Sell Millions of Snacks in China via Ecommerce like Costco

 Now Chinese consumers have more income to spend on better quality foods, snacks in China have become an optimal source for instant satisfaction or energy.

Snacks in China: E-commerce is growing at a lightning speed in China. The growth of E-commerce has been estimated up to 33.3% in 2015 from 2014. According to the National Bureau of Statistics; the increasing figures in E-commerce are much faster than retail growth in general at 10.6%. E-commerce facilitates about 12.1% of all retail sales in China. In a country of 1.37 billion consumers, brands need to incorporate local e-commerce in their business strategy. A well-known example in China’s snack industry, Three Squirrels has played smarter on E-commerce platforms than giant international food companies with bigger budgets.

How well are Snacks in China doing?

The snack industry in China has been growing at a steady pace of approximately 15% annual growth. Its worth was more than 200 billion RMB in 2011, and it’s estimated to be worth 480 billion by 2018.

Why are Snacks in China so popular?

As mainland Chinese consumers have higher income and greater awareness of health issues, they are buying fewer prepared local foods and snacks. Whereas five or ten years ago, instant noodles were an inexpensive source of nourishment. Consumers now look for snacks made from natural ingredients, that have the nourishment and prefer imported snacks. Now Chinese consumers have more income to spend on better quality foods and consume snacks mostly for instant satisfaction or energy.

Snacks in China are doing better than other food items

The growth of snacks in the Chinese marketplace is still significant if compared with its other counterparts. As Chinese customers are getting more aware of health issues caused by sugary items, the growth rate of sweets and chocolates has declined to about 10% since 2004. Another key player in the local snack industry, instant noodles are also declining at a fast pace due to the high quantity of sodium and preservatives in them. Preserved Fruit juice and soft drinks have seen their growth rates halved in the last three years as now Chinese consumers prefer to drink fresh juices. This shows a very strong trend change in the Chinese industry, where Chinese consumers still need snacks for instant energy boost due to their busy life schedules but now are making more aware and healthy choices.

International Snack Brands have a higher market share than local snacks in the Chinese marketplace

As International snack brands are perceived as having better quality, they are dominating China’s snack market. The top 10 snack brands are Want-want, Kraft Foods, LIWAYWAY, DANONE, Wm Wrigley Jr Company, Dove, ORION, Xufuji, and Jiashili. Of these brands, Wang-want and Xufuji are Taiwanese, accounting for 20% market share. Kraft Foods, LIWAYWAY, DANONE, Wm Wrigley Jr Company, Dove, ORION occupy 50% of the Chinese snack market together. Xufuji and Jiashili are domestic brands, and though they together account for 20%, they still attain less than half the market share in China’s snack industry.

 Why International snack Brands need a strong presence on E-commerce platforms?

According to Brian Negley, Vice President of Nielsen China “The connected commerce era is here,”. “Consumers are no longer shopping entirely online or offline; rather, they’re taking a blended approach, using whatever channel best suits their needs. The most successful retailers and manufacturers will be at the intersection of the physical and virtual worlds, leveraging technology to satisfy shoppers however, wherever and whenever they want to shop.”

This statement emphasizes International snack brands, to have a presence on the E-commerce platforms, as Chinese consumers choose to shop from both online and offline mediums.

What do International Snack brands “must-have” to enter Chinese E-commerce platforms?

As China’s E-commerce market is not the easiest one to enter due to the language barrier, cultural differences, and strict policies of e-commerce platforms but there are solutions offered by key players in the market to facilitate international brands to enter and be successful on Chinese E-commerce platforms.

Solutions for International Snack brands to Enter Chinese E-commerce Market

There are two vital approaches to enter and be successful on Chinese E-commerce platforms. Branding and presence on well-known e-commerce platforms of China.

 Branding

Nearly 50% of Chinese respondents say they are already ordering grocery products online for home delivery (compared to 25% globally) and more than half (52%) are willing to purchase online in the future, according to the new Nielsen Global E-commerce and the New Retail Survey. To capture the attention of these online shoppers the International brands need to have a strong presence on E-commerce platforms. This entirely needs to understand the habits and patterns of Chinese consumer shopping. The local digital marketing players in the Chinese market are pro at it. It’s best to reach out to them for helpful advice.

Presence on Chinese E-commerce Platforms

To enter the e-commerce market of China International brands must learn the policies of digital platforms. This includes TMALL, JD.com, Haitao, Taobao, and WeChat (social e-commerce)

Entering the Chinese E-commerce market via TMALL or TMALL Global

TMALL holds the biggest market share in the e-commerce market of China at 57%. It mainly focuses on premium brands. This characteristic makes TMALL the most expensive e-commerce marketplace in China. For Chinese consumers, high price indicates high quality therefore many customers prefer buying their products from TMALL.com TMALL is owned by Alibaba Group. It provides an opportunity for international brands to open exclusive online stores and directly sell products to Chinese consumers without being physically present in China.

TMALL has an invitation-only policy where only qualified international brands can either be invited to join or can apply through a certified third-party agency (TP). For more information on how to sell International products through TMALL, please contact a local digital marketing agency.

Apart from the aforementioned formalities the brand needs to have a strong digital marketing strategy catered towards Chinese online customers. The International brands need to gain visibility and build E-reputation in order to have a successful presence on the TMALL platform.

Entering Chinese E-commerce via JD.com

JD is China’s largest online direct sales company. It relatively has less market share than TMALL.com. It operates seven fulfillment centers and 166 warehouses in 44 cities. JD.com has 4,142 delivery stations across several districts of China.  International companies can open individual online stores on JD.com and brands are permitted to import food, beverages, apparel, and shoes from overseas. JD’s cross-border service, JD Worldwide, enables suppliers to sell directly to Chinese consumers without a local presence.

JD.com is less expensive than TMALL.com. It provides active global promotion of JD Worldwide (mainly in the U.S. and Australia) and supports in-house logistics services.  JD.com has a zero-tolerance policy for counterfeit products.

Apart from the aforementioned formalities, the international brands are expected to have Chinese consumers catered digital marketing strategy to attract targeted customers.

Entering Chinese E-commerce via Haitao Web Interfacce?

There are several cross-border websites that cater to international brands. Chinese consumers prefer buying imported food products from Haitaos. To learn about which Haitao is suitable for your brand please contact a local marketing agency catering to International food brands.

Entering Chinese E-commerce via Taobao

Taobao is owned by Alibaba Group. It offers the largest C2C e-commerce marketplace in China. Taobao allows registered or non-registered businesses to sell directly to consumers. It has more than a million sellers, along with countless product categories. Establishing a store on Taobao is virtually free but the online marketplace is ruled by small sole sellers who compete fiercely on price and honesty and authenticity is an unwritten rule of their trade ethics. Sellers with low budget and low-quality products opt for this platform. However, this platform is not the best one to sell food items just like all other well-known and trusted online platforms in China. Taobao also needs strong digital marketing skills to be visible to online customers.

Entering Chinese E-commerce via WeChat Official Account

WeChat is engrained in the lifestyles of Chinese consumers. It is an all-in-one app that integrates social e-commerce seamlessly. There are three types of service accounts available for promoting a business on WeChat; WeChat Subscription Account, WeChat Service Account, and WeChat Enterprise Account. Businesses present on WeChat via the aforementioned accounts can broadcast information to their followers. The information post can be shared, reposted, or generate comments by the followers.

WeChat Subscription Account:

A subscription account is the most basic version of all official WeChat accounts. It can be used to push information to the followers. The messages sent to followers are grouped in one folder containing all other subscription accounts that the user is following. It is generally used for daily news and information broadcast.

WeChat Service Account:

WeChat Service Account is considered the most suitable for businesses and organizations that aspire to access advanced WeChat Official Account. Service accounts allow more APIs (Minisite) than Subscription Account and companies are enable to build their own application, get inquires, and broadcast promotional content to their followers. With the help of a Service Account, one message per week and 4 messages per month can be sent to the followers.

WeChat Enterprise Account:

Enterprise Accounts are also called Corporate Accounts, these are mainly used for internal company use, for example; sharing memos, private group chat, or a simple project and task management system. These accounts are being increasingly used within Chinese organizations. These accounts are secure and followers have to go through an authentication process, unlike other WeChat account where gaining followers is the primary goal.

WeChat Official Account Guidelines

The WeChat accounts formed to target Chinese users must be registered inside China or else they will not be visible to Chinese users. Possessing an Official WeChat accounts requires a legal Chinese entity, a Chinese Residence ID, and A China mobile phone number. International companies are advised to partner with an expert Digital Marketing Agency, which is willing to apply for an official WeChat account on behalf of the international company. Together with opening an official WeChat account, it requires sound and expert knowledge of the market and digital strategy to target the right customer group and successfully penetrate the WeChat landscape.

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Would you like to learn more about China’s snack market, and how your snack brand can step into a gigantic Chinese E-commerce platform, you can reach us for a friendly discussion and learn about your snack brand’s prospects in the Chinese e-commerce market. Our Digital Marketing agency provides International Brands with tools that are optimal to unlock this enormous market to earn their full potential and multiple sales with millions of users. If you are interested in exploring Chinese Digital E-Commerce platforms, reach out to us for customized advice.