We’ve seen some small to medium sized brands consider testing China’s ecommerce market with a Taobao store before investing heavily into a Tmall store. If you’re not very familiar with Alibaba’s platforms, you must consider the unfair advantage Tmall has over Taobao. Brands must capitalize on every opportunity available to them in Tmall. Here are some ways Alibaba plays favorites towards Tmall stores.
Tmall stores are given much greater visibility in Taobao search results. The results are in a way “rigged” so that Tmall stores receive top priority in securing the most valuable positions. The top 3 most valuable positions are referred to as DouFuKuais (DFKs) in the industry. The direct translation would be “Tofu Spots”, so we’ll stick with DFKs here.
The significance of Tmall stores having greater access to DFKs is far greater than simply being more visible. DFKs have proven to be worth more than any of the next 40+ listings. In some cases, DFKs are worth more than the next 40+ all combined.
Note: Although Tmall and Taobao are two independent platforms, more than 90% of all traffic for any given Tmall store still originates from Taobao, more specifically the Taobao app. This is because consumers 90% of users only use the Taobao app for all their shopping, where Tmall is deeply integrated into Taobao. Only a tiny percentage of shoppers use the independent Tmall app.
The Catch: This all sounds like great news until stores actually try to secure those DFKs. Despite having priority to these valuable search positions, Tmall stores must go through extremely tough competition to prove their worth. That’s because DFKs can only be earned, not bought. Brands and retailers must employ a sound strategy that can consistently grow sales in the long term.
It is also crucial to have a solid optimization strategy. There are countless variables that can be optimized and you need to pick the right battles rather than going after every fancy optimization trick out there. You need to go for the low hanging fruit, which can hugely differ between stores. For example, reducing product offerings could improve search visibility because inventory turnover is a factor in Taobao’s search algorithm. However, what works for one store may have little to no impact on another so it’s important to pick a good optimization strategy.
Alibaba has a wide range of events happening all year long and most of them are promoting items sold by Tmall stores.
Note: An “event” in China’s world of ecommerce means any promotion or marketing campaign. This includes the biggest shopping day Nov. 11, aka Double-11 or Singles’ day as well as any of the smaller ones like Women’s day, Father’s day, Back-to-school etc. Most of these are free traffic and some have a separate registration fee.
Singles’ day is actually branded as a Tmall event, not Taobao. There are promotions that get front page exposure with a curated list of items hand-picked from Tmall stores. Taobao stores often don’t even get to be a part of these high profile events.
Singles’ day sales is beyond anything seen in the US. Countless brands are earning millions of dollars on that day alone in Tmall and they rely entirely on getting the exposure through prime screen real estate.
That doesn’t mean Taobao stores are entirely deprived of major events. They still get to participate in significant events like daily deals which run all-year long. Even in such events, most of the items come from Tmall stores. Although not as high profile as major platform-wide events, daily deals serve as a very healthy contribution to a Tmall store’s ongoing monthly sales.
The Catch: Everyone knows that the front page featured campaigns will get insane amounts of traffic. With demand skyrocketing for limited spots, Tmall event managers are flooded with requests from brands for the best event spots. As a result, brands are often forced to further reduce event pricing just to be able to compete with their competitors’ Tmall stores.
Contrary to popular belief, getting placement in top tier events isn’t merely a matter of asking nicely. Communication with event managers need to take place several months in advance, showing offer packages attractive to target consumers, backed by guarantees on logistics and promising sales numbers from past events. Failure to execute will result in being blacklisted for future events.
Among Tmall stores, brand flagship stores have a unique advantage. The words “flagship store” and “official flagship store” are all strictly reserved for brands and their authorized partners only. These words coming from a Tmall store are super powerful because it is widely known that flagships are not selling fakes. Companies need to go through an extremely labor intensive paperwork process to set up a Tmall store, and flagship stores especially need to prove that they represent the brand itself. In a market full of fakes, Tmall store owners must use those words in the store name, rather than try to use a fancier name.
Even if you’re a retailer with a non-flagship Tmall store, you’d have authority just by being a Tmall store for having gone through similar paperwork. Besides, Tmall was created in 2008 to become a place where consumers could feel safe about the authenticity of the things they bought. It was during a time when Taobao was being overrun with fakes. Based on that alone, it’s no surprise that Alibaba continues to play favorites for Tmall stores.
Exclusive Access to High ROI Ads
Tmall stores have the option to use a type of banner ad that produces an ROI far higher than any other existing paid traffic source. It’s called Ming Xing Dian Pu (MXDP) and it is a banner ad that shows up in the search results page when a customer searches for a brand name. The thing is that this ad shows up BEFORE any of the search results. It is far more valuable than the top 3 search results and only brand flagships and their approved retailers qualify for this.
On a mobile screen, it is the first thing that shows up taking a third of the entire screen. These ads are able to capture traffic for the Tmall store way better than all other options available… and only Tmall stores get to use this.
Spending on this type of ad is limited by the number of people that search for the brand name. But there is no catch to this type of ad so brands must maximize spending on this.
We have seen some smaller brands consider starting with a Taobao store to test the waters. Given the way Alibaba favors Tmall, there should be no question for brands: Tmall is the way to go. There is no way to get a glimpse of a brand’s potential with a Taobao store alone. A serious up front investment is required for success in ecommerce in China. Without enough budget, it is not even worth investing in a Taobao store.
Fortunately, Alibaba’s ecosystem has countless indicators that can be leveraged to make a sound estimate of future potential. With the right data strategy, you can gauge where your brand stands today in relation to your competitors and prepare a successful launch in China.