What Alibaba/Tmall's change of strategy tells us about the nature of selling to Chinese consumers
2023 traffic has governed the promotional language of the major platforms in China – none more so than Alibaba. With the cost of traffic becoming less and less affordable to the average seller, however, platforms have begun to lose their currency amongst sellers – the only winner for some time, has been Alibaba. But this is changing.
When you walk around China, look at people’s phones – they’re on Douyin for entertainment (and increasingly shopping), and WeChat. The weakness of a traffic-orientated approach is being exposed by Douyin’s growing popularity, which is taking users on a journey from discovery through to purchase. If you compare that with the likes of Taobao, where users enter late in their purchase journey, you can see how threatening this is to Alibaba, whose model has until now lacked the same ability to seed and enable discovery.
Alibaba is responding to this threat with a renewed focus on private channels – it’s about time. While others have talked about platforms for years, those of us in the industry have been seeing a different dynamic for some time – public vs. private channels. The reason for this is repurchase. Marketing expert Philip Kotler once said that the cost of acquiring a new customer is five times that of retaining an old customer. Therefore, those able to move traffic into private channels where they can serve them better, do both better by their customer / user, and simultaneously improve their commercial fundamentals.
Alibaba’s tacit acknowledgement of this reality is a good thing and will support merchants and users. It’s easy to draw attention to a store, but it’s more difficult to keep consumers truly active in the private domain. It requires care over content, customer strategy and a focus on product – all areas that are typically overlooked in the classic TP model and which we have always sought to deliver to our clients.
If you want a partner who is active across all channels – public (Douyin, Tmall, JD to name a few!) and private (pharmacy) – come talk to us.