Exploring the China ecommerce market: Three keys to cross-border retail success
By Jonathan Kapplow, SVP Consumer & Merchant Solutions, Pitney Bowes
What does your haitao strategy look like? That’s a Chinese term that translates roughly to “buying overseas,” or cross-border shopping. And it’s a term that many Chinese consumers are frequently using as cross-border ecommerce takes off in the world’s biggest online retail market.
eMarketer estimates the Chinese ecommerce market at $672 billion, but what’s most interesting for retailers is the high percentage of Chinese consumers who shop cross border. Figures from the Chinese search engine Baidu show that the growth of haitao searches (320 percent) far exceeds the growth of searches related to domestic ecommerce (30 percent).
Additionally, the 2016 Pitney Bowes Global Online Shopping Study demonstrated a 20 percent year-over-year growth in the number of Chinese consumers who say they trust out-of-country online retailers. Product authenticity is the leading motivator: 52 percent of respondents cited quality as the top reason why they shop overseas.
It all adds up to significant opportunity for ecommerce retailers who want to sell into China. Getting savvy about this unique market is step one. After recently spending time in-country and getting first-hand experience on consumer preferences and market challenges, here are three recommendations to achieving cross-border success in China:
1. Identify and Emphasize Your Product Strengths
Take a hard look at what you sell and evaluate it against the products that consumers say they most want to buy from international merchants. According to our study, 44 percent of Chinese buyers shop for consumer electronics cross-border, followed by apparel (41 percent), health and beauty products (36 percent) and shoes (35 percent).
That list aligns well with the notion that Chinese shoppers value product authenticity – many appear eager to buy big-ticket items from international retailers from whom there’s a reasonable expectation of quality. If these are areas of strength for your business, China could be the perfect fit as a new customer base.
2. Assume Your Brand is Unknown to Local Buyers
Even if you have product strength, there’s no guarantee Chinese consumers will have actually heard of your brand. Baidu data shows that when conducting haitao-related searches, 49 percent of users rely on general product terms, rather than brand-specific ones. Comparatively, 99 percent of domestic ecommerce searches include brand keywords.
Put simply, Chinese shoppers are much more familiar with their local brands. This is why selling via a domestic online marketplace can be an ideal way to enter the country and build trust. These marketplaces – especially in-country sites like Taobao and Tmall – are hugely popular in China, representing 76 percent of online sales.
3. Develop a Mobile and Social Strategy
Chinese consumers use their phone for everything, especially shopping. According to eMarketer more than half of all ecommerce sales in China are done on mobile, so lacking a mobile solution strategy will hurt your upside. Even if you’re mobile-friendly, you need local testers to ensure the app can be used and understood by Chinese buyers.
Chinese consumers also love social media – as such, your social strategy should involve local support so you can engage in authentic conversations with these buyers. And you can be pretty sure they’ll want to talk to your brand – the average Chinese social user is on nearly 11 platforms, compared to an average of three in the U.S.
Know Your Audience
Above all, international merchants who enjoy the most success in China are those who are able to embrace what Chinese customers already love about their online shopping experience (marketplaces, mobile, social) and develop brand equity on these already trusted platforms. With the right strategy and a trusted partner, your brand can become big business in the world’s most populous country.
To learn more about the results of the 2016 Pitney Bowes Global Online Shopping Study, download the report now.
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