Top Chinese E-commerce Platforms and Fees to Expect

August 11, 2022

The Chinese e-commerce market is the largest in the world and generated €867 billion in revenue in 2019. From 2020 to 2024, the annual growth rate of e-commerce in China is projected to be 6.9%.  Obviously, many overseas companies are tempted to enter the market and cater to millions of potential new consumers. Be it the youngest Gen Z or Chinese grandmas who are eager to spend more during their retirement, with a great product and market strategy it’s a great chance for brands to tip their toes.

👵🏻 Read more about China’s silver generation and their growing purchasing power and habits

This appeals to international businesses as well as the local business community, resulting in cross-border online trade. In 2022, it was estimated that the import e-commerce retail market would be worth close to 559 billion yuan. The most popular e-commerce platforms are Tmall, JD, Xiaohongshu, and WeChat. However, you will see there are plenty more e-commerce sites in China.  

No matter the size of your brand, the first step and choosing the right platform can be paralyzing. Companies quickly realize that the entry barriers to the biggest Chinese shopping platforms are challenging starting with the paperwork to e-commerce fees, steep deposits, and commissions.

One of the most attractive e-commerce models especially for niche or small brands that want just to test the waters would be cross-border e-commerce. Therefore more platforms offer this option now.

In China, cross-border e-commerce is distinguished by the fact that overseas companies are permitted to offer some goods to Chinese consumers online at favorable tariff rates and without the need for a business license. However, solution comes with some limitations we highlight in our previous article but nevertheless, it can be a very attractive way to kick off in China.

🇨🇳 Learn more about cross-border e-commerce and if it’s a solution for your brand

Let’s look at how much it costs to sell goods on these platforms in China, the pros and cons, and see which one can be the best fit for you.

Tmall

Tmall, formerly Taobao Mall, is a platform for business-to-consumer online retail, spun off from Taobao, and operated by Alibaba Group. It’s a highly reputable marketplace where all sellers are verified by the platform. In addition, Tmall has several solutions for brands that want to sell on the platform including cross-border sales.

 

Tmall General:

  • For Tmall general trade, the security deposit is $7,500. 
  • A deposit is required from vendors to open a Tmall store. The deposit is primarily used to ensure that retailers follow the Tmall Service Agreement and Tmall Rules so that expenses are covered in the event that retailers break any rules.
  • To use Tmall, an annual e-commerce fee of $4,500 must be paid. Depending on the merchant’s category, a yearly fee is paid at the time of settlement.
  • Suitable for brands that have Chinese business license.

Registration fee: USD 7,500 deposit + USD 4,500 annual tech support fee

Commissions:  8-12%

 

Tmall Global:

  • Cross-border solution
  • Suitable for overseas brands
  • Doesn’t require a local warehouse in China
  • Access to Tmall’s services including live-streaming and advertising

Registration fee: USD 7,500 deposit + USD 9,000 annual tech support fee

Commissions:  8-12%

 

Tmall mini-store:

  • Cross-border solution
  • Suitable for niche or small brands
  • Listed as sub-store on Tmall direct flagship
  • Suitable for smaller collections or products that can be shipped to China separately (maximum 3 products)

Registration fee: USD 4,500 deposit

Commissions:  4-12%

 

JD:

As Tmall, JD also offers solutions both for brands that have legal entity in China and cross-border players.

 

JD General:

  • When creating a new account, JD.com requests a deposit starting from USD 4,500 and higher.
  • For the majority of categories, the commission is between 2 and 5%.
  • Suitable for brands that are already in China

Registration fee: USD 4,500 deposit+

Monthly fee: USD 150

Commissions:  2-10%

 

JD Global:

  • Through a new partnership between JD and Shopify, merchants on that platform now have access to a new sales channel with a simpler onboarding process and better exchange rates through the marketplace.
  • Fees and requirements appear to be more demanding than Tmall

Registration fee: USD 15,000 deposit+

Monthly fee: USD 1,000+

Commissions:  2-5%

 

Xiaohongshu / RED

  • Suitable for lifestyle and fashion brands
  • Recently, RED tries to be more brand-friendly and lower the commission costs. These do not include marketing expenditures, influencer commissions, or fulfillment fees.
  • Account set-up guide >>> here

Registration fee: Case-by-case basis (normally USD 3,500)

Monthly fee: None

Commissions:  5% (reduced from 20% before)

Recently, we covered another quickly expanding platform dubbed ‘the RED but for men’.  You might have heard of Poizon also called Dewu on the Chinese market.

WeChat Mini-Programs as Alternative to Big Platforms

purchasing journey wechat mini programs

WeChat’s own mini-program-based online shop can be a great solution for brands that are not keen on costly registration fees and commissions. However, on the other side if you decide to go with the mini program you will have to figure out the storage, deliveries, refunds, and other logistics by yourself which the big platforms usually cover.  Due to that, you will need to build the mini program by yourself.

In addition, another amazing advantage of a mini program store is that you are the owner of the data. Also, WeChat users who are already your followers are more known to be more likely to convert to customers and normally the average purchase is bigger than those on other platforms. We covered the pros and cons and how the most successful brands do it on our blog.

🛍 Why selling on WeChat can be better than selling on Tmall and other platforms?

In conclusion, the Chinese e-commerce market is in a fascinating state right now. And platforms are vying to have the best appeal to clients and businesses. However, nothing seems to be offered for free. In other words, brands must invest in order to sell products on these e-commerce platforms because of the publicity and sales they generate. Above all, China’s famous e-commerce festivals like 11.11 called Singles’ Day or 6.18 are a great opportunity for brands to generate more sales.

If you wish to know more about e-commerce and cross-border e-commerce in China or other marketing techniques, please contact our team. We use our knowledge and expertise to help businesses build meaningful partnerships and develop their networks among Chinese customers. For additional information, please contact us at contact@thewechatagency.com.

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What’s New in China This Week?

November 2, 2021

How Chinese Retailers Are Reinventing the Customer Journey

China’s retail sector is both enormous and rapidly developing, with an estimated value of $5 trillion by 2020. It is also heavily computerised. And, as a result of the epidemic, digital has become a strategic priority for all retailers.

The authors draw from their research on Chinese retailers to explain five lessons that Western companies can learn from China as they develop their own digital market offerings:

  1. Create single entry points where customers can access all their potential purchases.
  2. Embed digital evaluation in the customer journey.
  3. Don’t think of sales as isolated events.
  4. Rethink the logistical fundamentals.
  5. Always stay close to the customer.

Link: https://hbr.org/2021/09/how-chinese-retailers-are-reinventing-the-customer-journey 

 

Luxury Brands and 11/11

Alibaba is actively promoting innovative digital retail solutions for luxury brands and is gradually expanding its virtual services and experiences. While the majority of luxury purchasing still takes place in physical stores, online and omnichannel expansion has constantly expanded – according to Bain & Co, China’s luxury internet penetration will increase to 23% in 2020, up from 12% the previous year.

Gucci, Vacheron Constantin, and Maison Margiela, for example, recently teamed with Tmall Luxury Pavilion to expand services previously only available in physical stores, such as membership benefits, sales associate consultations, and after-sales services.

This year’s 11.11 Global Shopping Festival, the world’s greatest retail extravaganza by sales, has over 200 luxury businesses offering a variety of services ranging from bespoke engraving to cleaning and repair services. Other highlights include a digital exhibition, an art presentation by a virtual influencer, Chopard and Cartier showcasing their items in 3D, AR try-on, and top executives joining firms’ live streams.

Link: https://www.alizila.com/alibaba-janet-wang-china-luxury-innovation-1111-shopping-festival/ 

 

China Brands Go Global

Report selected 100 Chinese brands present abroad and analyzed them. The purpose of the top 100 Chinese brands list was to look at consumer brands that have the most direct impact on global consumers – both in terms of sales and (more significantly) in terms of brand/audience impact and potential.

While many of the enterprises have their own websites, the vast majority of sales are made via ecommerce sites such as Amazon and AliExpress. While most brands have official accounts on three or more channels, social media is used more to enhance performance, such as digital advertisements (CPC), rather than to cultivate customer affinity. Brand content and organic growth are underserved because the focus is solely on advertising. Most brands have a small number of followers and a poor level of engagement.

Big event sponsorships: While these high-profile, high-budget endeavours are remarkable, they are often premature vanity projects for brands that have yet to gain traction in the market. These approaches are hoped to be fast-tracks to brand equity.

Link: https://www.talktototem.com/china-insights/china-brands-going-global 

 

WeChat Brand Channel

It’s a partnership between WeChat Pay and Channels; with this step, traffic from offline channels/mini programmes will be sent to WeChat Channels. There are five major benefits of using the Brand Channel.

  1. Turn to Channel’s video after offline payment: When users complete the payment, they will see the Brand Channel button and watch the videos
  2. Reserve the live stream after payment: The brands can add this feature to the payment page, so the users can make a live stream reservation during their payment
  3. Brand hongbao: The brands can send hongbao by QR code, when the users scan the QR code, they will receive the hongbao and use it when they pay the bill. On the receipt page, the users can get in the brands’ channels and explore the dedicated video
  4. Turn to Channel’s video after mini-program payment: The brands can add the Channels’ content in the mini-program page, so when the users browse the page, they can see the video amongst the products
  5. Coupons: The brands can combine the video to the coupon, so the users can watch the video when they get and use the coupon

Link: https://mp.weixin.qq.com/s/ZtJ5Pji6KwcPTMwS51PNEQ 

 

WeChat update version 8.0.16 supports one-click to close personalized advertising

WeChat version 8.0.16 shows an updated pop-up window with revised privacy protection guidelines to advise users of changes to privacy guidelines and information sharing disclosure.

The “personal information and permissions” entry has been added to the bottom of the “WeChat – I – Settings – Privacy” interface.

You can now turn off “personalised advertising” with a single click in WeChat’s “personalised advertising management” and set the switch to “closed.”

It’s important to note that turning off “personalised advertising” does not imply that you’ll never see advertisements on WeChat again. Instead, you will turn off the display of ads that are relevant to you, but you will continue to get broad commercials.

Link: https://mp.weixin.qq.com/s/fV5k4jVUCtvpzjO3UGFVXA

 

One mobile phone number can register multiple WeChat ID

A new function appears in WeChat version 8.0.15, which allows users to quickly register another WeChat signal without an additional mobile phone number.

You must also carry out real-name authentication of WeChat payment if you need to transfer, send, and receive red envelopes and other operations in WeChat without binding your mobile phone number. You are not required to bind your mobile phone number if you need to transfer, send, and receive red envelopes and other operations in WeChat without binding your mobile phone number.

Link: https://mp.weixin.qq.com/s/h5Tlo2NIsfVLlZMpISRbFg

 

Meta’s chief of Metaverse tells us what the future holds for the former Facebook

Meta aims to build solutions to social media problems that have yet to be solved in the future.

Meta has big aspirations for the metaverse. On Instagram, there’s a huge universe of artists, and there are a lot of people creating stuff on Facebook. Virtual commodities will undoubtedly play a significant role in Meta’s metaverse.

Link: https://www.cnet.com/tech/computing/metas-chief-of-metaverse-tells-us-what-the-future-holds-for-the-former-facebook/ 

 

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What Happened in China This Week?

October 19, 2021

Chanel Takes on the Resale Market With One Bag per Person per Year Policy

Chanel limits the number of purchases for its most popular handbags to one of each per customer per year. The move is aimed at preserving the uniqueness of luxury goods, since the resale market has exploded in recent years, with proxy purchasers buying out stocks and diluting the brand experience when reselling to their own clients. Furthermore, China’s second-hand market is expanding.

China is well-known for its vast resale grey market, which is overseen by plenty of daigous. According to BCG estimates, Chinese consumers will spend $35 billion in the global luxury market in 2020, with $28 billion (80%) paid through the usage of a daigou service.

Link: https://jingdaily.com/chanel-limit-purchases-handbags-resale/?utm_source=Jing+Daily+Subscriber+List&utm_campaign=b5b170f8dd-EMAIL_CAMPAIGN_2020_03_12_06_39_COPY_01&utm_medium=email&utm_term=0_8dec01cd8d-b5b170f8dd-408268421 

 

Taobao launches a new feature to embrace Double 11 shopping festival

Taobao launched a new feature called “Planting Grass Machine” 种草机 where users can browse product recommendation reviews that are posted by other users. It’s supposed to help consumers make better consumer decisions based on peer recommendation and it’s supposed to offer more variety of content and reviews than just KOL endorsements.

Any keyword typed in the “Plant Grass Machine” will take the user to a page of relevant lifestyle-sharing content.

Link: https://daoinsights.com/news/taobao-launches-a-new-feature-to-embrace-double-11-shopping-festival/ 

 

Double 11 x KOL’s reality show

In China, Livestream shopping has become a new trend, with more and more firms using it to market their products. This year, Austin, a well-known KOL, debuted a reality show called the Girls’ Offer. We can watch the show on Weibo, the Red and Douyin. During the show, we can see how he negotiates the price with the brands (most of them are cosmetics brands) and how the brands react to the challenges.

As the double 11 is coming, this show is like a teaser. The brands can get exposure before the big event, Austin will enhance his image and bring more traffic to his Livestream thanks to his professionality, the consumers can know in advance which brands will have the best offer for them.

Link: https://video.weibo.com/show?fid=1034:4690150597525601 

 

Tencent’s WeChat to stop routinely accessing photos after a tech influencer publicized the behaviour on Weibo

WeChat’s background scanning for new photos was said to run every few hours and found using Apple’s new “Record App Activity” feature in iOS 15. The company said the behaviour will be removed from the app in a future update, but other apps have been found to do the same thing

Background scanning for new photos “will be cancelled in the new version”, a company representative said. 

In recent years, China’s big tech businesses have been under increasing pressure to address privacy concerns. In 2019, the Ministry of Industry and Information Technology began checking apps for privacy issues on a regular basis. To date, it has identified over 1,300 apps for having too many permissions, illegally gathering user data, and misrepresenting customers.

Link: https://www.scmp.com/tech/big-tech/article/3151762/tencents-wechat-stop-routine-scans-photos-after-tech-influencer 

 

LinkedIn’s China retreat stems from regulatory and competitive pressures as local recruitment platforms prosper

The decision comes only two weeks before China’s Personal Information Privacy Law, which is one of the strongest data protection laws in the world, goes into force. In China, where job seekers and professional networkers have a variety of options, LinkedIn had only made a limited impact.

LinkedIn first entered China in 2014, and with its partial exit, it has become the final big US social media company to leave the nation.

Link: https://www.scmp.com/tech/tech-war/article/3152526/linkedins-china-retreat-stems-regulatory-and-competitive-pressures  

 

Why Brands Need WeChat Index

Based on the official explanation from WeChat Index, there are two main ways:

  • Brands can create related content on WeChat, such as WeChat articles, videos, or advertisements, to increase their exposure.
  • Brands can improve the quality of content that is related to the keyword.

Brands may assess their level of popularity on WeChat and so determine whether they are top-of-mind for Chinese customers by watching the WeChat Index. Brands may also determine the return on investment of marketing campaigns by comparing their WeChat index records to the campaign dates and determining which days have the highest search volume.

Link: https://www.luxurysociety.com/en/articles/2021/04/wechat-luxury-index-2021-social-commerce 

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WeChat for Travel Sector

October 12, 2021

Everyone who has ventured into Chinese marketing knows that WeChat, the mobile app and social media platform with over one billion monthly active users, is the place to be.

WeChat has spent the last decade trying to make its users’ lives easier. In China, it has become a “one-stop” store for social and transactional events.

Businesses can promote themselves on WeChat by requesting an Official Account or partnering with other parties. You can generate content on the WeChat service account and directly communicate with and sell to your followers and consumers if you have an Official Account. Its vast features have shown to be advantageous to many business sectors. 

 

How does WeChat benefit the Travel sector?

 

When it comes to travel, China continues to be the world’s largest outbound and inbound tourism market. In the past years, the number of domestic trips in China surpassed six billion, suggesting a ten-fold increase in comparison to ten years ago.

Travel agencies and hotels must discover innovative ways to give a holistic brand experience to their customers as the new generation of Asian travellers becomes more tech-savvy and knowledgeable.

WeChat & WeChat ads provide the global tourism sector with a real potential to communicate with locals without needing to physically be present in the country.

Some of the WeChat tools that can be leveraged by the travel industry are:

  • Check-In Service

China Southern Airlines has launched a WeChat mobile check-in service that allows passengers to skip the airport check-in wait. Once customers follow the airline on WeChat, they will be greeted with a message and instructions. Passengers must respond to the notification after which they will receive an electronic boarding card that can be printed at the airport’s self-service check-in facilities.

  • Price Comparator Function

On their WeChat account, Shangri-La Hotels is presently offering a price comparison function to help consumers get the best value for their vacation. Customers must choose a destination, a hotel, check-in and check-out dates, as well as the number of guests/rooms. The hotel price comparison search engine will then offer you the best rates for the hotel you’ve chosen instantly.

  • Smart Hotel Room

To improve WeChat customer service and introduce the concept of the Internet of things, Wechat launched this tool. This innovative technology transforms the WeChat app into a remote that allows visitors to manage all aspects of their room, including lighting, thermostats, and curtains, as well as lock and unlock doors. Customers must download the most recent version of the WeChat app, scan a room-specific QR code from the hotel room, and follow the particular instructions to use this service.

 

Other available tools include Online Booking Service, Loyalty Programs, Location-Based Service (LBS), Flash Sales, etc.

 

CONCLUSION

As China develops, the number of Chinese tourists continues to rise. With rising market demand and more inventive business models and development spots, China’s tourism sector appears to have adapted to the current condition of frequent epidemic prevention and control.  

With the help of different tourism fairs and expos, China’s cultural tourism business is recovering, providing more chances and benefits to the global tourism industry.  As a result, WeChat is the ideal medium for foreign tourism organisations trying to reach Chinese tourists.

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