2013/14 Fall Semester Marketing in China Presented by: John Ho 何炜亮 Sam Miura 三浦修一

Background

• • What’s Tmall ( 天猫 )?

A Chinese B2C online shopping platform Operated by Alibaba Group 2

Alibaba Group

Type Industry Founded in Area Served Private Internet, e-commerce, computer software Hangzhou, China (1999) China and overseas Alibaba Group primarily operates in the PRC, and in March 2013 it was estimated by The Economist magazine to have a valuation between $55 billion to more than $120 billion.

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Affiliated Entities

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In Tmall, you can find…

Chinese Brands Global Brands Luxury Brands 5

Market Overview

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Online B2C Market in the World

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The growth of E-commerce B2C market 3 times 8

Number of people doing online shopping in China (per 10,000), 2012 9

Trade volume of e-commerce in China (per RMB 10,000), 2012 10

Chinese Market Composition 11

Company Overview

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• At present, Tmall is the 8 th 47 th and the most visited website in China and the world respectively • Tmall is the biggest B2C online website in the world 13

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Market share in China 15

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Revenue Sources

Deposit from sellers Annual service fees Advertisements Fines charged from rule breakers Outsourcing Expertise 17

Strategic investments in other Internet enterprises in China  Xiami Music  Sina Weibo  AutoNavi  Qyer.com

 Tianhong Asset Management Co.,Ltd 18

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Why could Taobao beat eBay in 2005?

Alipay system Name registration & Real brand verification Evaluating system Chinese demand for “Security” Tailor-made webpage design for Chinese customers

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Alipay

Select goods, and buy Buyer Notice about the goods arriving Send the goods Seller Release the goods’ fees

Why could Taobao beat eBay in 2005?

Alipay system Name registration & Real brand verification Evaluating system Chinese demand for “Security” Tailor-made webpage design for Chinese customers

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Name registration & Real brand verification

Why could Taobao beat eBay in 2005?

Alipay system Name registration & Real brand verification Evaluating system Chinese demand for “Security” Tailor-made webpage design for Chinese customers

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Evaluating System

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Evaluating System

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Why could Taobao beat eBay in 2005?

Alipay system Name registration & Real brand verification Evaluating system Chinese demand for “Security” Tailor-made webpage design for Chinese customers

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Why could Taobao beat eBay in 2005?

Alipay system Name registration & Real brand verification Evaluating system Chinese demand for “Security” Tailor-made webpage design for Chinese customers

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Product

• Alipay system – usable for almost all Chinese banks and international credit cards • Wide range of goods/services • Consulting service to sellers • Comprehensive and reliable system to resolve arguments and complaints 30

Price

• Diversified price levels • Competitive pricing compared to physical flagship stores 31

Place

Producer Agent End customers • Tmall itself is an agent • To producer: Low establishing costs • To customer: Easy comparison of prices offered by different sellers 32

Promotion

• Pull Strategy: Double 11 33

US $ 3.1 Billion US $ 5.7 Billion 34

Promotion

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Sales Promotion

Group purchase/ limited sales discounts 35

Promotion

• Internet promotion • TV commercials • Ad boards in metro stations 36

Strength Weakness

1. A large number of member to enhance brands’ visibility 2. The largest B2C websites with the most diversified kinds of brands 3. Mature and practical features 4. Alibaba Group provides comprehensive service coverage in E commerce 1. Single language interface 2. Not user-friendly for elders or people lack of IT competence 3. Replicability of it own innovated system act as sample to other competitors, creating threats for itself 4. Constraints entering global market

SWOT Analysis Opportunities

1. Expanding e-commerce industry 2. Popularization of computer 3. Quick infrastructure construction in China, i.e. better transportations, urbanization 4. Inflation and lower purchasing power 5. B2C market is growing remarkably

Threats

1. Traditional, middle-aged or elder Chinese don’t trust the “Internet” 2. Competition leading to loss of profit margin and growth rate 3. Customers do not recognize significant differences between Tmall and its competitors 4. Too large number of shops opening poses challenges on monitor and management 37

Competitors

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Competitors

Tencent

− QQ Wanggou (QQ 网购 ) − PaiPai ( 拍拍网 ) 39

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Competitors

JD (formerly named 360buy)

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New Market Plan

What is the biggest challenge to Tmall at the moment?

Intense competition in the market – market share has been decreasing in recent two years Proposed new market plan’s purpose: To observe the market trend and react to the market demand. Differentiate Tmall from other similar competitors. Ultimately strengthens the loyalty of current and new users so as to avoid losing market share.

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New Market Plan

• Delivery Service Develop own courier services Example: 2013 Nov 11 Tmall – “Shopping Carnival”( 购物狂欢节 ) JD – “ Not only Cheap but

Fast”

( 不光低价 快才痛快 ) 44

New Market Plan

• Delivery Service Develop own courier services Long delivery time / Delay Untrue product description Fake product Cannot return goods/ get refund Lose of the goods during delivery Additional expenses Others

Reasons for buyers’ anger/ dissatisfaction in their online shopping experience

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New Market Plan

• Change in buyers’ demographic and thus the target audience

Age

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New Market Plan

Change in buyers’ demographic and thus the target audience

Grade 9 or below High school Bachelor Above bachelor Education Level

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New Market Plan

• Rising popularity of mobile e-commerce 48

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