China's cross-border online shopping industry to surpass €104 billion in 2018

Leading consulting firm Frost & Sullivan​, in partnership with China retail strategy expert Azoya Consulting​, released its new research report, 'The Cross-border eCommerce (Haitao) Opportunity in China', on 14th May 2018.

Driving Chinese sales​

With the largest global online shopping market, China has more than 500 million online shoppers and is expected to spend over $1 trillion (€834 bn) in 2018. Of this figure, cross-border eCommerce purchases — from retailers outside of China, otherwise known as Haitao — will reach $125 bn (€104.3 bn) this year.

"The research revealed the strong interest and expenditure amongst Chinese consumers in buying online from overseas retailers, with the average online shopper in China spending almost $850 (€709) per year on purchases from overseas retailers," ​revealed Mark Dougan, Consulting Director, Asia-Pacific, Frost & Sullivan.

"Our research indicated that Chinese consumers are significantly motivated by the perceived higher quality and lower risk of buying fake goods that overseas retailers offer."​

The research study collected information from over 1,000 online shoppers in China, combined with findings from over 100 global retailer and brand owner interviews.

Beauty buys online​

Growth Partnership Company, Frost & Sullivan, and China e-commerce strategy provider, Azoya Consulting, found that 63% of Chinese shoppers plan to increase their online spending in 2018 compared to 2017, indicating how cross-border digital retail is set to grow.

Beauty and cosmetics purchases make up 20% of the product category bought from overseas retailers, second only to fashion as the leading sector with 22% of purchases.

Chinese online shoppers have the largest amount of confidence in Japan (72%) as its overseas origin country of choice, followed by South Korea at 60%, the US at 55% and Australia at 37%.

On average, females spend $976 (€814) per year, 20% more than males. While men opt for convenience and fast delivery, women look for customer support with the Chinese language, along with necessary content on the supplier’s website.

Opening up Chinese opportunities​

Initiatives in recent years such as free trade zones have opened up its domestic e-Commerce market to global vendors. Today, over 80% of global retailers now view China as “an attractive market opportunity”​, Frost & Sullivan revealed in its recent press release. Despite its potential, at present, only 30% of online retailers “are satisfied with their current level of sales in China”​.

As a result, independent eCommerce web stores are in demand. This comes as only 21% of retailers using China as its only online channel reveal they are satisfied with their sales levels.

Competing brands, intense price competition, margin-eroding commissions and high upfront costs typify the Chinese online retail marketplace.

What needs to be done?​

“Confusing and highly competitive,”​ are two terms used to describe the Chinese marketplace.

"To build a brand that Chinese consumers trust, which commands a healthy profit margin and repeat buyers, retailers need to approach customers through multiple touchpoints. The key channel should be within retailers' control, accompanied by supplementary platforms,"​ highlighted Don Zhao, Co-Founder of Azoya International.

"More and more retailers are establishing standalone websites as the core of their strategies, as these sites directly connect retailers with Chinese consumers who desire foreign brands while empowering retailers with flexibility and control over their business."​

Brands need to prioritise a relevant market entry strategy to ensure they remain attractive to their target audiences. They must connect the correct products with the most appropriate channels and communicate these effectively to resonate with online buyers in China.