Alibaba’s online shopping websites sold 3 trillion yuan ($463 billion) worth of goods this year despite China’s slow economic growth, reflecting the e-commerce giant’s aggressive pursuit of foreign brands.
In 2014, barely half of premium brands in L2’s Digital IQ Index: Beauty China had e-commerce capabilities, and nearly all of them sold products exclusively through brand sites. Now, 80% of Index brands offer e-commerce, mostly through e-tailers such as Alibaba’s Tmall.
Several global brands launched Tmall stores in 2015, including Bobbi Brown, Lancôme, and Make Up For Ever. Listing on Tmall is a savvy strategy, as it allows these companies to defend the brand experience from the pervasive gray market. However, almost a third of Beauty brands in China have yet to establish storefronts on the e-tailer, limiting their ability to protect brand equity.
Announcing Alibaba’s sales figures, vice chairman Joseph Tsai wrote that the company was “at the heart of” China’s new consumption-based economy. As that shift continues, Tmall could become critical for global brands aiming to get a foothold in China.