The Spanish retailer Inditex SA is set to open an online store on Alibaba’s Tmall for its Zara brand this month to boost its sales among Chinese consumers.
Although Tmall will allow the brand to continue to control its interactions with customers, Inditex will have to “partially cede both oversight of the chain’s Web sales and a share of its profit,” according to Bloomberg Businessweek. Yet it could be the key to an even greater visibility for a brand that has already achieved success in China, as Jamie Merriman, an analyst at Sanford C. Bernstein & Co., explains.
“Retailers, to launch e-commerce in China, are deciding to launch through Tmall because of the breadth of its audience,” Merriman said. “It’s not a question so much about profitability as it is about the potential to expand market share.”
Inditex has 456 stores in China, and the country also accounts for 8 percent of the company’s sales. Before the brand decided to open a Tmall store, Zara’s China sales were expected to grow “as much as 20 percent over the next few years.” But its website, Zara.cn, is far behind Tmall, the seventh most popular Chinese web destination, in terms of views.
Tmall is China’s largest online retailer, hosting over 100,000 brands and more customers than Amazon.com. It takes 0.5 to 5 percent of sales made on it.
Zara’s attraction to Tmall may also stem from the website’s recent efforts to address the online sale of counterfeit goods in China. Tmall’s “sister sites,” Alibaba.com and Taobao.com, are notorious outlets for fake goods, but Tmall has found a solution: putting down cash deposits to guarantee the legitimacy of their products.
image credit: zara