Finding Cross-Border Commerce Success in China
If you’re looking to expand your ecommerce business into China, there’s good and bad news.
First, the bad news: Many ecommerce retailers fail in their cross-border efforts in China.
Now, the good news: You don’t have to be filed away among the unsuccessful attempts. You can find success in cross-border selling in China if you learn how to work with Chinese ecommerce standards. Start with a strategy that proves you understand consumer behavior in your new market. Play to win with a rundown of key online Chinese shopping rules.
The best news of all: You likely already have the keys to the most powerful success factors in Chinese ecommerce. They are:
- Cross-border ecommerce know-how
- Web presence for digital natives
- Cashless payment systems
- Social shopping and influencers
- Authenticity of goods
This guide can help you develop your strengths and catch up on those you lack.
1. Cross-border ecommerce know-how
Cross-border ecommerce potential in China is enormous. This type of shopping surpassed $100 billion last year, with the average cross-border consumer spending $848, according to analysts Frost & Sullivan. Nearly one-quarter of Chinese digital consumers will make cross-border purchases this year, according to eMarketer. That group will swell to 40 percent by 2020, says Flow’s Garrett Robertson, citing Forrester research.
This proves that a successful ecommerce strategy in China is both attainable and helpful for your company’s growth. This does not mean it will be an easy road. If you have China in mind for your first ever cross-border ecommerce play, you may need to think twice. Cross-border ecommerce is hard enough to master, and a market like China is unkind to new and experienced retailers alike.
However, if you do have proven success with cross-border ecommerce, you’re already in good shape to enter the China market. Cross-border ecommerce demands attention to the factors that set different shopping cultures apart. The Chinese customer experience is unlike anything you’ve seen before.
Start by understanding why China’s online shoppers choose cross-border buying options with data from Frost & Sullivan and Azoya Consulting. The two firms surveyed Chinese shoppers who buy directly from retailers in other countries. In descending order, Chinese cross-border consumers told the firms they were:
- Looking for higher quality and more reliable products
- Trying to avoid fake or counterfeit products
- Taking advantage of a lower price
- Buying products that were not available locally
- Curious about trying a new buying channel
Next, develop your strongest product categories for the Chinese market. The Frost & Sullivan/Azoya survey identified the most popular ecommerce verticals for cross-border purchases in China, among respondents who said they made an online purchase at least once a month directly from foreign retailers:
- Fashion (22%)
- Beauty and cosmetics (20%)
- Grocery (19%)
- Sports and leisure (18%)
- Mom and baby (15%)
- Electronics (10%)
Create the right shopping environment for Chinese ecommerce customers by bringing the products they want to buy right to them. Your sales will suffer if can’t prove that you understand your new market.
2. Web presence for digital natives
The Chinese ecommerce boom proves another key factor in your cross-border expansion success: the market is full of digital natives that expect a specific customer experience. Ecommerce as a percentage of total retail in China rocketed from less than 5 percent in 2010 to 15 percent in 2015, according to calculations by the Boston Consulting Group. In just five years, the market evolved into what we know today.
This means you must move quickly to capture the attention of your customers. It’s different from trying to reach customers with a typical U.S. ecommerce experience, with digital media oversaturation and a fragmented competitive landscape of hundreds of retailers fighting for a dollar.
Chinese ecommerce shoppers spend more time when they shop online than do U.S. and European consumers—averaging 30 minutes a day on Alibaba’s Taobao marketplace, triple the time U.S. consumers spend browsing, according to the Boston Consulting Group. That’s likely because they shop on platforms like WeChat, an all-purpose portal with the functionality of social media staples like Twitter, Snapchat, YouTube, Facebook, PayPal, plus calling features and texting. Imagine a world where you can chat with friends while completing a purchase on Amazon, without switching tabs or apps. It’s easy to see why China’s shoppers rack up so many hours on ecommerce platforms.
Content is king, especially in Chinese ecommerce. These shoppers prefer more detail in product listings and more photographs than their American and European counterparts. “In comparison to the U.S., the typical Chinese web site is very busy, especially the home page,” an unnamed retail executive said in a 2017 GELF report. “The detail pages on Chinese websites have a lot more info. Images and rich media are (important) because of the trust issue.”
We’ll come back to the trust issue in a bit. Until then, work on your digital content and website design strategy for entry into the Chinese ecommerce market.
3. Cashless payment systems
The digital natives created a new standard in their rapidly evolving economy. As ecommerce grew, so did mobile adoption and cashless payment systems. The two go hand-in-hand in China’s ecommerce customer experience. Chinese shoppers use digital wallets like Alipay and WeChat Pay to pay for everything—no purchase is too small.
By 2020, 74 percent of Chinese ecommerce will be conducted on mobile devices, compared to 46 percent in the United States, according to the Boston Consulting Group. Furthermore, mobile purchases will continue to be category agnostic, BCG says, including everything from food to luxury automobiles.
This all means that your cashless payment systems need to be fully integrated into your China-facing ecommerce websites. Don’t add to your cart abandonment problem by missing such an obvious and essential function.
4. Social shopping and influencers
China’s mobile revolution also kicked off the rise of social selling. Retailers lure buyers with high-production events on Weibo and WeChat featuring Chinese celebrities hawking fashion lines, cosmetic brands or even hot car models on social media, with an option for viewers to buy—then and there.
Chinese ecommerce takes influencer marketing to new heights. WeChat’s 902 million daily users digest social media marketing content every day from influencer juggernauts like Fang Yimin, known as “the Goddess of Shopping” who pitches for luxury brands Tiffany & Co., Burberry and Giorgio Armani, according to the web publication Style.
The Style story says Yimin sold 100 $45,500 Mini Coopers on her WeChat blog —in five minutes. That’s nearly a million dollars a minute. Think of the purchasing power you could unlock with a solid China-focused influencer strategy. It’s not too different from how U.S.-based brands capture their markets through social media and influencer marketing. China’s social media platforms have the rest of the world beat, as shoppers can complete their purchases right there in the app. Create a seamless social shopping experience and watch the money from China roll in.
As with any China-focused ecommerce strategy, flawed execution can result in massive failure. Social selling in China works because shoppers see their aspirations in brands and people they recognize and admire. Retailers looking to expand into China must have a deep understanding not just of social media, but of Chinese social media. Cultural zeitgeist is hard to decipher for outsiders, so it’s important to work with China-based partners who have a finger on the pulse of Chinese pop culture when trying to capitalize on the social selling trend.
5. Authenticity of your goods
As we mentioned above, the trust issue is a defining moment for retailers attempting a cross-border selling strategy in China. Chinese shoppers are willing to buy from a foreign retailer to get a good deal on price, but they’re more likely to be motivated by goods they perceive as higher quality. Chinese consumers also buy from European and U.S. retailers for assurance that the products they are buying are not counterfeit, especially when it comes to luxury brands, health and beauty products and food.
“The Chinese consumer is very aware of luxury and aware of counterfeits,” says Robertson, a senior business analyst at Flow. “They want the name brand because they want to outshine their friends. They only want to buy luxury goods from a known luxury retailer. So, they only want to buy Gucci from Gucci directly, because they know that name.”
Status symbols and social shopping may come off as shallow, but the fear of counterfeit products is a real problem in Chinese ecommerce. Chinese websites for shopping are all the rage, even though it carries a significant risk. Health and beauty products and certain food and nutrition items are also highly desirable from foreign retailers, in part because of past scares involving counterfeit products, including baby formula. China has a thriving online fraud industry, according to Experian, which said China led the world in overseas fraud attacks last year.
Provide high quality, authentic products and stand by your guarantees in shipping policies, refunds, pricing and taxes, and other key components of the final buying process. China’s ecommerce ecosystem will weed out the retailers that don’t value authenticity. Don’t lose out on this market by cutting corners with cheap fakes.
Ecommerce success in China is within reach — Our ebook can help
China poses unique challenges for cross-border ecommerce success. Build your successful China expansion with the above tips plus more insights in our ebook, featuring data that proves how China’s ecommerce culture is unlike anything you’ve seen before.
The Land of 800 Billionaires: Finding Cross-Border Commerce Success in China can help you tailor your ecommerce business to the growing Chinese consumer market with advice and perspectives on how to win in China by building on the strengths your company already has.
Download the book today and start on your path to cross-border ecommerce success in China.
photo by iStock
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