Alibaba’s Tmall Global Site Stumbles
Traffic on Shopping Platform for Foreign Brands Lags Behind Other Marketplaces
Ten months after its launch, the platform, Tmall Global, is failing to live up to this promise, say brands as well as consultants who track online shopping data, in what could be a black eye for China’s best known Internet company.
Traffic on Tmall Global is a fraction of that on Alibaba’s other marketplaces: The site ranks 311 out of roughly 3,500 in terms of popularity in China, while Alibaba’s Taobao and mainland Tmall sites rank Nos. 2 and 5 respectively, according to data provider Alexa Internet.
Foreign brands on the platform say Alibaba restricts them from buying ads. Some shops are selling only a handful of products each month and are considering leaving the site.
A review of the site for The Wall Street Journal suggests about 70% of the stores are doing “almost no volume,” said Jacob Cooke, chief executive of Web Presence in China, a digital marketing agency. “That platform is really going to damage [Alibaba’s] reputation,” he said.
Alibaba, which established the site in February, said it is committed to “helping international merchants succeed in bringing a presence to China through the platform,” but added that it takes time for brands to grow traffic and build their reputation. Alibaba said it doesn’t comment on third-party data.
The company is pushing to bring more overseas brands to its sites. In its IPO prospectus, Alibaba promotes Tmall Global as a way for foreign companies to “benefit from the exposure to the hundreds of millions of visitors” on its platforms, even without a mainland business license, a requirement for listing on Tmall proper. Between February and December, the new platform attracted nearly 5,400 brands.
To sign up on Tmall Global, merchants pay an annual fee of $5,000 to $10,000, along with a $25,000 refundable deposit. Generally, merchants also pay Alibaba 3% to 6% commissions on each sale.
New Zealand health-care products maker Xtend-Life Natural Products began selling its multivitamins and skin-care products on Tmall Global in late September, allocating about 50,000 New Zealand dollars (US$39,000) for first-year marketing. To boost traffic, co-founder Warren Matthews also offered discounts on Nov. 11, China’s version of Cyber Monday.
“The results so far have been disappointing—we’re currently doing a tenth of what we had expected,” Mr. Matthews said. “You need more like $250,000 a year to market your products to make serious headway,” he said, citing feedback from e-commerce consultants.
In the past month, Xtend-Life’s sales—through a shop run by New Zealand Post, the country’s mail-delivery service—include 11 bottles of its Multi-Xtra multivitamins and a box of its Zupafood Greenz nutritional supplement.
The New Zealand Post Tmall Global shop records significant sales on promotional days such as Nov. 11, said Asia marketing director Vallen Han.
Some brands have experienced early success.
Costco Wholesale Corp. , the second-largest U.S. retailer after Wal-Mart Stores Inc., had a “good outcome” on Tmall Global after a launch in October, Alibaba said. For instance, the retailer sells more than 15,000 tubs of mixed nuts and about 6,000 bottles of Cetaphil moisturizing lotion monthly, according to its Tmall site.
Costco declined to comment.
In a written statement before the October launch, the company said it entered Chinese e-commerce because of “tremendous growth opportunities.”
Still, fewer Chinese shoppers go to the site than to Alibaba’s other shopping platforms, in part because products might cost more and take weeks—rather than days—to be delivered because those goods are often shipped from outside China, analysts say.
Alibaba said it has warehouses for Tmall Global merchants to ship goods into China in bulk, which could shorten delivery times and cut shipping costs.
Yuen Wong, one of the founders of X2C-Fashion, an online seller of watches and clothes on Tmall Global, said shops also face restrictions on buying ads, which could hurt sales and lead to less prominent placement for the stores’ products in search results.
Web Presence in China’s analysis for The Wall Street Journal shows that searches on Alibaba’s Taobao and mainland Tmall platforms for 65 products, including goods as diverse as men’s sweaters and printer toner, yield no Tmall Global stores in the top 110 search results, suggesting merchants on this site lack visibility.
Alibaba said it made a “business decision” not to offer paid advertising to Tmall Global merchants now, but merchants can boost visibility by advertising on third-party sites that link back to the platform. Alibaba is also working on ways to make it easier for shoppers to find Tmall Global merchants and their products, said a spokeswoman.
Mr. Wong said his store is doing “better than expected” even without paid advertising, because he sells well-known brands and enlists bloggers to write about the shop.
Alibaba said it has also created business-development teams to help shops expand their e-commerce business and build their brands. The e-commerce company said it has tightened policies to “elevate the requirements and standards for entering Tmall Global.”
Recently, Alibaba has been notifying people that listing on the platform is invitation-only, consultants said.
Alibaba said the platform has always been invitation-only to “maintain quality and standards.”