China's
Tmall is Alibaba’s business-to-consumer platform where global and local brands set up flagship stores to sell their products directly to Chinese consumers and Ruraltaobao is the relatively new platform Alibaba has launched to turn China’s 600 million rural citizens into online shoppers and sellers. China's e-commerce market is currently made up of 550 million consumers and produced $589 billion in sales in 2015.
This deal is on trend with the increasing number of food and beverage brands and retailers moving aggressively to sell online in China and the growth of cross border commerce for the category (as well as other FMCG and packaged goods) in general. For example, Nestle announced in January that it partnered with Alibaba to sell 67 brands on its sites that are not for sale in brick and mortar stores in China and the result has been a significant uptick in revenue for
According to a joint announcement the deal will also include an “e-commerce food safety initiative” that will be run under the umbrella of the "Mars Global Food Safety Center" (GFSC) in China. From the press statement: “The Center is known for its world class scientific research and has supported food safety education for children in China. Through this partnership, it will bring the world’s leading food safety management research resources to bear for consumers on Alibaba’s platforms." Food safety is of paramount concern to Chinese consumers.
From this deal and others like it we can unpack a number of China consumer truths that are important to marketers around the world, several of which I have been highlighting in these pages and elsewhere for the last three years.
- Food & Beverage, including packaged goods; restaurant; and grocery, is one of the fastest growing and most important consumer categories in China. This truth is driven by urbanization, an expanding middle class, and consumer preferences for the safety, taste, experience and prestige that come with foreign foods and brands
- It will not be long before a significant minority or even majority of packaged goods, imported foods and groceries will be bought online in China, brands who wait too long will be left behind
- Cross border commerce as well as e-com fulfillment from within China gives brands more options than ever to sell to packaged, fresh and imported foods to Chinese consumers
- Across categories but certainly in F&B an O2O (online to offline) and Omni Channel sales and supply chain strategy is mission critical
- I expect food and beverage online sales to be tied in more intimately with online gaming, sports and the sports economy over the next five years and smart brands will investigate and execute on the tie-up up between the industries
If you want to know more about Chinese e-commerce, the food and beverage opportunity in China, cross border commerce and Alibaba keep reading this column, and you can email me at mzakkour@tompkinsinc.com.
