Tmall has introduced a string of game-changing beauty retail technologies including its virtual make-up application table and its online beauty assistant. Now, TMall has raised the retail stakes in China with yet another beauty breakthrough. Its online skin testing technology lets you take a single photo and receive a detailed analysis of your skin’s age, sensitivity, and type. Based on your results, TMall then recommends customized skincare solutions.
Cosmetic News recently had a chance to discuss Tmall’s strategies for empowering brands with Gu Mai, General Manager of Tmall’s beauty channel, mei.tmall.com. TMall has experimented with a series of technologies that enable brands to create seamless consumer experiences. A growing number of brands also have connected their TMall flagship stores to their own Websites to offer an integrated set of services and offers.
Gu Mai explains, “empowerment, by definition, is fundamentally about exploration of Alibaba’s basic capabilities. The deeper the exploration, the greater the empowerment. It’s mainly about the capabilities of distribution within the ecosystem, follower-based operation, and rapid iteration.”
Distribution Within the Ecosystem: Channel Matrices Online and Offline
Alibaba’s ecosystem covers multiple e-commerce platforms, including Tmall International, Tmall Supermarket, Tmall Direct Sales, and Cross-border Shopping. “Actually, each platform or channel represents a different consumer group. Tmall’s first ability is to provide merchants with a diverse set of channels to introduce brands to different consumer segments. In the future, positioning will be even more accurate.” Gu stresses. As an example, he compares the way that Alibaba’s different channels target different consumer segments to the way that traditional chain stores serve different consumers. Using Tmall’s channels, brands can choose specific channels to enter the Chinese market based on their maturity and development.
Tmall International and Cross Border Shopping channels have sharply reduced the cost of entering China for international brands. Previously, license applications could take 12 months or longer. Trademark disputes were common. These barriers kept many small- and medium-size international brands out of the market. Now, Tmall International allows small- and mid-sized brands to operate on its platform for six or 12 months while it’s applying for the required licenses and permits. After it has obtained local SFDA licenses, the brand can open its overseas store and flagship store. Gu Mai explains that P&G has used this strategy very effectively. “It uses its overseas flagship store as the incubator for new brands. Then it distributes across the ecosystem through different Tmall channels.”
Follower-based Operations: A Key Success Factor for Make-up
Brands that just use Tmall to sell products are missing out on much of its value, explains Gu. “If you only use (Tmall) to sell products, then Tmall does want you driving sales through drastic price reduction. Alibaba and Tmall have many competitors and friends. What sets Tmall apart form other platforms is that we want to be at the forefront of brand management and help our clients develop their brands.” This is analogous to offline franchised counters.
Similar to offline franchised counters, “we can create customized content that targets members and followers. We help brands promote and advertise. All of this can be done within the closed Tmall environment. For example, during the offline doll-machine campaign on Chinese Valentine’s Day, 25 brands, including Estee Lauder and Maybelline, were able to interact closely with young consumers via an offline event while drawing them to their online flagship stores. These types of events can help enhance the brand image and attract customers.”
Gu indicates that Tmall will launch its “second strategy” during the second half of 2017. “In addition to having Tmall flagship stores serve as brands second Websites, we also will offer “double insurance”. Alibaba will provide a high quality channel that provides brands with the benefit of double-insurance.
“In the future, brands will see their Tmall sales exceed their own Website revenue,” Gu confidently tells Cosmetic News. He also predicts that more than 40 brands will give up their own sites in favor of Tmall flagship stores by next August. Then, “Tmall flagship stores will be on par with brand Websites.”
For brands, this the core of empowerment. Brands can identify consumer pain points and work on membership, loyalty, and follower management. Gu cites Magnetic Booster, a product recently launched by SK-II as an example. Before the official launch of the product on its Tmall flagship store, 5,000 units had already been sold on Tmall Brand Day as part of the three-day, pre-sale campaign. On the day of the product’s official launch, it topped RMB 30 million in sales.
Rapid Iteration: Alibaba Brings the Internet Gene to Product Iteration
“Our third ability is to help brands upgrade products, accelerate product iteration, and even develop better products,” Gu says. “From research development, trial, testing and evaluation, and finalization, we have different approaches and teams to help brands. This aligns with Internet thinking and Alibaba genes. This also Alibaba’s greatest strength.
Historically, multinational brand’s product iteration could take 24 months. Even local companies spend 12 months on a product. After this, registration could require another 12 months. So, together, it could take 24-36 months to launch a new product. This created large risks in China’s fast-changing consumer market.
In the past, what consumers liked about e-commerce was only convenience. In the future, consumers want a combination of convenience, superb experience and high quality. Only products with these three attributes will be what consumers really need, and these are in perfect alignment with the three capabilities that Tmall have for brand empowerment.
Gu further adds, ”however, we can now shorten this timeframe to 6 months or less. For younger consumers, this is very good news.” In the future, Alibaba and brands will be use this to provide consumers with a seamless experience and fast access to new products.