Tmall Overseas Fulfillment (TOF) is an innovative solution provided by Alibaba to help international brands enter the Chinese market with less risk and lower cost. Here are five key points about TOF:
- Low-Risk Entry: TOF allows new brands to test the Chinese market without the need for a local business presence or large upfront investments in inventory and logistics. Brands can send limited quantities of their products to TOF warehouses, where they are listed on Tmall Global for sale.
- Speed to Market: By utilizing TOF, brands can quickly get their products to Chinese consumers. This service leverages Alibaba’s established logistics and distribution networks, significantly reducing the time it takes for new brands to start selling in China.
- Consumer Insights: Participating in TOF provides brands with valuable consumer data and insights. Brands can track product performance, consumer preferences, and buying behaviors, which helps in making informed decisions about potential full-scale market entry.
- Simplified Logistics: Alibaba handles all logistics related to TOF, including storage, order fulfillment, and returns. This simplifies the process for new brands, making it easier to manage foreign sales operations remotely.
- Brand Exposure: Being part of TOF gives brands exposure on one of China’s largest e-commerce platforms, Tmall Global. This exposure can significantly enhance brand visibility and reputation among Chinese consumers, setting the stage for potential future expansion.
Tmall Overseas Fulfillment offers a strategic and accessible path for new brands considering the vast Chinese market, minimizing traditional barriers to entry while maximizing potential reach and impact.
History
In August 2019, Tmall released a long-awaited solution for brands of all sizes wanting to test the Chinese market (See our Register on Tmall Global Guide).
Tmall open to (every) brand?
Not really.
Tmall Global just launched a new application site aimed to attract more overseas brands. Nowadays Tmall Global has over 20,000 international brands.
There are TREE different models for bands on Tmall Global:
- Tmall Global Flagship Store (TMG) – the most popular method: for hiring a Tmall Partner to operate the store and marketing, brands will need to invest.
- Tmall Direct Import (TDI) – is a model for top-selling lifestyle supermarket products.
- Tmall Overseas Fulfillment (TOF) – a retail model for brands with low China awareness.
Let’s have a look at what is TOF, which became a good solution for low-awareness businesses.
Tmall gives priority to “good” brand
- Not new one
- Already a bit popular
- Good reputation
Tmall Overseas Fulfillment (TOF)
TOF is a consignment solution that lets brands sell a small part of products on the Tmall Global platform, just need to place products at one of the TOF centers. So before making a full entry into China foreign businesses have a chance to try out and fine-tune their products. TOF centers now are available not only in China but in the US, South Korea, and Japan, with plans to enlarge into Europe this year.
Advantages of Tmall Overseas Fulfillment (TOF) ?
- Price , is lower than Tmall , process is more simple
- Market Testing: Enables brands to test market receptivity with minimal risk and investment.Rapid Market Entry: Offers a fast track into the Chinese market using Alibaba’s established logistics network.Streamlined Operations: Simplifies logistics, including storage and fulfillment, managed by Alibaba.Increased Visibility: Provides immediate exposure on Tmall Global, enhancing brand recognition in China.
- no management fees, Tmall to everything (and not much)
Cainiao Alibaba Oversea Logistic
Cainiao, Alibaba’s logistic network, will continue to empower its network of bonded warehouses in China to support these new initiatives. The goal is to triple its size to three million square meters in 3 years.
6 Warehouses over the world
Similar to TOF, there is a program that could be another effective way for international brands to achieve about 700 million active customers on Alibaba’s platforms. Brands and providers can take part in Tmall Global’s new Centralized Import Procurement program, which uses six storehouses around the globe to source goods for all the online and offline outlets within the Alibaba ecosystem, such as technology-driven grocery chain Freshippo and Tmall Supermarket.
This model was made for brands with low China visibility. After brands will send their products to Tmall’s overseas storehouse, the TOF team will manage the store and send the product to end consumers. It’s easy to configure the inventory if brands are not able to make a sale because the stock is kept in the brand’s home country.
While it looks like a good method to enter the Chinese market, without enough brand awareness, it’s improbable traffic from Tmall will bring many if any sales conversions, unless the product is a raw commodity (fruits, vegetables, raw materials). A trading floor isn’t the right platform to make brand awareness.
THREE important points of TOF
- TOF uses a consignment model to optimize assortment and simplify the exchange of inventory in the home country
- TOF uses foreign storehouses for direct implementation to consumers providing inventory flexibility and low logistic and storage expenses for suppliers
- TOF is a new collaboration model to contribute to foreign brands targeting the increasing middle-class customer base and test China market for sales ability
TOF: Benefits for merchants:
- Easy exchange and refund of products in the home country
- No extra operational expenses and sales
- Full access to Chinese customers who are looking for foreign production
- Low expenses market entry to optimize and test product assortment
- Versatile calculation possibility: weekly or monthly (in home currency)