Understanding Tmall Partners in China’s luxury e-commerce

Brahm Buck

The following is an edited excerpt of a story originally published on Vogue Business in China. Read the full article in English here or visit Vogue Business in China on WeChat. Few Chinese consumers would notice that when they shop from a non-Chinese brand on Tmall, they are interacting with […]

The following is an edited excerpt of a story originally published on Vogue Business in China. Read the full article in English here or visit Vogue Business in China on WeChat.

Few Chinese consumers would notice that when they shop from a non-Chinese brand on Tmall, they are interacting with a brand’s local Tmall Partner instead of the brand itself.

A typical shopping journey to get a pair of Air Jordan sneakers or Diesel jeans on Tmall looks like this: a style-conscious twentysomething spots a cool social media post, goes to the Tmall product page and clicks on the coupon banner before finalising the order. The order is then confirmed by the e-commerce team, noted in the inventory system, added to the daily sales report sheet, sent to the warehouse team and taken off the stock shelf for package preparation. These steps would be executed and managed by the brand’s Tmall Partner.

By providing e-commerce infrastructure, an agile inventory and logistics system and a robust data centre, TP agencies are essentially international brands’ local e-commerce arm, able to share platform expertise that luxury brands may not otherwise have.

According to a report by iiMedia, 80 to 90 per cent of foreign brands have strong demand for a TP partnership, while only 20 to 30 per cent of domestic brands consider working with one. Navigating through the TP industry’s hierarchical system is not easy. By the first half of 2020, Tmall had 1,086 certified TP service providers, each ranked from one to six stars depending on the range and quality of services. Among them, Tmall recognises 12 “six stars” TP agencies. These super-TPs are much more than an e-commerce firm that a brand outsources. Instead, they act simultaneously as a brand’s e-commerce arm, creative studio, brand consultant, customer service centre and logistic provider.

Filling the millennial China gap

Sandrine Zerbib, founder of Full Jet, a brand-focused TP based in Shanghai, says that luxury brands commonly make the mistake of approaching the Chinese e-commerce market from a Western perspective. “Chinese consumers are different in their purchase intentions and motives, in their interactions with the brand and their expectations,” she says. Chinese luxury customers are younger than in Europe or the US, with online luxury shoppers even more so. Consumers under 30 years old contribute to almost 50 per cent of luxury purchases in China. “Because the consumer is younger, he or she is also keener than Western consumers to shop online as well as to enjoy and share online content,” she says.

Five years after its parent company Kering sued Alibaba for alleged counterfeit issues, Gucci launched two official stores on Tmall in December 2020. (Kering dropped the lawsuit in 2017.) In January 2021, ultra-luxury brand Hermès quietly debuted on the platform. After landing on Tmall, the cultural gap is a daily operational challenge.

“This gap translates in every aspect of the [brands’] marketing mix: from product selection to digital content tonality to the choice of digital channels. It also affects internal processes. For example, the Chinese digital scene requires content production at scale. [Operating on these platforms] means an endless need for visuals, from photos to videos. And this is not what luxury brands’ HQs are equipped for,” explains Zerbib.

The future-proof TP is multipurpose

TP agencies, while valuable, are not a magic solution. After all, TP’s nature as a fixed-term service provider can sometimes go against a brand’s best interests. While a TP agency is inherently sales-oriented, brands usually also focus on cultivating and maintaining their overall image in the market.

Luxury brand Hermès debuted on Alibaba’s Tmall in January 2021.

© Lucas Barioulet/AFP via Getty Images

TPs and brands can also have different priorities and timescales for when they want to achieve them. A TP agency is likely to base its e-commerce plan on short-term operational goals, while brands may prioritise long-term, in-depth relationships with Chinese consumers.

TPs are also, of course, Tmall-specific. But as more e-commerce players become relevant for luxury players in China in the next decade, a Tmall-reliant strategy limits brands’ long-term growth.

To capture tomorrow’s consumers, both TPs and brands should evolve, upgrade and find new ways to satisfy consumers’ growing needs for both efficiency and entertainment.

“Multinationals quickly understood that China’s e-commerce landscape is unique and requires e-commerce expertise, the technical ones as much as the brand-focused ones,” Zerbib adds. Beyond the “hard” IT capabilities needed for an efficient sales operation, brands are also looking for strategic advice and branding services.

Olivier Verot, founder of the Shanghai-based Gentlemen Marketing Agency, corroborates the view on fusing sales and branding skills for a future-proof business. “In recent years, many TPs are offering marketing services, like social media management. We see that pattern a lot, even though it is not in a TP agency’s DNA to work on long-term branding. At the same time, marketing agencies are also offering e-commerce services to brands even though neither distribution nor logistics are in their business DNA,” he says.

In 2019, Alibaba’s Tmall Partner changed to Tmall Ecological Partner, as a step to accelerate the consolidation of the TP service market. “More and more brands want to deal with one player that takes care of everything and assumes responsibility for results,” says Verot.

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