You should wonder how to set up your e-commerce presence in China and generate traffic to their WeChat store. We’ll now deep-dive into a common problem of vendors selling to China: logistics and shipping to China. China is expanding the scope for cross-border e-commerce because cross-border e-commerce (CBEC) can be better tracked and taxed, when compared to gray-market daigou purchases.
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It has been a great year for the cross-border e-commerce industry in China. It’s clear that the cross-border e-commerce industry in China is becoming more and more complex. Brands and retailers will have to choose an appropriate market entry model, and be more targeted in their marketing efforts. This means narrowing down what kinds of customers they want to reach, as well as what kind of brand image they want to convey to them.
China boosts cross-border e-commerce to bolster imports
China released some details of a new policy on allowing more cross-border e-commerce purchases. The Chinese government’s support for the cross-border e-commerce industry remains strong and policies are likely to be further relaxed. We remain positive on the outlook for the industry and 2019 is a year in which many new opportunities will arise. International Brands and retailers who remain flexible and open-minded will be best positioned to succeed.
Cross-Border E-commerce Platforms
Actually, there are more than a dozen different Cross-Border e-commerce platforms in China such as Jumei Global Store, Daling, Amazon Global, B&G, Kaola.com, Suning Global, JD Worldwide and VIP International, covering every product category. However, the market is still dominated by the best known platform of the biggest domestic e-commerce player, Alibaba’s Tmall Global, which holds more than 27%.
In order to help you in this strategic process of decision, we have put together key details of these alternative platforms that foreign brands can use to start their online sales in:
Kaola is a platform that provides online services focused on selling high-quality foreign products to middle class Chinese consumers with an emphasis on the sale of large-scale products directly to buyers. The app is more popular with white-collar citizens aged 20-40 products categories and has been growing in the last few years. The platform offers different product categories such as Fashion & Apparel, Jewelry & Accessories, Sports & Outdoors, Children’s Wear & Shoes, Home & Personal Care and Nutrition and Health Food.
Vipshop.com or VIP international
VIP international is the cross-border e-commerce platform of VIP.com or Vipshop.com. This platform specialized in online discount sales. Its main strategy is to team up with popular and well-known brands by selling their excess inventory at discount prices. The app has established a great position in China’s online market and discount retail market. Some of its main focus categories are Cosmetics & Beauty, Maternity & Baby, Food & Nutrition, Home & Personal Care, Fashion & Apparel.
RED is one of the largest and fastest growing social e-commerce apps in China. It is an online sharing community which enables users to post their recommendations based on their previous experiences. From that feature it naturally added cross border sales features as well. Unlike other social media, the platform aims to offer more informative and detailed content in order to make it more authentic and build trust with Chinese users. In the past, RED was mainly focused on beauty and cosmetics, however it has been expanding to other segments such as fashion, food, traveling and lifestyle.
2019: A great year for the cross-border e-commerce industry in China
China is expanding the cross-border e-commerce system because it can be better tracked and taxed, when compared to gray-market daigou purchases. Chinese Government tries to make it easier to protect Chinese consumers from fake goods.
The Cross-border is conducting by the Chinese consumption trend
In the past, Chinese consumers have flocked to the same well-known brands that everyone else buys. Despite of the report showing the Chinese slow economy, young professionals in Tier 1-2 cities will continue to spend on higher-quality imported products, specifically those that can enhance one’s health and aesthetics. Now, as Chinese consumers become more and more sophisticated they are beginning to consider imported products that do a better job of catering to a specific need or function. With the rise of Alipay and WeChat Payment, there are now two clear alternatives: Alipay cross-border and WeChat Payment cross-border.
New digital marketing tactics will continue to emerge
In order to make a difference in a very competitive market like China, western brands have to come up with unique ways to connect with customers and build their loyalty. Western Brands are mixing e-commerce with games, live streaming, short videos, and more to stand out from the crowd. We have some examples such as L’Oreal livestreaming Chinese influencers at the Cannes Film Festival on its WeChat mini-program, and Dior designing a Tetris game to promote its lipstick products.
Daigou will split into two groups
China’s new e-commerce law is pushing individual sellers on WeChat and Taobao to obtain business licenses and file tax returns. This includes Daigou agents and smaller Daigou using personal accounts to sell online. They may forego selling and become micro-influencers, helping larger Daigou organisations market products on WeChat, and getting a commission in the process.
More retailers consider other alternatives
Large e-commerce platforms such as Tmall Global, JD Worldwide, and Netease Kaola are procuring their own inventory directly from international brands, and stocking them in bonded warehouses closer to China. In the past four years, Tmall Global has introduced nearly 19,000 overseas brands from 75 countries to Chinese consumers. This means that Tmall Global can provide lower prices, faster logistics, and stronger customer experience. Third-party retailers who sell the same brands on these platforms will find it difficult to compete on price and logistics and may launch their own independent websites instead. More than 80 percent of them were newcomers to the Chinese market.
Smaller e-commerce platforms will continue to fall into Alibaba’s
Chinese E-commerce is becoming more competitive as Alibaba and JD can provide lower prices, wider selection of imported products, and faster shipping when compared to smaller competitors. Smaller players are partnering with Alibaba and JD because they have stronger operational capabilities. Alibaba and JD are partnering with smaller platforms because they are niche-focused and do a better job at marketing to certain audiences. Examples include Little Red Book (Xiaohongshu) contributing product reviews to Taobao and Farfetch partnering with JD.com.
Netease Kaola will set up more offline cross-border e-commerce stores
Offline retail is good for driving brand awareness amongst potential Chinese customers who may not normally purchase cross-border e-commerce products. The great example was the JD’s latest experience center in Chongqing, an offline cross-border e-commerce store that’s opened in recent months. In this store, Chinese customers can browse and test out products, and the products are shipped from bonded warehouses within the same day.
Cross-border WeChat shops built on mini-programs increase in popularity
Chinese consumers have become increasingly drawn to foreign brands via e-commerce platforms. For small brands, WeChat stores are a cost-effective way to build a China e-commerce presence without paying large upfront fees for marketplace platforms or setting up an official Chinese website. For big brands, they can be used for different functions such as launching limited collections, live streaming makeup tutorials, or designing creative games.
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