Mondelez International, maker of Oreo cookies and Cadbury eggs, has struck a strategic partnership with eCommerce giant Alibaba Group in an attempt to expand its footprint in the Mainland China market.
It’s the first such tie-up with a Chinese e-retailer for the US-based snack maker.
The agreement will allow Mondelez to leverage Alibaba’s ecosystem of eCommerce, marketing and logistics companies to better target and engage Chinese consumers. In a statement, Mondelez said the partnership is a “significant step” toward reaching its goal of generating $1 billion in global eCommerce revenue by 2020.
“Snacking is a fast-growing sector for the eCommerce market in China and Alibaba is a powerful partner to help us capture our share of that growth by expanding our distribution channels and improving our brands’ accessibility in both rural and urban Chinese markets,” Mondelez chief growth officer Tim Cofer said.
Mondelez will also increase its investment in it’s existing storefront on Tmall.com, Alibaba’s business-to-consumer online marketplace, by offering Tmall shoppers a wider range of products and launching new products exclusively through the platform. One such product, “Oreo Colorfilled,” which lets consumers design their own Oreo packaging, will launch in May. Oreo Colorfilled was first tested in the US market last fall.
Mondelez said its sales on Tmall – its flagship store opened in 2011 – quadrupled last year, though it declined to offer exact figures. While about 10 per cent of snacks sales in China currently take place online, Mondelez said the channel is expanding quickly and the deal with Alibaba will help to capture a share of that growth.
The announcement is part of a larger move by Alibaba to give merchants selling on its online marketplaces a full suite of services that includes marketing, cloud computing, supply chain management and data analytics. Brands such as Unilever and Germany’s Metro Group have already signed on.
“We look forward to helping Mondelez International fully utilise our eCommerce ecosystem and technology infrastructure to successfully build their brands and effectively reach the 407 million annual active buyers on our China retail marketplaces who are looking for quality international products that Mondelez International provides,” Alibaba Group VP Jet Jing said.
Mondelez China president Stephen Maher noted that both companies also see the importance in targeting China’s rural consumers. Alibaba and Mondelez have aggressive projects to broaden their reach to China’s smaller cities and rural areas and both companies “share the common goal of expanding distribution channels and improving product accessibility,” Maher said.
Mondelez isn’t alone among foreign snacks and candy companies looking to tap the enormous growth potential of China’s consumer market. US chocolate giant Hershey’s also has stores on both Tmall.com and Alibaba’s cross-border eCommerce marketplace Tmall Global. In an interview with Alizila last month, Hershey’s eCommerce director, Sylvia Fu, explained why online sales were a core part of the company’s business strategy.
“At the moment, eCommerce is still a small portion of our total sales in China,” she said. “But this part of the business has a huge potential to leapfrog in the years ahead in light of its rapid growth and huge opportunity.”
*Originally published by Alizila, the independent but Alibaba-funded news service on Alibaba Group global business.