Ahead of Alibaba IPO, Western retailers rush to do ecommerce in China

Julia Q. Zhu is the founder of Observer Solutions, a China-focused ecommerce consulting and research firm, and runs the China Ecommerce Pulse Newsletter. She formerly held management roles for Alibaba Group. She’s @juliaqzhu on Twitter.

As the world awaits the highly anticipated IPO of Alibaba in the US, Western retailers are rushing to establish themselves in China’s ecommerce ecosystem. Today, American fashion brand Calvin Klein is launching a flagship online store on Alibaba’s brand-oriented marketplace Tmall (pictured above).

Just a week ago, H&M took a slightly different approach in its China expansion by launching a standalone online shopping store for China.

Both those moves again underscore the powerful draw of China’s fast-growing online shopping market. Chinese consumers will spend an estimated US$275 billion on B2C (business-to-consumer) sites such as Alibaba’s Tmall and arch-rival JD this year. That’ll rise to US$440 billion by 2016.

Since 2012, a number of major US-based brand names, including Apple, Microsoft, Bose, Nike, Gap, Levi’s, Disney, New Balance, and the National Football League have launched stores on Tmall. Earlier this year, European companies including luxury brand Burberry and ASOS joined Tmall as well.

See: Top Chinese messaging app makes big ecommerce leap with opening of WeChat stores

Companies are adopting different approaches to win the wallets of Chinese online shoppers. For example, British fashion retailer Topshop made a new move last month, striking a deal with Shangpin, a Chinese estore that sells multi-brand contemporary fashion from labels such as Lanvin, La Perla, and Diane von Furstenberg.

Offline-to-online: A young man at an H&M store in China scans a QR code. (Image: Tech in Asia)

Western retailers struggle to decide whether to open their own independent online store in China, or join an existing marketplace like Tmall or JD. However, given that Tmall accounts for around 50 percent of B2C online retail sales in China, it has been winning and is the preferred starting point for most foreign firms entering China’s ecommerce market.

Alibaba lists on the New York Stock Exchange today when Friday trading begins in the US. The company could raise as much as US$25 billion today. The world is waiting to see how influential Alibaba’s Tmall and other online platforms will become in the near term, and in the years to come, and major brands are weighing up how such estores should factor in to their broader retail strategy.

See: Alibaba IPO will make it biggest internet company in China and third biggest in the world