Carmaker Tesla became the third major company in recent weeks to set up an online-only business in China by announcing Tuesday it is partnering solely with Alibaba for its first foray into the mainland market. Tesla follows Costco and Miss Selfridge in having no physical presence and bucking the traditional mindset of opening a large flagship store in a tier-one city like Shanghai to create awareness and buzz, followed quickly by an e-commerce launch and the rolling out of a few smaller stores in other locations. It is a tried-and-tested method that's worked well for companies from luxury fashion houses to fast fashion success Zara but a number of brands are throwing out that rulebook. Tesla is selling its luxury electric cars on Tmall, allowing consumers to place a 50,000 yuan (HK$63,200) deposit and order the electric car through the internet. It's a smart way for Tesla to save on upfront investment in a market that behaves very differently, according to Seton Vermaak, head of strategy for digital marketing agency Razorfish. "It's very expensive to open a store. There's a lot of investment," Vermaak said. "E-commerce has reached a point now that it's good enough to use it as a test ground. Why not be first do the online shop, research, test it out, get a better feeling for the marketplace and then follow it up with a physical store down the road?" Also newly launched on Tmall is warehouse-club chain Costco, which delivers to mainland consumers directly from the US within five to 20 days. In September, Sir Phillip Green, the Arcadia Group retail mogul behind Topshop, introduced Chinese shoppers to its younger sister brand Miss Selfridge via premium fashion e-commerce site Shangpin. "Topshop is their biggest, best brand and it certainly has, if you look at what Sir Phillip Green has done … he's put most of his effort into Topshop. From that point of view that Topshop is the one they're willing to invest in. Miss Selfridge has always been a less exciting, smaller brand than Topshop," OC&C Strategy consultant Richard McKenzie said. Last year, China surpassed the US as the world's largest digital retail market. Chinese shoppers spent 1.3 trillion yuan (HK$1.638 trillion) online, a sum that has grown more than 70 per cent annually since 2009 and is expected to reach 3.3 trillion yuan by next year, a Bain & Co report said. The key obstacle for these online-only ventures is in building brand awareness. Although the target buyer for a company like Tesla is young and probably very much into technology, it's harder for a less sexy proposition like Costco which faces intense competition in the hypermarket segment from players such as Yihaodian and JD. "It will be tough for a new online international brand to come here and not have a physical place to meet them but the Chinese are way ahead of the world in social commerce. They rely on peer to peer, on each other more than anyone else in the world. They are going to use social proof to form a bond with that brand," Vermaak said. Retailers also need a strong partner who can offer traffic volume and then something more. Shangpin for instance, is offering to style 1,000 looks or outfits across its brand partner to help customers connect products to an actual lifestyle. Does this mean these brands will never set up stores on the mainland? Not necessarily, McKenzie said. It's more a reversal of the steps in how they penetrate the market. "They will learn what sells well, learn the level of demand for it and then decide what level of investment is appropriate. It's an experiment and a bit of learning. If their idea is to go mainstream on e-commerce alone, I think it'll be a disappointment. If they're seeing how big of an opportunity it is, I think it's a quite smart thing to do," McKenzie said.