Sramana Mitra: What happens if you’re a new merchant?
Jacob Cooke: If you’re a new merchant, you’re in the sandbox for 30 days. That can be tough. You probably want to focus on pricing for the first 30 days. You also might want to up the guarantee level. Basically, every sector is different. One of the most competitive sectors is clothing. That’s basically what we want to do. We want to go in and benchmark where everybody else is at. You probably want to make a few sample purchases with those guys. You want to be a little bit better. You’ll probably engage our firm, for example, to set those bars for your people with experience to create that fulfillment system.
I’ll give you another example about how competitive it is. The ratings are out of 5. If your rating is 4.7 or lower, it is quite low and you certainly won’t be on the first page. You’ve to be good at what you do. It has to be five-star service. All your warranties have to be honored. You have to be knowledgeable about your products. They’re going to ask a lot of questions.
It doesn’t take very long to generate sales. You can start to participate in the PPC programs that exist within the platform and from there, generate those sales. Once you maximize all of the traffic from inside the platform, which converts quite well to around 2%, you can focus on media buys and other digital marketing techniques that can drive traffic outside the platform into your Tmall store.
Sramana Mitra: In the case of US merchants, when they run PPC campaigns like these, they actually prefer to send the traffic to their own website where they can capture the lead and information of the client. In the case of China, it seems like all the marketing campaign is driving traffic to the Tmall website where you do not have the ability to capture the customer information and have to acquire that customer again.
Jacob Cooke: We’ve developed some technology. We’re working closely with Alibaba to fix these problems. One of the cases that we’re probably going to talk about is Micron. We talked about five year and lifetime warranties on the DRAM products. For example, in order to qualify for those warranties, you do need to register the products. That’s one of the ways that we deal with that issue for those guys. Probably 60% of the consumers register once they’ve made the purchase. Of course, those guarantees can be expensive.
We work with MediaPlex a lot out here too. I don’t know if you’re familiar with them but it’s the same conglomerate as Commission Junction. They’re one of the largest ad serving companies. We’re working with them as well to allow the tracking. What happens is the unique identifier in ad tracking is always IP addresses because those are kept very private to the user name. We don’t know, in a lot of cases, how that user got to the Tmall store. We know the traffic split of the people that got there, so we can do traffic numbers.