Should Aussie Retailers Take Advantage of Chinese E-Commerce?

Ally Feiam By Ally Feiam | 20 Sep 2019

E-Commerce in China is one of the largest categories across the globe. From Alibaba Group’s booming dominance over the industry and social media shopping becoming the leading way customers shop online, there’s plenty that Aussie retailers can learn from China.

Eaoron Australia, one of the ‘leading skincare brands’ in Australia, has signed a deal with Chinese social media e-commerce platform, Beidian. This partnership will help the retailer connect with 50 million Chinese users of the app.

“Eaoron is a brand built on innovation; we pride ourselves on being at the cutting edge of product development,” said Fernando Rodriguez, Head of Business Development for Australian United Pharmaceuticals. “In terms of marketing, we take an equally innovative approach, and this unique agreement will expand the presence of our Australian made products in China,” he said.

What is Beidian?

Beidian is a Chinese e-commerce and social media platform that’s aimed towards Chinese mums. Established in 2017, it’s a subsidiary of BeiBei, a leading E-commerce platform. It has experienced ‘exponential growth’ in both sale volumes and users by tapping into the Key Opinion Leaders (KOL) market in China.

In May 2019, Beidian raised USD 126 million in funding from investors including Hillhouse Capital, Xiang He Capital, Sequoia Capital, Sinovation Ventures, IDG Capital, and Capital Today.

KOLs are the equivalent of Western social media influencers, with followers that range from hundreds of thousands to millions. “KOLs have been a strong part of our marketing mix in China particularly as Chinese people are incredibly discerning when it comes to selecting products they ingest or apply
to their skin,” said Mr Rodriguez.

“The two most important things consumers look for are trusted recommendations and trusted sales platforms. Chinese customers want to know they are buying authentic products sourced through channels where goods can be traced back to the origin of the manufacturer, which in our case is Australia.”

The Chinese Demographic

According to a report from Nielsen, 68 per cent of Chinese consumers rely on reviews and recommendations from others before making a purchase. In comparison, only 40 per cent of customers are influenced by advertising. Moreover, the same report identified that 49 per cent of Chinese customers actively seek out luxury brands from overseas, from both skincare and cosmetics. This compares to the global average of 24 per cent.

Who Are the Top Chinese E-Commerce Sites?

There are several e-commerce platforms that Chinese customers prefer to shop with, but there are five that dominate the industry:

  1. Taobao
  2. Pinduoduo
  3. JD.com
  4. XiaoHongShu
  5. Tmall

Should Aussie Retailers Cash in Chinese E-Commerce?

Australian retailers like Eaoron have invested its time into the e-commerce category in China, with hopes to diversify its customer base and demographic.

“Eaoron is a perfect fit for the Beidian platform, like ours, it is a nimble brand that responds quickly to market innovation. It’s also been innovative among Australian brands targeting China in so far as it already has a very strong following among many leading Chinese KOLs,” explained Li Wenyan, Global Procurement Director of Beidian.

“Our platform is built on consumer trust; as Eaoron is an Australian-owned and made brand; we are delivering our customers products from a market which has the highest reputation for safety and quality across China.”

“In China, Tmall and JD occupy more than 80% of Business-to-Customer e-commerce market. Therefore, under the overwhelming edge of these two giants, start-ups have to get traffic in innovative ways,” Mr Wenyan explained.

Breaking into the Chinese market is extremely difficult, as seen by international brands who have subsequently left the market (Forever 21, Amazon and others). There are several challenges to face when selling in China, sone of the major reasons being trust. According to E-Commerce Agency China, it can be difficult to convince customers to purchase something from a ‘new’ brand – there is little trust development when a company is introduced to the market, which is something that brands have to sort out straight away.

Other issues include targeting the right market. Although an older demographic may love Louis Vuitton bags in Australia, the younger generation will jump at the chance to own one of their own in China. Researching the right market is an essential step towards being successful in China.

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