Nenad Cetkovic is COO of feed-management specialist Lengow. Today he shares a backgrounder on China and why ecommerce merchants should be at least considering targeting Chinese consumers if they’re not already doing so:
650 million web users, $450 billion spent online in 2014, 30% growth rate… Despite not yet being very open to overseas online purchases, the Chinese market is full of potential. The rise of ecommerce in the country has been impossible to ignore.
Chinese consumers are fond of western brands, which are renowned for their quality and the country’s marketplaces are gradually becoming more open to cross border ecommerce. For example, Alibaba launched Tmall Global to facilitate selling for overseas businesses without Chinese business licenses. In addition, JD.com, China’s second biggest B2C ecommerce platform, recently created a “French Mall”, which focuses on products imported from France. The platform is expected to achieve a turnover of $2,5 billion in the next two years, thus proving that there is a future for international products in China.
Breaking into the Chinese market is not simple. Remoteness and cultural differences pose significant challenges. For example, more detailed product pages with more images are required, in addition to alternative payment systems and delivery options. Communication strategy, especially in relation to social networks, also must be adapted. However, the ecosystem is much simpler than in Europe. There are no comparison shopping engines in China and the market is roughly divided between six marketplaces. The markeplaces Alibaba, Tmall and Taobao dominate the market, combined they account for approximately 75% of market share. Entry into a Chinese marketplace offers emerchants access to a huge qualified traffic flow.
Regulations imposed by the leading ecommerce site Alibaba are constraining for smaller companies (delivery must be made in 20 days, a live chat must be available in Mandarin, etc). However, other marketplaces are more flexible with regards to overseas retailers. JD.com, for example, offers to buy the stock directly and manage the marketing for merchants.
Despite the numerous obstacles, China’s ecommerce potential cannot be overlooked. If not doing so already, international online retailers should strongly consider taking advantage of this profitable market, especially as it is becoming increasingly open to international ecommerce trade.