tmall Global is not a pure sales channel, it’s a place to build your brand in China • Swisse combined cutting edge online and offline marketing for its Super Brand Day

One “Super ID” Personalized User

Experience Across all platforms

Taobao & Tmall Apps Shopping, Marketing, and Entertainment platforms

UC Web 2nd largest mobile web browser

and newsfeed

Youku Tudou (“Chinese Youtube”) Largest video site in China

Weibo (“Chinese Twitter”) Largest microblogging site

Entertainment Alibaba Pictures, Alibaba Sports, Alibaba Music, Tmall TV

Integrated Marketing Channels At Alibaba Digital Media and Entertainment are Completely Integrated into the Market Places

Selected Brands on Tmall Global Supermarkets Department Stores Beauty, Personal Care,

Cosmetics Fashion Mother & Baby

Food & Beverages Health & Pharmacy Fast-Moving Consumer Goods (FMCG)

GETTING STARTED ON TMALL GLOBAL

On-Boarding on TMG – Steps Involved

Assessment & Preparation

1

Store Application

2

Store Development

3

Operation & Optimization

4

Approval Launch

On-Boarding Timeline – Tmall Global

*Actual timeframes may vary

Store Development

Operation & Optimization


Store Application

1

2

3

4

Understand the platform

Provide TMG with brand and product

information

Find and select Tmall Partner (TP)

Develop detailed plan with TP

Submit Store Application Files

Register Alipay Global Account

Register Taobao Account

Receive Store Invitation Code

Submit Company/Brand

Qualifications

Upload information into Cainiao system

Managing TP Building brand awareness

Testing the market Fueling continued growth

Design store & upload products

Sign contract & register with Cainiao

TMG APPROVAL

Ship products (according to service)

2-4 weeks*

2 weeks*

3-6 weeks*

Ongoing

Alibaba: Making it Easy to do Business Anywhere

2 BILLION CONSUMERS

TENS OF MILLIONS OF MERCHANTS

GLOBAL BUY

GLOBAL SELL

GLOBAL PAY

GLOBAL TRAVEL

GLOBAL DELIVER

APPENDIX

TMG Flagship Store – Fee Structure

Tmall Global’s most recent fee structure can be found here: https://rule.tmall.hk/rule/rule_detail.htm?spm=0.0.0.0.34zhwp&id=1891&tag=self

A one-time of 150,000-300,000 RMB is used as collateral in case of

any damages of expenses incurred under the service

agreement with Tmall Global

An annual fee of 30-60,000 RMB,

depending on the category the store’s products belong to

A commission of 0.50% - 5% based on product

categories, plus 1% Alipay service fee per

item sold

Security Deposit Annual Fee Commission Fee

Fix fee and commission structure. Fee and

commission amount varies from TP to TP.

Depending on the mode of logistics,

prices will vary. Bonded warehouse being the

most cost efficient and direct mail the most

costly.

TP Partner Logistics

https://rule.tmall.hk/rule/rule_detail.htm?spm=0.0.0.0.34zhwp&id=1891&tag=self

TMALL direct – Fee Structure

A one-time of 150,000-300,000 RMB is used as collateral in case of

any damages of expenses incurred under the service

agreement with Tmall Global

Security Deposit

East: Shanghai, Ningbo, Hangzhou

North: Zhengzhou

West: Chongqing

South: Guangzhou

6 cities

19 warehouses

400K sq. meters

1.5M packages/day

Bonded Warehouse

Sales forecast

Bulk shipping

Order Payment

Logistics

Electronic Clearance Domestic

delivery Buyer Order

Seller estimates potential sales of products

Seller ships to Cainiao* bonded

warehouse via sea/air using

own forwarder.

Buyer places order which goes to our

system. Warehouse picks, packs and ships out

System matches order, payment and logistics data for custom

clearance.

After clearance, product is delivered

nationwide

Buyer receives product

Once goods arrive at the bonded warehouse, Cainiao takes care of the rest

Bonded Warehouse

Cainiao* Network is Alibaba’s logistics arm

Disadvantages Advantages vs.

Suitable for • Products with stable demand • High turnover • Long shelf life

Bonded Warehouse

• Guaranteed Fast Lead Time Cainiao guarantees that every order will arrive within a week of consumer purchase

• Stable Inventory Inventory is stored beforehand to prevent stock-outs during promotion events

• Lower Total Costs Sellers can bulk ship to local bonded warehouse, resulting in lower transport cost per item

• Low Import Taxes Under the cross border scheme, taxes are at 11.9%

• Inventory Commitment Sellers must allocate a part of their inventory to be placed in China

• Expiration Products that are not sold quickly may expire and discarded

US: L.A & Newcastle

London

Frankfurt

Hong Kong

AU: Sydney & Melbourne

S. Korea Japan: Tokyo & Osaka

Taipei

NZ: Auckland

Consolidated shipping (warehouses outside China)

9 countries

13 warehouses

100K sq. meters

100K packages/day

Consolidated shipping

Order

Buyer places order

Order Payment

Logistics

Electronic Clearance

Domestic delivery

Buyer Overseas warehouse

Air freight Pick & Pack, Outbound

Seller packs, print label prepares product for ship

out

Product arrives at Cainiao

warehouse

Export custom clearance and

freight to China

System matches order, payment and logistics data

for custom clearance.


nationwide


Once goods arrive at the Cainiao warehouse, Cainiao takes care of the rest

Consolidated shipping Disadvantages Advantages vs.

Suitable for • Seasonal demand • New products • High variety, low turnover

• Guaranteed Delivery Cainiao guarantees that every order will arrive within 2 weeks, if not we will compensate the consumer. [brands have to send order to warehouse within 48 or 72 hours]

• Domestic shipping Sellers ship to Cainiao warehouses in their home country (if applicable)

• Pilot Testing For new products, sellers can test market demand before committing to a bonded warehouse solution


• Longer Lead Time Lead time is double that of a bonded warehouse in China

• Higher Cost Higher costs compared to the bonded warehouse model

Order

Order Payment

Logistics

Electronic Clearance

Domestic delivery

Buyer

GFC

Air freight Stock,

Pick & Pack, Outbound

Bulk shipping to AU or HK warehouse

Buyer places order on platform

Warehouse receives order and prepares

ship out

Export custom clearance and freight to China

System matches order, payment and logistics data for custom

clearance.


nationwide


Once goods arrive at the Cainiao warehouse, Cainiao takes care of the rest

Global Fulfillment Center (GFC) AVAILABLE IN AUSTRALIA & HONG KONG ONLY*

*As of March 2017

Global Fulfillment Center (GFC) Disadvantages Advantages vs.

Suitable for • Sellers with products in Australia or in Hong Kong • Sellers who prefer to outsource picking and packing • High variety, low turnover products

• Consignment service Cainiao picks, packs, and takes care of the order once goods are in the GFC

• Domestic shipping (AU or HK only) AU or HK based sellers ship to Cainiao GFCs in their home countries

• Pilot Testing For new products, sellers can test market demand before committing to a bonded warehouse solution


• Higher Cost Higher costs compared to the bonded warehouse model

Category

Tax Rate Tax-Free Order Threshold (RMB)

Direct Mail (Logistic Option 4)

Cross Border (Logistic Options 1, 2, 3)

Direct Mail (Logistic Option 4)

Cross Border (Logistic Options 1, 2, 3)

Mother & Baby 15%

11.9%

333

N/A

Food

Apparel & Shoes 30% 166

Electronics

Wine 60% 21% 83

Cosmetics 60% 11.9% – 26.35% 83

Price / Net Weight Average unit price >= 10RMB < 10RMB >=15RMB <15RMB

Classification (Tax Rate) High-end (26.35%) For the masses (11.90%) High-end (26.35%) For the masses (11.90%)

Cosmetics and Skincare category: High-end or for the masses?

Import Taxes by category

Note: Government regulations change often in China. Connect with your Cainiao contact person for the latest rates

On-Boarding on TMG – Steps Involved

Store Development

Operation & Optimization 3 4


Store Application

1

2

Launch Approval

tmall global intro deck · • further build brand affinity and loyalty • entry into southeast...

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