While cashed-up Chinese consumers are becoming more sophisticated in comparing and shopping for quality consumer goods online, more and more foreign companies are leveraging this opportunity to grow their retail market share in China by joining or setting up their own online stores. Ecommerce in China is simply too big to ignore, and it makes sense for Australian businesses to consider the move.
Here are 5 must-knows for companies looking at the China ecommerce market:
Companies have three major options to retail online; a single brand flagship store, a multi-brand store, or an online retail portal.
In a single brand flagship store, the company may either own and manage the store itself or commission a third party to manage the store. Sell on a multi-brand store specialising in a country or product category: the multi-brand store is usually owned and managed by a third party or consolidator, and the store will usually either specialise in a country or product category.
Finally, Australian businesses exporting to China can opt to sell to an online retail portal, which works like a distributor plus retailer. This final option is the easiest model for foreign companies while the flagship store route provides the best control by the brand owner. Businesses need to look at their resources and capabilities when selecting the optimal online retail model.
In China, the number one online B2C platform is Tmall, while B2B is monopolised by Taobao. Both platforms are owned by Jack Ma’s Alibaba Group. These two platforms are the best-to-go if companies choose to operate a flagship store or opt for a multi-brand store. For those interested in an online retail portal, JD.com (formerly known as 360buy) is the major online shopping centre.
Ecommerce in China is simply too big to ignore, and it makes sense for Australian businesses to consider the move.
Alipay in China is as popular as PayPal in major western countries. Chinese online consumers usually pay through their Alipay account, credit cards issued by Chinese banks, or with cash upon receiving goods.
Western credit cards are not widely accepted by online retail platforms. To facilitate Chinese consumers’ transactions, a local account and an Alipay account are must-haves.
Chinese consumers are not patient when it comes to delivery times. An efficient and capable logistics service provider will win you repeated sales. Local logistic firms such as Shunfeng, Shentong have outperformed international chains including DHL, UPS and TNT.
To choose reliable online sellers, Chinese consumers tend to search by using the “popularity” and “total sales” ranks on online retail platforms. Such rankings are mostly boosted by aggressive online marketing and word of mouth.
Chinese consumers are also passionate about posting reviews on the products they buy online. Online reviews are the major driver for converting visits to sales. Therefore, online maintenance is a key success factor for selling products online in China. A dedicated “live online” customer service and marketing team will put you ahead of thousands of small players in a huge online platform such as Taobao.
Managing an online store overseas in another language is a challenging task for most businesses. The key success factor is to work with a genuine, capable and committed service provider. While the traditional retail outlets are shrinking, online retail channels are fast-growing and more direct for businesses in reaching the Chinese market.
Sara specialises in international business strategy development, international market development, and business investment in China. She has extensive experience in these areas and previously worked for the Australia China Business Council.
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