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Big Business with baby equipment:

The Managing Director of Tmall Baby talks about the significant changes in families and education, a huge market potential and big data at Alibaba

The “Kind + Jugendmesse” – in english “child + youth fair”– in Cologne might sound like a fun event for families. However, those who entered the grounds of the Koelnmesse between 20th and 23rd September 2017 were quickly disabused. 1,232 exhibitors from 50 countries and 22,500 trade visitors presented a quite different picture. What was happening there was big international business.

Innovative, exciting, fast-growing, sustainable and environmentally-aware: this is more or less how the market for childcare and baby equipment could be described. In addition to all these qualities, there was an indisputable international influence on the “Kind + Jugendmesse” — the people in charge were once again able to meet the challenge of positioning themselves as a hub for national and international business, as well as trendsetters. We were lucky enough to get a chance to interview the Managing Director of Tmall Baby, Andy Du, about the latest developments on the Chinese market and the potential for foreign companies.

Think big, think Tmall! The Chinese big player gives insights

Meeting an e-commerce platform (actually the only one of its kind on the entire trade show) at Kind & Jugend was only astonishing to us till the moment, when Andy Du quickly provided clarity with some initial facts and figures: in 2016, China’s total volume of the maternal and infant industry already amounted to 2.4 trillion RMB. With the implementation of the new baby policy, parents will be allowed to have two children if one parent grew up as a single child. This means that the 4-2-1 structure could be transformed into a 4-2-2 model, and the total 18 to 20 million newborns per year are expected to be added by two more million babies. This would mean an increase of consumption of 30 billion RMB and a 13 % annual increase of the industrial volume. The growth momentum of the children’s product market in China is forecasted to grow at a higher rate than the global average.

Generating knowledge from data – on a large scale

Although the retail sector still plays an important role and is also growing at around 10 % annually, multi-channel solutions are becoming particularly popular in China. "With an annual growth rate of over 40 % over the past 3 to 5 years, e-commerce is the driving engine," says Andy Du. According to an e-commerce industry report by Kanta Retail in 2016, 70 % of the B2C market is generated through Tmall. At the beginning of 2017, more than 10,000 brands of moms and kids products were doing business at Tmall, including around 2,000 stores of international brands in baby’s categories such as Danone, Nestle, Friso, P & G, Moony and Kimberly Clark.

And there is clearly no end in sight for the growth, according to the report and market analytics. As part of the online giant Alibaba, Tmall can access large amounts of data and is able to reach out to 90 % of all consumers in the categories "baby" and "mothers". Already more than half a billion Chinese consumers are buying on Tmall and Taobao (another Alibaba affiliate) – 60 % of them are women between 20 and 40 years, which obviously covers the topic "target group". Speaking of target, this is clearly framed at Tmall: "Tmall wants to be the driving engine of the mother and childcare industry in China." At the same time the company focuses on quality, safety, fashion, trends and science-based childcare, which is especially popular with young and highly educated parents.

Benefit from experience: How supports foreign brands and merchants with the market entry

In our talk, Andy Du tells us about the fact that Chinese consumers are highly interested in innovative products and high technology, which is of course not really too surprising since this meets our outside view on Chinese consumers. By far more surprising and of interest for foreign companies is the following: In general, Chinese mothers are very young (90 % of them were born after 1990) and with increasing income they attribute greater importance to stylish and fashionable design. In our conversation, Du once again illustrated the impressive capabilities of Alibaba. With the help of the available data, the customer can be viewed along the entire Customer Life Cycle – hence it’s possible to measure his attention for topics, his buying interests and his actual purchasing behavior. The coverage of traditional and social media provides information about the users of Youku and Tudou (similar to YouTube), Maps, and much more. Anyone who sells via Tmall is able to monitor whether an ad was seen yesterday or last week, and when the last interaction with the respective brand took place, thereby making the relationship to the brand measurable. In the near future Tmall would like to provide more merchants this opportunity – the company clearly positions themselves as a strong partner for a market entry in China and highlights both the sales and growth potential, as well as data technology insights and their long-term experience. Foreign brands do not have to start with a physical store, but can initially offer their products online. Tmall offers support with the launch of an online shop, overcoming of language barriers, being legally compliant and much more. As we asked, which types of costs they roughly take into consideration, Du said that there is nothing to worry about: main costs should be calculated around spendings for marketing and logistics. However, when it comes to marketing it is worth not to be too reluctant, because it helps to get to know Chinese consumers. They have been shopping online for more than ten years now, hence they have high expectations regarding customer service and speed of delivery, says Andy Du.





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