Reshaping the digital and retail wine offer
Mike Hu shares Tmall’s plans to develop wine offer
In 2017, Vinexpo formed a partnership with Tmall, the online retailer that is part of China’s leading digital firm Alibaba. At this year’s Vinexpo Bordeaux, Mike Hu, president of FMCG at Tmall, gave a presentation during which he explained how the platform could help wine brands improve their business in the fast-growing Chinese market. Vinexpo Daily caught up with him after the session to find out why his company has been reaching out to the global wine business.
YOUNGER CHINESE CONSUMERS (…) WANT TO BUY WINE BUT LACK THE KNOWLEDGE (…) WE PROVIDE THE DETAILED KNOWLEDGE THEY NEED TO MAKE PURCHASING DECISIONS
How can Alibaba help wine companies break into China?
Right now, the majority of wine distribution is offline, through retailers, with online penetration very low. But we have noticed that China’s younger generation is changing its behaviour and doing a lot more purchasing via their mobiles. This is important because soon the mobile- using generation will account for the majority of consumption. So now is the right time for us to have a dialogue with big brands.
Why is Tmall a good partner for wine brands?
Tmall has very high levels of penetration in China, so we believe that we can help wine brands achieve incremental sales. China is a very complicated market so it is important to work with a partner that really understands how it works. A key point to realise about younger Chinese consumers is that they want to buy wine but lack the knowledge to decide which is a good selection. So if we can create deeper levels of cooperation with wine brands, then we provide the detailed knowledge they need to make purchasing decisions.
What kind of partners are you looking for?
It is mainly bigger brands that create a path that others can then follow. Chinese wine consumers on Tmall start with the country – France, Spain, Australia etc and then look at product segments such as sparkling wine. They will then find rankings of the top players.
What can they do to ensure they the best possible engagement?
Any long term strategy starts with the consumer, and whether you are giving them the right product, value and service. In terms of presenting yourself on Tmall, you need more than just the product. You need digital assets to create ongoing communication. In the next couple of months, for example, we will include some live video streaming, because that is a great way of telling a brand story.
Why has Tmall has been opening physical stores recently?
Consumers are looking for something different from physical stores and from online. With physical stores, they want to taste the products, but with online it is more about checking comments, pricing and offers. So our goal is to give them more experiences offline and more content online. Together that is a powerful combination which can encourage them to become heavy purchasers of a brand.
Do you think the wine industry understands what Tmall offers?
I think many of them recognise that China is a big opportunity, but they are not always familiar with how Alibaba and Tmall can work with them. But like the beauty category, I expect they will understand much better in a few years. What we really need is a best practice example that other wine companies can then follow. I remember we had a similar situation with Japanese brands in the beauty category a few years ago. We started working with a Japanese super brand that was finding it difficult to break into China. But after a while we managed to turn their business around in China. So now other Japanese brands know what they have to do to build their business in China.
How have you been interacting with the Vinexpo community?
For the past two years, we have been telling the story of Alibaba’s philosophy – why we are different from platforms like Amazon and how we do business. People want to get into the Chinese market quickly but don’t know how, so we also provide them with the right contacts. Vinexpo is also a great place for us to listen and learn. I am looking forward to Vinexpo in Shanghai, because that might be an opportunity to do some live streaming, so more people can understand what is happening in the global wine business.
Mike officially joined Alibaba group as the General Manager of Tmall Beauty in Jan. 2016. In Dec. 2017, he was named the President of FMCG, covering Beauty, Personal Care, Home Care, Baby Care, Food and Beverage, Health, and Tmall Supermarket.
Mike Hu, President of FMCG at Tmall