07 Jan What is the Brands First Step Before Tmall or JD.com?
It is an established fact that China’s middle class is increasingly paying for and demanding high-quality Western products. We have seen over the past few years a significant number of foreign brands trying to target these Chinese consumers; often using the cross-border ecommerce channel as their initial foray into China.
The booming Chinese e-commerce industry, estimated at $97.3 billion and to grow to $222.3 billion by the end of this decade is certainly tempting for brands looking to grow their sales, but it’s important to note that success is no guarantee. Entering the Chinese market raises a lot of challenges that you need to be prepared to face before there’s even a possibility of a sale.
First off, what exactly is Tmall Global or JD Global? These platforms are B2C e‑commerce marketplaces that account for 83% of China’s e-commerce market. Marketplaces contain and represent a variety of brands or businesses. They are regulated for you to sell your products. However, before getting started in Chinese e-commerce it is incredibly important to be aware of the high costs and risks associated with joining such a marketplace.
As an example, opening and operating a store on Tmall Global is not an easy or inexpensive venture. To begin with, registration requires a $25,000 USD security deposit and, depending on the industry, there can be additional annual fees ranging from $5,000-$10,000. For example, sellers who provide health food products and supplements are charged $5,000, while those selling children’s clothing are charged $10,000. On top of those charges, there are also some logistical costs to consider. To open a store on Tmall Global, vendors must be able to provide a Chinese-based product-return system and provide customer service support in Chinese. You’ll also want to invest in the development and decoration of your online storefront, as well as continued marketing campaigns to gain visibility.
The bottom line: businesses setting up a store expecting to see immediate sales are almost guaranteed to be disappointed. Many brands set up shop and then wait years for initial sales to begin, let alone a steady flow of orders. It’s not impossible to see results sooner, but for most vendors, B2C marketplaces involves a lot of patience.
So, what is the number one thing a brand can do to increase their chances of success?
Before setting up your Tmall or JD eStore, firstly target your products into the Chinese community living in your home market. This does a number of things; not only buying your product, but testing your Chinese communications & branding messages, pricing and packaging.
Once your products become accepted by the local Chinese communities, you can look to promote them to the daigou community (buying agents that purchase and ship products back to their personal networks in China) using a D2C (Daigou-to-Consumer) marketplace.
It is a much cheaper and lower risk way for a brand to understand if their products will find a market in China by engaging with the local Chinese communities and using them as a proxy group prior to the Chinese entry strategy.
DaigouSales is the leading D2C marketplace and a great partner to help you work with the local Chinese daigou community in your home market. You get a fully managed and operated eStore within the marketplace and all cross-border shipping and payments are taken care of; all for a modest monthly subscription fee of $A249.
As a first step towards China, you can’t go past this platform. Start with pricing and portfolio strategies. Make smart marketing choices and build your brand within the daigou group so they can start to test then advocate your products within their buying networks located in China.
Once you have seen some traction within this D2C channel and have learnt more about the Chinese consumer, you are in a much better place to move towards commencing a B2C channel strategy knowing much more about which Chinese consumers will respond to your products, pricing and branding messages.
You understand the risks and are still interested in targeting Chinese consumers…what are the next steps? Contact us and we’ll set up a meeting to discuss your business’s particular circumstances, including risks, challenges, and opportunities.