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  • The Brand Speaks the Truth…

    Post by : expatree

Double 11, the so called “Chinese shopping day” is approaching soon. Doesn’t matter if its Tmall or brand suppliers, even 3rd party agents start going crazy busy preparing for this big day. Store Operations, Marketing, Customer Service, Logistics, Techniques, Accounting- all these aspects have to be ready before this festive day. “Double 11 is a fighting war rather than a huge campaign” It sounds like a joke but to some extent, it’s true. “Double 11” is definitely not a strange name to most long-term resident expats, when we are exploring how it works, most of expats are feeling unbelievably lost and surprised on the complexity surrounding the “specific” local shopping policies that they have never been observed in the western countries. We are frequently questioned by foreign brands, Is it really good enough to join Double 11 even Tmall platform for foreign brands?Well, good question. Before we answer this question, we need to discuss a few facts.

> In 2013, Tmall sales revenue achieved 35 billion RMB within the first 24 hours of Nov. 11, how was this possible?

Thanks to the contribution of demographic division of 1.3 billion people, the Chinese say “If and only if every Chinese gives 1 RMB, you have already become a billionaire”, of course, not all Chinese go to Tmall but there is no doubt that Tmall owns an inestimable individual client database.
 
Not limited to this, good “marketing strategy” helps to create the sales miracle. As we know, brand suppliers who joined the “Double 11” campaign have to follow Tmall policy and offer 50% discount on all products without exemption. Like most Christmas big sales in western malls and supermarkets, consumers are used to saving or setting aside a budget just for the upcoming “special offer” day. Imperceptibly it’s leading to a creation of a potential “urgent marketing”, a purchase demanding all resources at one point in time. To our experience, the average monthly sales in August, September and October are just about 8% against a whole yearly figure. The record figure has been 80% of one-year sales contribution comes from the Double 11 day.

> How much profit margin can a brand supplier achieve on Double 11?
 
In Nov. 11, 2013, one worldwide fast fashion apparel brand rose up to 110 million on sales in Tmall store, to our big surprise, they admitted it’s nearly no gross profit on Double 11. The leverage of cost and profit are lost in the balance, when a brand supplier is suffering the profit margin on a lower unit price, it simultaneously soars in expenses compared to the normal daily life. Due to the heavy traffic, customer service teams have to be doubled even tripled in covering the demand on this day. Therefore, the Human Resource department had a heavy responsibility in new recruitment work. In the other hand, operations and technical team have to work overtime to guarantee no mistakes happen, this results in the high costs that diminish the profit margin.
 
Another perspective, there are more than 2000 well-known apparel brands in Tmall. After the cheerful day of the big sales in the Tmall, the embarrassing arises: “why do local consumers select your brand rather than others?” In a historical report, only less than 20% of brand suppliers gain a yearly profit at the Tmall, the remaining suppliers are struggling to cover their cost margin.

> Is it really worthwhile joining Double 11 even if Tmall is a platform for foreign brands?

Let’s go back this question. “The Bigger, The Better”, these well-known brands easily take advantage of their existing reputation and get more benefits on the Tmall huge traffic. Strictly speaking, “well-known” should be “local well-known”, unfortunately this always gives people a false impression that international bands must be popular in Chinese market without any realistic client basis.
 
Particularly for startup or growing brands, Tmall is a sales platform but not a promotional platform. Not only are the high expenses a factor these young brands cannot afford, but also there isn’t any foundation of market your brand to accumulate own reputation by collecting loyal followers. “In China good promotion is an essential key step. Compared to the cost several years ago, getting a new client is 15 times higher.” said by Gordon, Expatree CEO
 
It seems most foreign well-known brands are showing remarkable prudence in investing in the Tmall. Take advantage of huge traffic volume, they utilize platform to occupy more and more of a marketing share. Considering sales volume rather than profit volume is another voice of marketing strategy. Tmall is an alternative channel after all, brand suppliers expect to handle their own majority channel, mirroring to a high attention on the long-term brand marketing.
 
A good brand consists of several featured elements and you are able to share this brand value with everyone- any word brand can tell you that story. After this discussion, here is an excellent video explaining how a brand gradually developed their marketing message and revealed their message.

Date:2014-10-23 23:27:48
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