Author: Julian Wallis, UK&I Country Manager, Ingenico ePayments
China is a challenging market for Western retailers to expand into, but a rise in living standards means consumers there are increasingly willing to look beyond their borders to find high-quality products, such as nutritional supplements and cosmetics, at the right price. According to a recent report in PYMNTS, a quarter of the Chinese population will be shopping either directly on overseas websites or through third parties by 2020. The most popular shopping destinations for online cross-border sales are the US, Japan, South Korea, Germany, Australia and the UK.
Plenty of retailers have struggled with their expansion into China, but with the right strategy, merchants will enjoy great success. Despite its phenomenal growth, the Chinese market’s most exciting days are still ahead of it: Alibaba, the country’s largest online retailer and marketplace, is aiming to serve two billion consumers and support 10 million businesses within the next ten years.
Singles day (11th November, or 11.11) is China’s biggest shopping day of the year and is expected to eclipse last year’s £9.3bn worth of sales by a considerable margin. Alibaba recently extended its 24-hour sale to an incredible 24 days and most of these payments will be processed though Alipay.
Mobile payment transactions, for example, are expected to lead the eCommerce boom in China. According to a 2015 Forrester report, 25% of respondents to a survey reported that they shop via mobile phone on a weekly basis. Merchants need to offer this or risk losing out to rivals that do. $383bn was spent via mobile devices in China last year alone.
The importance of Alipay, the most popular e-wallet service in China, cannot be overstated. The brand boasts over 800 million users and processes more than 8.5 million transactions every day.
However, payments go beyond Alipay in China. Cash on delivery is extremely popular, while it’s also essential to offer Union Pay as well as other popular local payments providers. Why? A variety of payment options shows a high level of customer care and will help reduce cart abandonment.
There are six critical pillars of online retailing that must be addressed in any successful international strategy: localisation, logistics, payments, mobile and multichannel, social media presence, and fraud prevention.
When considering an expansion into China, merchants must be prepared to navigate the cultural, regulatory and fiscal minefields that may present complications. Payments will be central to meeting this challenge. Merchants should ensure they can offer the key platforms, but take care to adapt to local variations and preferences. China’s market, both within and outside the country, will only continue to flourish – adapt to its users and you will too.