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Chinese Cross-border E-commerce Overview
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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 billion and 27% growth when compared to last year. In the next four years, the Chinese online sales are expected to reach US$1.8 trillion each year，which will be more than double the size of the US market.
The fast development of the Chinese market with a large and growing digital user and consumer base has contributed to a rapidly growth of domestic online sales as well as cross-border E-commerce. Furthermore, the 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,health care, baby products, and electronics are on top of the list of the Chinese online consumers.
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, BandG, 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% shares of the market. Luckily this trend has been changing since smaller platforms are increasing their presence in the e-market.
Competing with the main platform, there are other 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 platforms by posting photos and recommendations which could be crucial to boost the online presence in China. As these platforms are smaller players, the demands and costs related to operating a shop on them are much less daunting than with the big dominant players.
The following are some key details of these alternative platforms that foreign brands can use to start their online sales on.
1. Kaola
Kaola is a platform that provides online services focused on selling high-quality foreign products to the Chinese middle class 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. The platform offers different product categories such as fashion and apparel, jewelry and accessories, sports and outdoors, children’s wear and shoes, home and personal care and nutrition and health food.
2. VIP International
VIP international is the cross-border E-commerce platform of VIP.com or Vipshop.com. This platform is 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 and beauty,maternity and baby, food and nutrition, home and personal care, and fashion and apparel.
3. 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. It naturally adds 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 the 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 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 that you enter the Chinese online market by 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 is required. It is also important to be persistent, flexible, and creative to adjust to different consumers’ needs.