From Amazon in the US to Alibaba in China, e-commerce companies across the globe are going offline with high-tech brick-and-mortar storefronts. Thanks to strong Chinese consumer demand for imported goods, this trend has extended to cross-border e-tailers as well.
Taking advantage of China’s cross-border e-commerce pilot zone system, both Alibaba’s Tmall Global platform and China’s largest cross-border e-tailer Kaola launched physical stores in Hangzhou in April.
Kaola’s location opened on April 28, offering imported cosmetics, personal care, maternity & baby, accessible luxury, electronics, and more. Price listings for products are digital screens updated in real time to reflect the price of the products on Kaola’s online platform. Shoppers can also scan product QR codes in-store to pull up the product on the app or order through WeChat.
Meanwhile, the Tmall Global store opened within a location of department store chain Intime, which is owned by Alibaba. Also featuring scannable QR codes on products, the store selects items in stock based on data analysis of consumer preferences within a 3-km radius of the store and offers same-day delivery.
Gartner L2’s Digital IQ Index: Beauty China finds that beauty brand official store adoption is higher on Tmall Global than Kaola, with 32% of mass brands offering official stores on Tmall Global and 9% operating them on Kaola. This difference exists in spite of the fact that Kaola has the largest cross-border e-commerce market share in China. A wider variety of brands is sold on Kaola, however, with 60% of mass brands and 92% of premium brands distributed on the platform.
China’s development of cross-border e-commerce pilot zones with preferential tariff policies has helped e-tailers capitalize on consumer demand for imported goods that are generally sold at a high price premium. Alibaba has expressed plans to expand its Tmall Global brick-and-mortar presence to other areas with these special zones, including Shanghai, Ningbo, and Shenzhen.
Brick-and-mortar is increasingly a battleground for China’s top e-tailers as they have been expanding their physical store presence. JD.com opened its first offline supermarket 7Fresh in January, following Alibaba’s development of its Hema supermarket chain. Both offer high-tech, digitally connected in-store experiences along with the opportunity to order online for fast delivery. Alibaba and JD.com have also pursued partnerships with existing brick-and-mortar retailers in order to help develop their omnichannel capabilities while accessing a trove of data on consumers’ offline shopping habits.