How does Alibaba shape its brand

Alibaba boss Karl Wehner: This is how the online giant is helping in China

“You don't just go to China, you need a strategy,” says local Alibaba boss Karl Wehner. In an interview, the manager explains how German exporters can reach around 500 million affluent consumers in the country and reveals where the devil is in the details.

Share this articleMr. Wehner, what does a German retailer have to do to get their products listed on Alibaba?
Karl Wehner: It is important to understand that Alibaba provides the technological infrastructure for digital trade and advises and accompanies companies on their way to China. Brands and retailers design their shops completely freely - in the style of their own brand. That is what sets us apart from others.
Karl Wehner has been Managing Director for Germany, Austria, Switzerland, Turkey and Eastern Europe at the Alibaba Group since July 2017. Wehner has over 15 years of experience in e-commerce and sales and began his career in online trading at Amazon Germany in 1999. There he introduced the Amazon Marketplace in Germany and was responsible for the launch of the Amazon credit card.
Hardly anyone here knows what a good shop in China should look like. How much input do you give?
On the one hand, every brand has its own corporate identity. This should be retained. Required adjustments are more about questions about the target group or customer segments. These are different in China than in Germany. We help the brands in an advisory and accompanying role in order to find the right local partner and serve as a central point of contact for everything to do with China.

And are you the central point of contact in Germany?
Not just me, of course. But we are not a "listing service" - that means that every retailer is completely free to design their presence on our platforms, not just listing their products on our interface. For the design you need an agency to implement it. Basically like opening a webshop in Germany. However, the tasks of an implementation agency in China are much more extensive, because these agencies, so-called Tmall or Tradepartner - TPs for short - are not only responsible for the technical design of the shop, but also for the design, marketing and customer service, i.e. also for the day-to-day business.

Our users access our apps an average of eight times a day and spend around twenty minutes with them. These are numbers that we previously only knew from social media. For Chinese consumers, shopping is pure entertainment.

Karl Wehner, Alibaba
What do the Chinese expect from a website?
Chinese consumers deal with brands differently. The customer asks a question in the chat in the app at 8.30 p.m. He expects the answer within three to five seconds.
 
What are such questions about?
Often it's about authenticity and origin. When pictures of the company headquarters or the managing director are shown, the question may arise whether it is really the managing director or an actor. The more authentic the footage, the better.

What else do western brands have to consider?
The brand has to position itself in China without losing its own history. For German brands in particular, history plays a very special role from the perspective of Chinese consumers. So you have to learn - also with the help of your partner Alibaba - to understand which products are the right ones for China. That can differ from products that are successful in this country.

So you are a development worker for the market and a partner agent for the technical implementation?
Exactly. The platform for the B2C area in cross-border business is called Tmall Global. It is ideal for dealers who do not have a physical presence in China. Here, for example, the products are supplied to Chinese consumers from Hong Kong. Ultimately, you need a partner like the TP we recommend. We have our own partner evaluation team for this, we call it the TP management team. Depending on the brand that is to be offered on the Chinese market, we make three to five recommendations for TPs. Our business development team offers the brand or business partner additional support with questions about what exactly to look out for in each case.
Wehner: "We urgently recommend having a clear idea of ​​strategy, positioning and product range. Is the target group correctly defined, does the product selection suit these customers and have I realized that marketing works differently in China? You have to ask such questions answer yourself beforehand. "
To what extent does the partner take responsibility?
In no case should the implementation partner be left solely responsible for what needs to be done. You can't give that away. China is the most important growth market for many brands. You have to align your resources accordingly. You need a team for this, you should find project managers who can speak Mandarin. The TP (Tradepartner) should be viewed and used as an extended arm, but the brain should stay in the head.

How does the process work if someone wants to go to China? Does he then call you in Munich first?
The company or brand must have done its own homework. Normally you already have experience with Chinese consumers in brick-and-mortar stores. You don't just go to China, you need a strategy. We can't deliver that.

Do you also advise entrepreneurs that they should rather stay in Germany?
No, we don't say that. But we urgently advise you to have a clear idea of ​​strategy, positioning and product range. Has the target group been correctly defined, does the product selection suit these customers and have I realized that marketing works differently in China? You have to answer such questions beforehand.

What do you have to consider with consumers?
Apart from language and culture, the demographic data in China also differs significantly from Germany. The affluent class in China comprises around half a billion people, almost all of whom are under 35 years of age. These are completely different requirements for a brand.

Fast facts on Alibaba

  • On Singles Day, November 11, 2017, goods with a total turnover of almost $ 18 billion sold.
  • With approximately $ 500 billion Alibaba is arguably the largest marketplace in the world.
  • Dream return soon 30 percent.
  • Chinese online trade is growing by 20 percent and more every year. For example, e-commerce in the Middle Kingdom is likely to use the brand of $ 900 billion have cracked.
  • Depending on estimates, the share of the various Alibaba marketplaces in the country's online trade ranges between 60 and 70 percent.
  • Unlike Amazon, Alibaba operates no own goods store, with a few exceptions, no own warehouse and no fleet of trucks.
  • The link between online trading and stationary business is called Alibaba "New Retail". The 25 Hema fresh food markets in Beijing and Shanghai are full of technology and offer every conceivable form of omnichannel shopping with delivery services around the clock.
How does that show up, for example?
A brand defined a certain color for itself. Now the Chinese New Year was just around the corner. So the implementation partner recommended designing the background in deep dark red, the traditional color for the New Year celebrations. Since the red color is not part of its own corporate identity, the company initially resisted it, only to finally follow the recommendation. The conversion rate, i.e. the ratio of page views to orders, rose immediately. The color played an enormous role.

Where else is the devil in the details?
For example, when a provider has to accommodate the topics of shopping and entertainment at the same time. Our users access our apps an average of eight times a day and spend around twenty minutes with them. These are not your usual e-commerce numbers, but numbers that we previously only knew from social media. For Chinese consumers, shopping is pure entertainment.

Are Chinese customers more critical than Germans?
The Chinese customer is much more technologically savvy. The demands are very high, both for authenticity and for quality. But the stirrup also has to be hung lower in order to get consumers to try something in the first place. Today's class of buyers in China did not get any experience with brands from their grandparents and parents. We all grew up with brands like Persil.

Alibaba- These companies are part of the ecosystem (selection)

  • Alibaba.com is active in 200 countries and is the world's largest B2B wholesale marketplace; supplemented by the Chinese wholesale 1688.com.
  • Tmall Global is the platform for western exports to China.
  • Taobao: largest shopping search engine in china.
  • Alimama: Online advertising and marketing.
  • AntFinance with the payment service Alipay is the tenth largest bank in the world. Many European retailers offer Alipay for tourists from China, including Kaufhof and Rossmann.
  • Cainiao: In China, 60 million parcels are sent every day via the logistics network.
  • amap.com: Online map service via 8AutoNavi.
  • Alitrip, Fliggy: leading online travel platform (joint venture with Marriott Hotels)
  • Tao is the search engine for price comparisons, vouchers and hotel prices.
  • Alibaba Digital Media & Entertain Group ("South China Morning Post").
  • Alibaba Sports Group
  • WTP: Electronic World Trade Platform (including hub for overseas shipping in Malaysia).
  • Aliyun, Alicloud: Cloud computing (including data centers in Dubai, Tokyo, Sydney and Frankfurt).
Does the lack of experience with brands make the Chinese more interested in private labels?
On average, a Chinese consumer spends ten minutes on the side of a product that he has never ordered. There is comparatively little information on this in Germany. And more than thirty seconds is way too long for most of us. Chinese people scroll up and down, watch videos, look for information about where something comes from, how and what it is made of. You have to tell a lot, bring in your history. Any additional information is helpful. The desire for quality is just as present. That is why “Made in Germany” is in great demand.
dm is represented with a number of brands
Do you give recommendations on pricing?
No, pricing and product selection are part of the business plan. Chinese customers are well informed today. You take a close look at what an imported product costs in the country of origin or elsewhere. They find out within a few minutes, there is a direct price comparison between China and Germany.

How does the logistics work?
That, too, is in the hands of the branded goods manufacturer or retailer. You can pack and ship the order directly from here. This is the most complex and expensive option. Then there is the consolidation in a warehouse, as with the Cainiao partner Hermes. Cainiao is our logistics division. There is also the option of shipping the goods from a warehouse in Hong Kong. The “coronation” would be a bonded warehouse on Chinese territory. And then Alibaba trucks drive through China?
Our Cainiao platform orchestrates almost 60 million parcels every day. But we don't have our own logistics, no trucks, no warehouses - with a few exceptions. We work with service providers on the last mile. If we were to employ all these people ourselves, we would have to employ 1.5 million people. Alibaba sees itself as the technological foundation that enables others with its infrastructure to participate in the market. We don't want to control everything. Then the speed would fall by the wayside.

Alibaba does massive data analysis. What insights does the German company bring?
The Alibaba ecosystem, including the Youku video portal, Didi the transport operator and the Alipay payment system, provide more than just commercial data. The brands that work with us can fall back on this. A customer receives a uniform digital identity across all of these services. This is unique. A brand can thus address selected customers in a more targeted manner.

Does that also work in the omnichannel business?
For us there is no longer any separation between online and offline. We call our concept "New Retail". Under this roof, we are also digitizing stationary retail, including the 25 Hema fresh food stores. But for us it is not about bringing stationary sales into the online world. We use our data for a seamless transition in the shopping experience. Just a few years ago, Alibaba was completely unknown in this country. That has completely changed. How did you do that?
Long hard work (laughs). Above all, it is because we keep what we promise. We have built an ecosystem with the wheels interlocking. And China is a growth market. There are around 700 million online users. Over 500 million are active Alibaba customers. We are therefore in a very good position.

You can read more about Alibaba in the current issue of "Der Handel".

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