What can China offer UK e-tailers?

LinkedIn Twitter Facebook

 

Author: Nenad Cetkovic, COO, Lengow

 

Despite decelerating, China’s growth rate remains impressive, at 7% for Q4 of 2015. Compare that to the UK’s 0.5% growth rate, and China’s retail opportunities seem obvious. Add the fact that the country has 670 million internet users1, more than any other country, and it’s clear to see why online retailers are increasingly expanding into China. The country is now the largest ecommerce market in the world, and estimates predict that there will be over £650bn worth of online sales in 20162, despite the fact that currently, internet penetration remains less than 50%. That is to say, 500 million Chinese people are not yet online, close to the total population of all of the European Union countries, at 503 million. Predictions state that by 2020, the Chinese ecommerce market will be larger those of the USA, Britain, Japan, Germany and France combined (the 2nd to 6th largest ecommerce markets respectively).

 

Opportunities for British retailers in particular are numerous; James Hardy, European Head of Alibaba.com has said that British merchants can attract Chinese consumers by utilising the region’s first-rate reputation for high-quality products. What’s more, China’s key players are beginning to encourage cross-border trade; for example, the Alibaba Group launched its international marketplace, Tmall Global, in 2014.

 

What are Chinese consumers looking for?

It is crucial for online retailers to realise that consumer behaviour in China depends greatly on age, and thus marketing strategies should be suited to their targeted demographic. The older generation tend to more frugal when it comes to spending, whereas young people save less, choosing to spend their money on entertainment, electronics and luxury brands. This younger group are the most interesting for e-tailers, as 60% of online shoppers are between 19 and 35, and they often rely on social media to discover new trends.

 

Retailers should also be aware of the three main factors which influence Chinese buying behaviour. iResearch’s recent survey revealed that the preferential purchasing condition for over 34% of Chinese customers is price, followed by convenience and trust. Consequently, it is key that online merchants provide a smooth purchasing process, to both reassure and satisfy the customer, with a customer service team that remains reactive despite the 7-8 hour time difference.

 

What risks should you be aware of when selling in China?

It goes without saying that online retailers will encounter logistical difficulties when delivering to China. Unfortunately, the growth of China’s mail service does not match that of its general ecommerce market. This lack of high quality logistics can cause multiple issues for businesses, from lost parcels to late deliveries, which can prove disastrous in a country where such a large emphasis is placed on trust. Therefore, retailers must find a reliable third-party logistics provider to make sure packages are delivered safely, and on time.

 

Businesses should also adapt their payment methods to suit the Chinese market, or risk losing customers. 49% of online transactions are made through the Alibaba’s payment service, Alipay, so be sure to offer this option. Retailers also risk losing customers if they do not recognise China-specific national holidays. The two most lucrative retail holidays are Chinese New Year and Single’s Day on 11th November, neither of which are celebrated in the Western world. In 2015, customers spent over £71bn during the Chinese New Year period, and Alibaba generated $14.3bn worth of sales on Single’s Day alone. Considering 33% of Chinese consumers bought items from international brands during the 24-hour event, it is crucial that international retailers market their products for these specific events.

 

How do Chinese e-commerce giants compare with eBay or Amazon?

In most countries, Amazon is the ecommerce leader, dominating the market share. However, in China, researchers estimate that Amazon only has 1.5% of market share, and is instead overshadowed by Alibaba. Having realised that they cannot compete with Alibaba in regards to domestic B2C sales, Amazon now markets itself in China as a way for Chinese retailers to sell internationally, thanks to its Amazon Global Store Initiative. In a similar vein, eBay tried to enter China in 2002, having already successfully replicated its business model in 19 other countries. But in 2006, it withdrew from the Chinese market due to Taobao, a competitor founded in 2003. Both of these companies failed to flourish because they didn’t adapt their sites specifically to the Chinese consumer. National identity is very important to the Chinese population, and Taobao markets itself as a truly Chinese platform, utilising reds and oranges, which represent festivity and prosperity in China.

 

Chinese consumers also like busy web designs with lots of colours and links; Taobao’s interface mirrors this preference. Foreign businesses often play down the importance of trust to a Chinese consumer whereas Taobao has its own chat where buyers and sellers can establish this trust and negotiate a price. Furthermore, both buyers and sellers are rated on this marketplace, as opposed to just buyers on eBay.

 

1 - finance.sina.com.cn/360desktop/roll/20150727/215522803640.shtml Finance.sina.com.cn. 2015-07-27. Retrieved 2016-02-29.
2 - www.emarketer.com/Article/Ecommerce-Drives-Retail-Sales-Growth-China/1013028

LinkedIn Twitter Facebook

Royal Mail Sponsor

Register today for unlimited article views, and unique insights

Register Now

Why international e-tailers should re-visit the top of the funnel

Why international e-tailers should re-visit the top of the funnel

The role of brand awareness is increasingly critical to international expansion and with various platforms offering better reach and targeting than ever before, why is it important for international retailers to revisit the top of the funnel to help create a more compelling picture?
Quality of delivery offer important to Dutch shoppers

Quality of delivery offer important to Dutch shoppers

Cross-border eCommerce in Belgium and the Netherlands is making big strides and with a population of 28 million people and combined GDP of €1.08trn and English spoken widely, it’s no wonder it offers an attractive market to international merchants looking to expand into new territories. But does the quality of delivery offered that important to Dutch shoppers?
How to maximise your chances of success in India

How to maximise your chances of success in India

eCommerce is growing at an unprecedented rate in India thanks to a number of factors and with the percentage of online retail sales growing rapidly, what do retailers need to consider in order to maximise their chances of success in India?
What do Russian consumers want when it comes to cross-border shopping?

What do Russian consumers want when it comes to cross-border shopping?

Russia is the 9th biggest country in the world with roughly 30 million online Russian shoppers in 2015 which only continue to grows in 2016. However, with cross-border shopping being the fastest-growing segment of the Russian eCommerce market, what do Russian consumers want when it comes to cross-border shopping?
The importance of understanding what it is to be Russian

The importance of understanding what it is to be Russian

Russia, in terms of internet penetration, did lag behind most other European countries but is rapidly playing catch up. Not surprisingly, eCommerce has increased alongside internet penetration with an estimated 148 million orders generated in 2015. But with so many unknowns surrounding entering the Russian market, what are the golden rules?
What should retailers know about Russian attitudes to parcel deliveries?

What should retailers know about Russian attitudes to parcel deliveries?

Russia offers a potentially attractive market for international merchants, however the market needs careful consideration in order to get it right. Things to take into account include the distinctly different Russian way of thinking, along with the legal rules and political context of the country. So what are the key things retailers need to know?
Retail Pricing in a post-Brexit world

Retail Pricing in a post-Brexit world

Since Brexit, a number of events have taken place which has meant the price of items has significantly dropped in the UK. But what are the affects of the UK leaving the European Union on retail pricing?
Australia extends tax to foreign eCommerce

Australia extends tax to foreign eCommerce

For a number of valid reasons, Australia is still a destination firmly in the minds of any business looking to expand into the APAC region. With an attractive foreign eCommerce tax law favoring companies coming into Australia, what are the big changes coming down the line in 2017?
Managing cross-border payments in a booming Chinese eCommerce market

Managing cross-border payments in a booming Chinese eCommerce market

Cross-border eCommerce sales in China are rocketing but with a challenging market for Western retailers to expand into, do retailers really understand the key to success when it comes to cross-border payments?
China - a trillion-dollar-sized pie?

China - a trillion-dollar-sized pie?

Not only is China the world’s largest and fastest growing eCommerce market, but online shopping continues to rise significantly with online spending estimated to reach over one trillion dollars by 2020. So is China currently at the forefront of your mind?

Contact Us

eCommerce Worldwide
2 Ching Court
49-53 Monmouth St
London
WC2H 9EY

Tel: 0203 696 0980
2016© eCommerce Worldwide

Keep In Touch

powered by Affino

About eCommerce Worldwide

eCommerce Worldwide provides online retailers with all the information, and resources, they need to develop cross-border strategies for entering new markets around the world
Read More