This article describes different Cross-Border ecommerce platforms, provides a summary of the main benefits of using some of the popular platforms.
China’s e-commerce market is the largest in the world and already represents more than 40% of the total global e-commerce spending. This year, China’s Singles’ day set a new record with US$30.8 and 27% growth when compared to last year. In the next four years, Chinese online sales are expected to reach US$1.8 trillion which will be more than double the size of the US market.
Image: eMarketer/The Economist
The fast development of the Chinese market combined with a large and growing digital user and consumer base has contributed to a rapid growth of domestic online sales as well as cross-border e-commerce. In part, the concerns about the safety of domestic products have pushed consumers to look abroad for brands with a strong reputation and a focus on quality. Furthermore, Chinese consumers are becoming more aware of international brands, which reflects the increased demand for overseas products. It is worth mentioning that high-quality food, cosmetics, healthcare, baby products, and electronics are on top of the list of Chinese online consumers.
Despite this big market and all the opportunities it brings, entering the Chinese e-commerce market is not easy. The Chinese government has been implementing new regulations which make this process complicated and bureaucratic. Besides that, there are a lot of available e-commerce platforms with different characteristics and functionalities, which make the strategic decision to get into the Chinese market even more difficult.
Therefore, small and medium-sized companies that want to enter the Chinese e-commerce market must be aware of both the opportunities and the obstacles of this new market. In addition, it is important to understand the e-commerce platforms since choosing the right one is crucial to boosting your online presence in China! It could be the difference between a thriving success story or a hasty exit.
Cross-Border E-Commerce Platforms
Currently, there are more than a dozen different Cross-Border e-commerce platforms in China covering every product category. In the last few years, a great number of Platforms sprang up, such as Jumei Global Store, Daling, Amazon Global, B&G, Kaola.com, Suning Global, JD Worldwide and VIP International. 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%. Luckily this trend has been changing since smaller platforms are increasing their presence in the e-market.
One clear reason for the success of cross-border e-commerce is the fact that to enter the Chinese online market brands must have a legal presence in China. Of course, some international companies would rather not invest time and money to get this governmental permission. In order to overcome this obstacle, Alibaba Group and JD.com started to run Tmall Global and JD.com Worldwide, their respectively cross-border e-commerce platforms. The major benefit of these platforms is to allow foreign brands to sell their products in Chinese e-market without Chinese business licenses. Besides that, Tmall Global works as the first step into China in order to collect data on the market as well as their consumer.
Currently, many large global brands have their presence on these platforms since it provides high exposure to the market and allows them to benefit from the great platform quality. But it is necessary to mention that is largely compulsory for foreign brands to team up with a Small Partner, which is an e-commerce agency for local operations, such as national delivery, customer service, and domestic warehousing. Additionally, to have a presence on these platforms the foreign company has to pay high management fees and also has to invest great amounts in order to have a real impact. In addition, the application process to start selling your products in these platforms require some product and brand specifications that could make the process harder. All in all, the benefits don’t always outway the cost for every brand, which is why it is great there are other options nowadays!
Competing with the main platforms there are others cross-border platforms such as Little Red Book (RED) or Kaola that have been increasing their presence in the Chinese market. These apps normally specialize in niche markets and smaller brands, which can help to promote a better customer experience and also to make the process of finding early adopters easier. Besides that, users can have a better interaction with the platform posting photos and recommendations which could be crucial to boosting the online presence in China. As these platforms are smaller players themselves, the demands and costs related to operating a shop on there are much less daunting than with the big dominant players.
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.
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.
Little Red Book (RED)
Little Red Book (RED) 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. Previously RED was mainly focused on beauty and cosmetics, however, it has been expanding to other segments such as fashion, food, traveling, and lifestyle. RED is one of the largest and fastest growing social e-commerce apps in China.
Each of these platforms has their own strengths and weaknesses, so it is really important to understand which are the main points that could benefit or hurt your business. Furthermore, depending on your business and strategy in China it might not be recommended to sell on too many different platforms since you will need to allocate resources to manage and promote each one of them. Besides that, each platform has a different application process, rules for their logistics and users focus, which makes it harder to successfully manage different platforms at the same time. Finally, it is suggested to enter the Chinese online market selling a limited number of SKUs, adding volume as your business grows.
As you can see, in order to succeed in China a lot of research, strategy and planning are required. It is also important to be persistent, flexible and creative to adjust to different consumers’ needs. We at AgencyChina are here to help you succeed in China. Feel free to contact us if you are considering entering the market or feel you need to make a change to your current presence in China. We will provide transparent and data-driven support across the market entry, in-market strategy, and operations.