Alibaba: Engaging a Chinese Market
The Coronavirus pandemic has seen a huge shift in consumer behaviour. We spoke to Maggie Zhou, Managing Director of Alibaba Group Australia and New Zealand about how New Zealand brands can effectively engage with a Chinese market, retail and consumer trends that have emerged out of the Covid-19 crisis, and how Alibaba itself has reacted and adapted to the pandemic…
Last year, Alibaba focussed their efforts on NZ and built a local team to help Kiwi brands and producers connect with Chinese consumers. How have you been working with NZ brands, and what success have NZ brands had on the Alibaba platform?
New Zealand is an important market for Alibaba Group for both high quality products exported to China and inbound visitors. Today more than 700 New Zealand brands are selling via our business-to-consumer marketplaces Tmall and Tmall Global and in 2018 we established a local team in New Zealand to better service our clients across the country.
Our New Zealand team’s focus is to help enable local brands, retailers and producers to successfully connect with Chinese consumers and inbound visitors to New Zealand. Building on this success, we were able to successfully introduce our flagship event the Alibaba E-Commerce Expo to New Zealand last year, allowing local companies to network and loop into Alibaba’s wider ecosystem.
There are a number of New Zealand brands which are ranked as some of the top selling products on our Tmall marketplace. For example, during last year’s 11.11 Global Shopping Festival, the A2 Milk Company ranked eighth in the top 10 imported brands bought by Chinese consumers by GMV. In fact, New Zealand ranked 9th of all countries globally for exports into the China market via Tmall and Tmall Global during the festival.
What new retail trends are you seeing in China – from store formats, consumer needs, and how is Alibaba keeping things fresh for consumers?
Especially at this unique time, we are seeing more businesses digitise their offering and connect into e-commerce channels to enable brands to keep up with consumer demand. With this rise in e-commerce, we are also beginning to see new breakthroughs and developments in logistics, aiding retailers to overcome issues of low transport efficiency and high logistics costs.
For example, in 2016 Alibaba brought grocery shopping into the digital era by merging online and offline retail experiences in launching its Freshippo supermarket concept. The supermarkets have soared in popularity with Chinese consumers thanks to its mobile-first shopping experience, 30-minute delivery options and vast selection of products, including live seafood with cook-in-store options. Within a few years since creation, Freshippo has expanded to about 200 stores.
To expand its reach and capabilities in China, Freshippo has been experimenting with new store formats that cater to the needs of different consumers across the county. While the original supermarket concept remains at the heart of most Freshippo locations, the chain started to introduce new shopping experiences to its portfolio about two years after its initial launch.
The Freshippo brand now includes everything from convenience stores and breakfast pick-up stations to even a shopping mall. As a sign of just how quickly Alibaba is moving, five out of the six new store formats were launched in 2019 alone.
There is also a major global shift towards sustainability and this is something that all online retailers need to consider when it comes to tailoring their distribution strategy. At Alibaba we are looking towards a greener future with more comprehensive green campaigns, such as Alibaba Green Logistics 2020. Enabled through world-class technologies, the campaign represents joint efforts across the Alibaba Group to improve material recycling, packaging, route planning and delivery methods to work towards a greener future.
With the onset of COVID19, how has Alibaba responded? And what support have you provided SMEs during these uncertain times?
At Alibaba Group we recognise that COVID-19 has had an unprecedented impact on a range of industries. During this time, we wanted to do anything we could to help minimise this impact on the businesses within our ecosystem and ensure they have the ability to emerge from this stronger than before. As a result, we have introduced a range of initiatives to help SMEs during this uncertain time such as reduced marketplace, warehouse and logistics fees.
Alibaba Cloud, the data intelligence backbone of Alibaba Group, has also launched a Global SME Enablement Program to provide cloud technology relief worth more than USD30 million (NZD50 million) to new and existing small to medium enterprises around the world. This new program will equip each business with the solutions needed to maintain their companies amid the pandemic, ensuring they emerge stronger and more resilient.
Shanghai recently held Fashion Week entirely online due to the pandemic – a world first. What was the response, and how can brands use technology/digital now to engage with consumers?
Shanghai Fashion Week was a huge success with more than 150 designers and brands livestreaming their autumn-winter 2020 collections online. Opening showcases alone on the first day attracted 2.5 million views, with the total number of streams for the event totalling over 11 million views, generating more than RMB20 million (NZD4.7 million) in GMV.
This event has highlighted the importance of brands embracing a new digitally enhanced world. Particularly in China, young consumers are highly informed and digitised meaning brands need to step up their efforts when it comes to technology in order to attract and engage with consumers. During the COVID-19 outbreak, the popularity of livestreaming surged with Alibaba’s Taobao Live recording a 120% increase in sales during February compared to the same period last year.
There is data from China showing online sales for food and consumer goods have increased over the last two months. McKinsey have also found a shift in consumer preferences away from restaurants, and towards groceries & fresh food. What are you seeing through Alibaba’s channels/platforms and what opportunities are there for New Zealand producers and brands?
The healthcare, fresh food and mother and baby categories are always popular categories for imported products, particularly from New Zealand. However, Alibaba has also seen an enormous increase in the sale of quality pet products. For example, during last year’s 11.11 Global Shopping Festival, cat food was the best-selling category on Alibaba Group’s cross-border marketplace, Tmall Global. In fact, this year New Zealand pet food brand Ziwi won the “Trendiest Brand” award on Tmall Global.
Most recently, New Zealand’s most successful and largest pet food exporter won the prestigious award for ‘Trendiest Brand’ at Alibaba’s Trendiest Brand Awards of 2020. Kiwi produce and products are incredibly sought after in China due to their ‘clean and green’ image and Alibaba strives to enable New Zealand businesses to explore new opportunities. There is enormous potential to build on the 700 Kiwi brands already on our B2C marketplaces Tmall and Tmall Global.
Lastly, what advice would you give to Kiwi businesses thinking about their future in China?
One of the most important things to think about when planning for global expansion is for brands and retailers to fully understand their target audience. Simply taking your product into the China market in the same format as it is being offered in New Zealand will often not suffice as each market has different wants and needs.
One of the best things for New Zealand companies seeking to enter the China market is to spend some time to find the right partner. Our annual Alibaba E-Commerce Expo has assisted hundreds of brands in connecting with our wider ecosystem over the past three years in Australia. This is why in 2019, Alibaba decided to expand this offering to New Zealand. Over the course of two-days, the flagship event attracted over 100 exhibitors and over 13,000 pre-registrations were received online, which meant every one out of ten Chinese in Auckland signed up to explore the trends and opportunities that the Alibaba ecosystem brings to the New Zealand market. In addition, our Tmall Global marketplace has a local team who can guide New Zealand brands through the process of opening a Tmall Global Flagship store, and they have recently held their first virtual Tmall Partner (TP) matching event, connecting New Zealand and Australian brands with TPs in China.