A new incubator launched in January by Alibaba Group’s Taobao Global platform is providing resources to introduce independent, international brands to millennial Chinese customers, who are showing a rising interest in niche, previously undiscovered foreign products.
Fashion brands like The Kooples and Pinko, and beauty brands like Deciem-owned The Ordinary and MartiDerm, have begun selling in China through Taobao Global after being accepted into the platform’s incubator program. Different than Alibaba’s Tmall e-commerce platform and the main Taobao marketplace, Taobao Global specializes in working with small- to medium-sized businesses not local to the Chinese market, which typically need more of an assist when launching in China. While Taobao Global carries products from more than 200,000 brands, these small international sellers lack the resources to succeed on the marketplace, thanks to differences in supply chain logistics and marketing strategies. The incubator, within Taobao Global, is designed to identify brands who could reach more customers if given the tools to do so.
“Providing a great user experience and customer service has always been Taobao Global’s mission. We believe that sharing our experiences and empowering sellers to uphold great customer service standards will in turn yield increasingly loyal customers,” said Wei Meng, head of Taobao Global. “Additionally, as we lower barriers for new sellers and make it even easier for existing sellers to do business, customers will see a wider variety of international brands and product choices, which resonate with the platform’s growing base of young users who want to discover new products.”
Because 40 percent of gross merchandise volume on Taobao is currently spent on these independent businesses, Taobao Global is expanding the amount of support it lends them. It provides resources around business functions like customer data, search term trends, localized supply chain management, marketing and content creation. So far this year, the incubator has worked with 54 brands, and it plans to accept a total of 365 by March 2019. Brands are chosen by the Taobao Global team based on how well their product and product category is anticipated to succeed in China – Meng said the goal is that every brand in the incubator will generate more than $1,562 (RMB 10,000) daily.
Early incubated brands have seen results. Japan’s hair-care line Megami No Wakka and U.S.-based handbag Welden saw sales improve through Taobao Global after receiving support from the platform around customer data and from Chinese influencers they worked with to spread awareness. Sales of Megami No Wakka’s amino oil shampoo increased from $150 in sales per day on average to nearly $40,000.
Welden, meanwhile, sold $300,000 worth of product in five hours — about 1,000 bags total — by working with Chinese influencer Zoe Zhang on a Taobao Global livestream event. As livestreaming products becomes a substantial revenue driver in China, projected to drive $4.4 billion in direct revenue this year according to Deloitte, it’s also becoming an integral part of how Taobao Global markets its products. Through livestreaming, it’s easy to not only raise awareness, but to help facilitate order fulfillments through shipping and delivery handled by Taobao Global.
“What we’re doing is helping small- to medium-sized American brands that don’t have a lot of resources, and can’t afford heavy investment in building a customer base in China, test the market in an inexpensive and risk-free way,” said Taobao Global buyer Mark Yuan to Glossy in a previous interview. “The livestream is a 3D, interactive experience where the customer is engaged.”
The goal is that using Taobao’s customer data, trend insight, livestreaming and other influencer marketing capabilities, content creation and order management and fulfillment services, these brands will gain the legs of their own to sell through other e-commerce channels in China, like Tmall. So, Taobao’s team of buyers are hand-selecting the brands they think are poised to become permanent sellers in the region.
“Our criteria are simple,” said Meng. “We draw insights from customer activity on our platform to evaluate a category and then an individual brand’s likelihood of success in China. The brand’s interest is also very important. We want to work with brands that want to supercharge their growth in China’s growing market.”