Does the title claim sound too good to be true? Can you really double your e-commerce sales by selling in China? Don’t roll your eyes till you get to the end of this post!
The China e-commerce market is booming.
It’s the largest online shopping market in the world — with an astonishing market share of over 55% — and generates more sales each year than the US, UK, Japan, South Korea and Germany combined.
But how can international brands capitalize on this phenomenal growth and double their sales (or more) by selling in China? Let’s dive in…
The power of e-commerce marketplaces in China
In China, e-commerce websites are used more like search engines than straight up online stores. These are the go-to platforms for Chinese consumers to identify, compare and buy new products.
61% of Chinese consumers start their product search on Tmall — while only 39% of global shoppers turn to Amazon this early in the process. The lesson? E-commerce platforms are the place to be for brands looking to reach Chinese buyers in the Awareness and Consideration stages of the customer journey.
Tmall Global, as well as JD Worldwide, are major e-commerce players in China — both marketplaces allow for cross border e-commerce, and aim to connect western brands to Chinese consumers.
Here’s a side by side comparison of the two:
|Tmall Global||JD Worldwide|
|Company registration||Sellers can be registered and based in any country||Sellers can be registered and based in any country|
|Warehouse requirements||Outside China or partner / bonded warehouse in China||Outside China or partner / bonded warehouse in China|
|Users||Approx. 500 million monthly users.||Approx. 335 million annual active users.|
|Costs||Deposit: $25,000 |
Annual fee: $5,000-10,000 depending on category.
Commission: 0.5-5% depending on category.
|Deposit: $15,000. |
Annual fee: a flat-fee of $1,000.
Commission: 2-8% based on order value.
|Used by||Over 50% under the age of 27.||80% 18-45, and 65% have university degrees.|
|Popular product categories||Fashion, cosmetics and technology products.||Health, home and hygiene products.|
Other leading e-commerce platforms in China include:
- Taobao: the most popular e-commerce site in China, with over 660 million monthly users.
- XiaoHongshu: a social commerce platform with over 300 million registered users.
- WeChat Mini-Programs: sub-applications on China’s most popular mobile app, WeChat, that generates around 1.1 billion transactions every day.
But JD Worldwide and Tmall Global are considered the fastest routes for Western brands looking to attract Chinese consumers.
International brands in China — who’s winning in the e-commerce market?
To understand what success looks like on Chinese e-commerce platforms, let’s take a look at five brands that have achieved record-breaking rates of growth as a direct result of e-commerce partnerships.
Platforms: Alibaba, Tmall and Taobao
How they succeeded: In 2018, Starbucks created and launched an innovative ‘virtual store’, letting customers order deliveries and takeaways via a number of Alibaba apps.
Key results: A year after launch, Starbucks reported an impressive 17% growth in China, achieved record-breaking sales on Singles Day, and became the No.1 card app on Tmall.
2. Fonterra / Anchor
Platforms: JD.com and Tmall
How they succeeded: Fonterra China (owners of Anchor dairy products) invested in extensive digital campaigns on both JD.com and Tmall to celebrate Singles Day — a popular Chinese retail holiday.
Key results: In 2018, the company reported sales of over $28 million in the Singles Day period and became the No.1 product in its category; attracting over 30 million visitors to its e-commerce stores.
Platforms: WeChat, Tmall and JD.com
How they succeeded: In 2019, Dyson partnered with JD.com to open its own store, and launched a WeChat mini-program empowering users to shop directly on the app.
Key results: After partnering with JD, specifically, Dyson tripled its customer acquisition in China, and exceeded sales expectations by 22%.
How they succeeded: In 2016, Lululemon launched an exclusive e-commerce shop on Tmall, and teamed up with KOLs (key opinion leaders) on social media to promote their brand.
Key results: Within one year, Lululemon reported growth of 175% and doubled Chinese traffic.
How they succeeded: L’Oréal invested heavily in Singles Day 2019, launching new products in collaboration with Chinese KOLs on Tmall live streams.
Key results: The brand became the most successful beauty brand on the platform, and boosted Singles Day sales to over $100M.
The key takeaways:
- When launching new products and campaigns in China, e-commerce marketplaces are the fastest route to success
- Creating digital campaigns around Chinese retail holidays, like Singles Day, is proven to increase sales
- Combining e-commerce shop fronts with interactive features, such as live streams and WeChat mini-programs, is an unbeatable formula for success.
Selling via independent e-commerce stores in China — yes or no?
While e-commerce marketplaces offer unrivaled access to Chinese consumers, there are a number of downsides to consider, including:
- Costs: most e-commerce platforms charge a deposit, an annual fee and a commission on every purchase
- Design restrictions: brands will be limited in how far they can customize their digital shop fronts
- Lack of ownership: when selling on Tmall or JD.com, customers belong to the marketplace and not the store itself — making customer acquisition highly competitive.
For large, international brands that already have a reputation in China, launching an independent e-commerce store (as Dyson did) could deliver ROI.
That said, e-commerce marketplaces in China are where the majority of consumers do their shopping. So a partnership store is still highly recommended — even for the most established brands.
Aside from exposure, these e-commerce partnerships help to 1) connect international brands directly to Chinese shoppers in a trusted and convenient way, and 2) overcome the many difficulties of selling in China, such as language barriers, regulations and shipping difficulties.
What makes a successful e-commerce strategy in China?
When it comes to growing sales in China, there are a number of key factors that all brands need to get right. These include:
1. Having a point of sale in China
Above all else, a trusted and accessible point of sale in China is fundamental to attracting local consumers, who cannot access foreign websites. This is why having an online shop on a Chinese e-commerce marketplace is so important.
But, which platform should you choose? This depends on the products you sell, your budget, your target market, and whether your brand is registered in China or overseas.
To learn more about launching a Chinese POS, read our in-depth guides on Tmall Global and JD Worldwide.
2. Building an effective marketing strategy
Once you’ve established a point of sale in China, you’ve then got to turn your attention to marketing your brand and getting it in front of the right consumers. This includes:
a. Getting your pricing right
In order to increase your sales (and revenue), your product pricing has got to strike a necessary balance between protecting your margins, and making your product attractive enough for Chinese consumers.
This means assessing your manufacturing costs, advertising costs and selling costs (including all e-commerce fees) against your bottomline.
You’ll also have to conduct thorough market research, to identify the right price point in comparison to direct competitors.
b. Focusing on content production
E-commerce in China is about more than just shopping — it’s a form of digital community and online entertainment.
Videos, live streams, games, competitions, virtual reality, and collaborations with KOLs (social media influencers) all help to create excitement and engagement around a brand — and that’s key to driving sales in China.
It’s also important to encourage users to leave reviews and videos about your product, as customer recommendations carry a lot of weight in Chinese commerce.
c. Advertising your brand and online store
No surprises here, but an effective and far-reaching ad strategy is imperative when selling in the China e-commerce market.
First, this should include running ads on the e-commerce platforms you are selling on — JD Worldwide and Tmall Global both offer integrated advertising spots in the form of banner adverts and ‘pop-up’ promotions.
It’s also important to run adverts on other platforms. Some top ones are:
- Baidu: the country’s No.1 search engine with almost 200 million daily users.
- Bytedance: the company behind TikTok, with a reach of 700 million users a day.
- WeChat: China’s most downloaded app with over 1.1 billion users per month.
- Toutiao: the No.1 news app in China, with over 700 million registered users.
Click here to learn more about advertising on these platforms, and how they can be used to drive your growth in China.
d. Targeting your ideal consumers
China is an extremely diverse and varied country, and making sure your brand is reaching the right segment of this population is a must.
Besides targeting your customer personas according to age, gender, occupation and income, it’s also important to understand where your ideal consumer lives. To do this, an understanding of China’s tier 1, 2 and 3 cities is fundamental:
- First tier cities: these are China’s most developed cities, such as Beijing, Shanghai, Guangzhou and Shenzhen. Opportunities for luxury goods are high in these regions.
- Second tier cities: include major capitals, along with up-and-coming cities, like Changsha, Chengdu and Nanjing. These offer a less competitive, but hugely valuable marketplace for brands.
- Third tier cities: these are smaller, less developed cities in China, including Kunming, Zibo and Huizhou, and offer less opportunity for international brands.
3. Finding the right partner
Finally, Putting all of the above in place isn’t easy. China can be a very difficult market to navigate, with tough regulations, language barriers, and costs that quickly add up.
That’s why it’s important for international brands to partner up with an expert in Chinese e-commerce and marketing — it’ll save you in time, mistakes and money.
Here at AdChina.io, we’ve helped global brands across the world achieve sales success in China. Our innovative software makes targeting Chinese consumers easy, affordable and flexible, with options to run complete, end-to-end strategies or DIY campaigns to run however you like.
Book your free demo today to boost your sales, and unlock the biggest market in the world.