Jacob Cooke: Some of the software that we’ve developed plugs into all of the stores, so we can actually take products, put them in warehouses, and fulfill for JD.com, Yihaodian, or Tmall out of one logistics center. Once you’ve got your legal and licensing details worked out, they really push you towards getting into the platform. It’s a lot cheaper. You do have Tmall logos on every page. It’s very clear. You’re limited in terms of the software and the layout of the page, but that’s the only drawback. That and you can get limited consumer information. Those platforms aren’t really good at what we call closing the loop.
Sramana Mitra: You don’t own the customer. The customer is owned by the platform.
Jacob Cooke: That’s correct. Customers can offer information and about 50% of the time, they do. They will give you email and phone numbers. We can create a newsletter list from that. But they do own the customer. The unique identifier is usually just a username specific to Tmall.
If somebody goes to Tmall and buys something right there and then, they can probably grab the referrer ID. We can know which websites they came from. We can know which ad spend resulted in that conversion. One of the biggest issues that we’re working with a company right now is to try to see, through various tracking methods, how a person comes back a week later especially for the bigger-ticket items that we deal with. It may have a sales cycle of 45 days. They may think about this purchase for a little while before they actually buy it. Those are the times when we lose out on the referrer information. Those are the drawbacks.
The pluses are there’s traffic in the platform you can take advantage of, the guarantee that these products are from one of the most trusted brands in the country, and the consumers on Tmall aren’t as price sensitive, which is great because this can be a very cut-throat market in terms of margin. Plenty of people are willing to buy wholesale, mark it up 3% and put it out to the market.
Sramana Mitra: On a platform site where there’s so many merchants, discoverability is often a big problem. We see that on app stores and eBay. How do you advise your clients to deal with that?
Jacob Cooke: Like any platform, there’s a search bar. Tmall is quite unique. 60% of the algorithm is based on customer feedback. Other than that, a third is the shipping time. Second one is product quality and the third one is the service that was provided by the store. When you go into a store and when you’re thinking of launching, one of the steps is to definitely benchmark all of your competitors in terms of pricing and service. If ratings are out of 5, and competitors are at 4.8 then we need to comprehend the strategies that will bring us to 4.8. Once we get to 4.8, when people are searching for products in our categories, then our results are going to come up first. Other than that remaining 40%, there’s relevance, price, and 30-day returns. If you nail those first three and you do it better than your competition, that’s what’s going to drive people to your store first.