Why Retailers Should Focus on China for Global Ecommerce Growth
Apr 17, 2019
Cross-border shopping is becoming a way of life for Chinese consumers who put high value on securing brand-name and luxury items directly from the manufacturer. Non-domestic retailers must understand Chinese consumers and empower them to shop the way they prefer to engage.
Shopping has no borders today. Online shoppers are increasingly buying from global ecommerce sites in addition to sites in their own country. Nearly all (96%) of the retail advertisers in CJ Affiliate’s network have seen website visitors from other countries this year.
The rise in cross-border shopping is creating a wealth of opportunities for retailers who may be looking to grow their global market share of both new and existing customers, wherever they are located. It’s a smart strategy, particularly when ecommerce growth in your domestic market is reaching maturity.
China is one of the top countries for retailers to turn their focus to in 2019. China leads the world in ecommerce, with more than 40% of the world’s ecommerce transactions taking place there, up from only 1% a decade ago. eMarketer projects total retail ecommerce in China will reach nearly $2 trillion in 2019.
Cross-border shopping is becoming a way of life for Chinese consumers who put high value on securing brand-name and luxury items directly from the manufacturer. According to eMarketer, 24% of China’s digital shoppers will make a cross-border purchase this year, lifting the market’s value by 15% year over year to $115.5 billion. New Chinese ecommerce regulations will place additional emphasis on cross-border shopping opportunities. China is already a global force in ecommerce and digital technology, but it’s not too late for retailers to get into the game and win big. To succeed in China, here are local insights and strategies to keep in mind:
Understand Chinese cross-border shopper attributes
Non-domestic retailers must understand Chinese consumers and empower them to shop the way they prefer to engage. There are a number of important attributes to factor in. Cross-border shoppers are price-sensitive and it’s often cheaper for them to buy imported goods. There have been concerns about counterfeit brands and the safety of domestic products in China, so overseas brands are often perceived as higher quality. Chinese consumers value authenticity in brands and products and want to know they’re getting the real thing.
Chinese cross-border shoppers will accept shipping delays to get what they want from retailers outside their market, but they expect to have global payment options that make cross-border buying seamless. In addition to ensuring international shipping options are prominent on your site and easy to understand, non-domestic brands should consider offering competitive shipping rates, running free shipping promotions or accommodating freight forwarding.
Tap into the power of KOLs (Key Opinion Leaders)
To consider purchasing from a cross-border retailer, Chinese shoppers want more than an affiliate offer or a campaign with a coupon publisher—they need validation from peers and influencers. Today’s consumers are bombarded with brand messages, so they often turn to social media influencers (known as KOLs or Key Opinion Leaders in China) for inspiration and advice. KOLs are extremely powerful in helping brands break through the clutter and establish credibility, which is particularly important for brands entering a new market. Even if the social media stars are not directly selling the product, they are heavily influencing purchasing decisions: 68% of consumers in China say their shopping choices are influenced by social media, according to eMarketer. KOLs with large followings have the ability to drive significant sales volume for retailers. One of the best known examples is fashion blogger Becky Li, who has more than 3 million followers on WeChat and sold 100 Mini Cooper cars on her blog in just five minutes.
Global shopping events are the big winners
Alibaba’s Singles Day is by far the most well-known shopping day in China and it continues to grow. The shopping event set anew recordin 2018 with more than $30.8 billion in sales in just 24 hours.
Affiliate publishers are smart marketers and will optimize their sites and apps for Singles Day to promote additional brands and stores. Retailers can take advantage of this by offering higher commissions and media placement to their top affiliate publishers and KOLs. They should also set up Singles Day offers that are strong enough to compete with Black Friday and Cyber Monday, otherwise Chinese shoppers may not be interested because there are plenty of great domestic offers.
Be ready to engage Chinese consumers on a mobile screen
Due to heavy mobile phone ownership and usage rates, mobile phones are the primary device used for ecommerce in China. According to Nielsen, 84% of ecommerce sales in China were completed on a mobile device in 2017—up from 71% in 2015. Andat least 80% of digital ad spending in China will be on mobile devices, meaning that retailer websites and ecommerce platforms must be optimized for mobile.
This goes hand in hand with the trend that consumers will spend more time watching digital videos. The key to launching a successful strategy in China is partnering with publishers who know the China mobile ad space, for example, how to promote a retailer’s products using WeChat and understanding the ever-growing trend of QR codes.
The demand for imported goods and cross-border shopping in China isn’t going away any time soon. More retailers will enter the Chinese market through cross-border ecommerce this year, but those who win will be those who are focused on delivering experiences that reflect local shopper behavior and preferences.