Charged spoke to Alibaba’s Shirley Song, head of the Tmall Innovation Center (TMIC) to find out more about the retail innovation arm of one of China’s largest ecommerce companies and how it helps ecommerce merchants globally.

What is the Tmall Innovation Center?

Established in 2017, the Tmall Innovation Center is the dedicated retail innovation arm of Tmall, Alibaba’s B2C marketplace. The mission of TMIC is to help brands identify new channels and strategies to tap into the Chinese market using precise market analysis, real-time consumer insights and product concept testing.

TMIC’s range of services include working with brands to incubate products tailored specifically for the China market, to revamping their online flagship stores and curating marketing campaigns.

To date, we have worked with over 2000 brands around the globe. In the year ended March 31, 2022, TMIC helped brand partners to incubate nearly 4,500 new products. TMIC connects brands to Chinese consumers and enables them to get fast feedback as they move from product idea to launch – the TMIC model takes six months, when this process usually takes 18 months. Reducing the duration of the new product incubation cycle not only reduces the cost, but also increases the probability of a real win.

How does TMIC support retailers in China?

Given the scale of the market, and how quickly consumer wants and needs change, product development can be both a risky and costly endeavour. We help tackle these challenges by offering brands consumer insights and tactical solutions to accelerate their product development and ensure a higher degree of success.

We do this through: trend detection – using our insights to form a birds-eye view of consumers’ preferences on everything, ranging from ingredients and flavours to product packaging; consumer co-creation, leveraging the Taobao app to enable brands to directly engage with consumers, collect real-time feedback and adapt products accordingly; testing tools, which sees brands test new products, branding, or prices in a simulated shopping environment and our ecosystem of strategic partners including raw material suppliers, designers, universities and research houses, to provide brands with all they need to launch cutting-edge products.

What consumer insights does it deliver?

Across the Alibaba Group, and through our partners outside of the Alibaba ecosystem, we deliver insights on a variety of product innovation trends. This includes insights on lifestyle-based innovation, hobby-based innovation, and design-driven innovation to name but a few.

For example, in recent months, we have seen that consumers in China are changing their lifestyles and embracing camping. This initially brought popularity to camping clothes and equipment but has since expanded to portable and self-heated packaged food and portable fridges. By spotting these trends early, we help our partners stay at the very forefront of the market.

Can you give any examples of products that have been developed through TMIC?

We are very proud to work with global brands, including Nestlé, Philips and Beiersdorf. These brands are genuine market leaders, driving innovation around the world, but each had their own challenge in-market.

For example, in China, consumers don’t really drink that much coffee – in the US and Europe, approximately 100 cups of coffee per capita are drunk annually, whereas in China it is much lower at 10 cups per capita annually. This is possibly due to the fact that consumers in China don’t like the typical, bitter taste of coffee. Therefore, to introduce consumers – particularly Gen Zs – to coffee, we worked with Nestlé to launch a range of fruit-flavoured coffees and more experiential products.

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This helped capture the imagination of consumers, enticing them into the category and inspiring them to try other coffee products and formats within their broader product portfolio.

Meanwhile, last year we worked with Nivea China, one of Beiersdorf’s brands, to launch two new innovative products – a tiger grass enriched male skincare product for consumers who are staying up late, and a female cleanser for sensitive skin. Both leveraged our insights throughout the entire NPD cycle, including our simulated testing platform. This enabled Nivea to efficiently validate ideas, options, product claims, and designs within just two weeks, rapidly accelerating the product’s speed-to-market.

Finally, together with Philips, we launched one of the first products leveraging a C2B model – a consumer centric approach to new product development. This used our comprehensive understanding of local insights to co-create new products, a Gen Z youth shaver and a portable water flosser, that directly respond to the needs of local consumers.

How can ecommerce brands in Europe benefit from the TMIC?

What we are seeing at TMIC is international brands using China – and our insights-driven offer – to influence broader decision making in other markets, including Europe. For example, the success of Philip’s C2B approach in China inspired its teams in the US and Europe to look at how they can take a more insights-based approach to innovation. Today, Philip’s global teams are exploring their own C2B products, borrowing insights from China and adapting within other markets.

We believe we will also see more TMIC-led products, which perform well in China, venturing overseas. Nivea’s tiger grass skincare product is already being rolled out to other Asian markets with longer-term plans to expand into Europe. This will indirectly drive product innovation around the world, as products become more relevant to the modern needs of consumers.

Do you see insights-led new product development the future of commerce?

Absolutely. Ultimately, consumers respond positively to products, branding, pricing, and marketing, that is relevant to them. By leveraging the power of local insights, brands can create products that are far more relevant and have a higher chance of success. Real-time feedback from shoppers can help brands determine the best price point and messaging that will resonate with consumers the most.

Finally, the world is changing, and brands should certainly look at how they use technology to get real-time insights and rapidly accelerate new product development. I believe we are entering an era of near real-time product development, where products are launched within weeks of a new trend emerging, which will benefit consumers but will require brands to adapt accordingly.

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