As a Tmall business, you need the right strategy in order to ensure you have the right niche when you are selling your merchandise on the site. If you don’t have a target niche and if you are not selling the right product line, it is going to be quite difficult for you to make a profit. For this reason, you have to know who to target, what to sell to them and how to sell to them. There is more than one strategy you can employ when you are trying to set up your account; these are a few options to consider in order to ensure you make a profit, and to ensure you survive on the site.
“The Resale Strategy”
One such strategy that you can employ as a business owner is to purchase products at discount, purchasing through wholesale suppliers, and then reselling them to your customers on Tmall. If you already have a developed niche, this is a great way to ensure you always have the products they are looking for online, and it is also a way to ensure you will find the best deals when you are purchasing the supplies which you will resell to your clientele on Tmall.
One example of working through this model is selling shoes at wholesale. If you sell Nike or Reebok, or any other major brand, as a merchant you can purchase these items through wholesale online sites, or you can purchase through local distributors in bulk for a discounted rate. From there, you can sell these items online, and you can turn a major profit. If you purchase the shoes for $25 each, you can sell them for double, or even a bit more, as they tend to sell for much higher prices through the direct merchant (Nike or Reebok).
Pros of the Resale Strategy
The main benefit of this strategy is the wholesale cost. Of course you need a developed business with Tmall, but if you have the right niche, it is an easy sale to make. These are items that are always in demand; if you have the right sizes, styles and selection in stock, you can easily turn a profit. Another benefit is the ease of transport and delivery. You can have items drop shipped directly to clients, so you will only pay one shipping rate and the rest will be pure profit.
Cons of the Resale Strategy
Like any good strategy, there are always cons to different online businesses. For starters, it is more likely than not that other merchants through the Tmall site are already employing this strategy; this means you are going to have stiff competition, especially in a market like sporting goods, shoes, kitchen supplies and other major items. Again, if many businesses are using this model, then wholesalers may also hike up their prices.
Although you will still pay less, you have to compare wholesale suppliers to ensure you find the best deals. Businesses also have to ensure they do not oversaturate the market. When there is more supply than demand, it is going to result in prices lowering and profits going down as well. So, businesses have to understand there is competition with this model, and learn how to properly utilize wholesale suppliers to ensure the highest profit margins possible.
“The Drop Shipping Strategy”
Another strategy which can be employed is to have items directly drop shipped. You can purchase through third party suppliers, pay them a flat rate and have them ship the goods to your customer directly. As a business owner, this eliminates the need to have warehouses so you can cut back on these costs. It also allows you to eliminate too much stock; you won’t have dead stock sitting in warehouses taking up space. Right when a customer places an order, you will reach out to your supplier and they will ship directly to the customer. Simple, quick and easy.
If you employ this strategy, you must compare drop shipping suppliers. Like the wholesaler, the prices will vary based on who you choose to work with. So, comparing their rates, what they sell and where they will ship to are all factors to keep in mind if you opt to go with this strategy as a business on Tmall.
Buy In the United States
If you plan on selling to a market in China, you can always purchase here in the US. Buying through sites like Amazon, eBay and other mass merchants is a great way to save. Even larger wholesalers like Costco or BJs are great places to find certain items for less. If you have enough overhead as a merchant on Tmall, you will have sufficient funds to buy items in bulk, and sell them to the overseas market. And, because the Chinese consumer is willing to buy US-made goods, they are going to pay a higher price. This means if you pay $50 for items, you can turn around and sell them to the consumer for $75 or more. End result is that you are earning a profit of 50% or higher per sale made.
If you opt to use this sales strategy, quite a bit of research should be done. First off, you want to ensure you are buying genuine goods which are produced by the actual manufacturer. You also want to compare the rates for the different merchants, so as to find the best deals for the products you will resell. And, you have to make sure you find out shipping rates to China, what type of overhead you will keep and how to minimize warehouse costs. These are all factors to keep in mind if this is a strategy you are considering if you will turn around and sell to your consumers through Tmall.
Companies on Tmall
As the world’s largest shoe and athletic clothing manufacturer, the company already has a strong hold on the consumer market. In turn, they were able to quickly penetrate through Tmall and become a leader in sales in no time. By selling shoes, clothing and offering discount sale items, the company is able to make the highest profit margins. Also, with new products being introduced on a regular basis, it is no wonder they are able to earn the highest profit margins when selling goods to the consumer audience. As an official flagship store, not only are they able to sell the different items the company manufactures, but can also sell in varying quantities to their consumer audience.
Another of the most famous sporting manufacturers in the world also employs the wholesale strategy to sell through the Tmall marketplace. Consumers can purchase shoes, clothing, backpacks and other items for a discounted price through the site. The company began on Tmall and also branched out to Taobao, as well as the other sites listed on Alibaba.
By working with the Tmall site, they are able to sell directly to consumers and can also sell B2B through the Taobao network. Additionally, the merchant can employ different sales tactics. From drop shipping to larger businesses or selling at a discounted price to the consumer directly, the major company not only has a stronghold on the market, but also offers a variety of merchandise for discounted pricing to their online consumer base.
Puma is yet another sport clothing and shoe manufacturer, offering discounted prices through the Tmall merchant site. Not only are consumers able to purchase shoes directly through the site, but clothing and other items are also available for consumers to purchase through their site as well. As the world’s leading active lifestyle brand, consumers can choose from a variety of products and will find the best pricing rather than purchasing directly through the company’s site. As a major B2B and B2C merchant, not only can larger businesses purchase through their site on Tmall, but consumers can also purchase directly through their site at a discounted price in comparison to other online sites.
Each of these three merchants on Tmall use the B2C and B2B model. Not only does this give them a larger consumer base, it also allows them to penetrate the market for their niche. By having a set niche consumer, and by having a larger consumer base, sales are simplified and marketing is limited. Not only is it a brand name that the consumer trusts, but the quality of their merchandise also speaks volumes for the product lines that they sell to their consumer base. And, with a vast number of product lines being sold to the consumer, these three businesses are able to turn the largest profit margins, and can easily sell their merchandise, even with limited marketing being performed.
Due to the fact that the companies are already established, entering the Tmall market did not require much work to be done. And because they sell in such high quantities, these merchants can employ a variety of merchant sales tactics in order to ensure the highest profit margins, and to ensure they sell to the largest consumer base possible as well.
What Strategy is Right for You?
In the end, businesses have to consider several factors to choose the right sales strategy. These are the factors to consider:
• Your niche audience. Is it a small niche, or a large niche with little marketing required?
• How will you ship? Drop ship, direct shipping or third party?
• What will your consumer expect when they are purchasing from you?
• How much of a profit do you want to turn?
• Do you have warehouse space, how much and how often will you ship to clients?
These are a few of the questions to ask yourself as a business owner, who is starting up a Tmall merchant account. Not only will the answers to these questions help dictate how much you are going to earn, but also the manner in which you will set up your online site, and how you are going to be shipping goods to your customers.
Regardless of the strategy chosen, these are the factors to consider, and a few different options to choose from, if you do decide to become a merchant, and sell directly to your consumers through the Tmall marketplace.