Author: Nick Landon, Managing Director of Royal Mail Parcels, Royal Mail
China is the world’s second largest, and fastest growing, economy. Annual retail sales have grown by almost 15% year-on-year for the last four years, making China the largest eCommerce market in the world. UK brands are enduringly popular with Chinese consumers, and third-party platforms like Tmall can take British products to market quickly and easily. China presents a real opportunity for the UK’s etailers. For those who are looking to access this vibrant, profitable market, here are a few things to consider:
1. Do your market research
Understanding the needs of online shoppers in China is a great place to start and will provide retailers with more confidence in accessing this huge market. That means carefully investigating the target audience and likely demand for specific products. Our Delivery Matters research has been looking at Chinese consumers’ habits and preferences when they shop online, exploring market trends, products Chinese customers buy online, average spend, preference for delivery options, attitude towards British goods, and platforms they purchase from. We found that 90% of online sales go through marketplaces and Tmall represents 50% of all the B2C market.
One key finding is that quality and authenticity are the main reasons why UK brands are so sought after by Chinese consumers, and 60% of online shoppers who have bought from a UK website purposefully sought out UK retailers.
2. Prepare for cultural differences
Social media marketing and peer-to-peer reviews matter a lot to Chinese shoppers. One specific finding from Delivery Matters China highlights the importance of social media marketing to online shoppers. Consumers’ purchasing decisions are largely influenced by what they see on the local social media networks. This includes seller ratings in the e-marketplaces and how the seller’s products, services and logistics performances are being rated and commented on. 82% of online shoppers say seller ratings have a big impact on their purchase decisions*.
3. Check out prices, taxes and custom documentation
Pricing and accountancy are a potential challenge. Etailers might want to quote prices in the local currency, but might also need to ensure they are complying with local regulations on sales tax and other levies. 40% of online shoppers in China say paying in their local currency would make them more likely to shop from a UK retailer*.
Another important consideration is the production of the right custom documentation, as if done incorrectly it could slow down the delivery of orders. At Royal Mail our range of shipping solutions offers an easy solution to produce relevant customs documentation for non-European shipments including CN22/CN23 declaration labels and commercial invoices, as well as the ability to produce local characters for international shipments, including Chinese, Japanese and Cyrillic.
4. Look into your delivery options
Retailers will need to investigate the best way to distribute: direct from the UK or via a China-based fulfilment centre for example. They will need to consider things like network reach, delivery speeds, returns services and, of course, pricing. Online shoppers in China place a great emphasis on speed, delivery status and convenience, with speed being the most cited reason for satisfaction.
Major Chinese third-party platforms such as Alibaba’s Taobao and Tmall can make breaking into this market much simpler. At Royal Mail we have joined the Chinese eCommerce boom with the launch of our store front on Alibaba’s Tmall Global e-marketplace, providing Chinese online shoppers with increased access to premium, authentic and high quality British products. The solution offers British retailers and exporters an accelerated opportunity to access the Chinese market. It removes the challenges that many companies would otherwise face in getting their products into the hands of Chinese consumers, including promotion on Chinese eCommerce sites, local customer support service, customs duties, documentation, shipping and logistics.
5. Use a trusted delivery partner
Knowing who delivers their goods can encourage consumers to shop more from the UK. Choosing a reputable and trustworthy delivery company is hence important for UK retailers to help their shoppers overcome any potential concerns or barriers linked to international delivery. We offer UK online retailers a range of International delivery services and by working with China Post we ensure we have expert and local knowledge within China.
*Delivery Matters - China report, April 2015 - independently conducted by Hall & Partners