Aussie cosmetics firm spurns domestic market to sell directly to China through daigou

By RJ Whitehead

- Last updated on GMT

Aussie cosmetics firm spurns domestic market to sell directly to China through daigou
While once the daigou channel was an unorganised means of distribution from countries like Australia to China for mostly health products and supplements, it is quickly transforming into something far more proper—especially for cosmetics manufacturers Down Under.

Alternative sales channel is becoming more organised as businesses look for new ways to export. As recently as just a couple of years ago, battalions of Chinese buyers in Australia—or daigou​—would supply their home networks, made up of friends, family and communities, with goods bought off shelves there and take them home in rammed suitcases. This was due to a continuing lack of trust in domestically made Chinese products in the wake after years of safety scandals.

But things have evolved and companies like Daigousales.com, an Australian-owned, web-based startup, have taken the labour—and murkiness—out of the process. Its founder, Matthew McDougall, now claims to be marketing 30,000 SKUs on behalf of 400 brands to daigou​ through its online service.

Australia in demand

One Australian skincare brand, Bondi Goddess, has embraced this approach more than most. Though it is manufactured Down Under, its products are not available on the local market. Instead, it markets directly to Chinese customers, leveraging heavily its Aussie-ness under the tagline “The essence of Australia​”.

The Bondi Goddess range features a fruit-extract cleanser, an anti-pollution rejuvenator from concentrated Centella gel, a collagen anti-wrinkle serum and a skin lightening serum from unripened papaya fruit.

A lot of Chinese know of Bondi [Beach] in Sydney, with its clean water and natural environment. And Bondi Goddess, though it’s made and owned by Australians, is only available on the Chinese market through Daigou​,” said McDougall. “That’s been their strategy right from the start​.”

China-specific products

Unlike a most manufacturers, who put their home market first before turning to export, owners Erinjayne and Alan Plummer decided to make Bondi Goddess a brand specific to the China. And their means to approach that export market via the daigou​, who would market the products towards young Chinese women.

We gave them a strategy to get the Chinese in Australia to understand the product and then sell it to their people there—their contacts back in China​,” said McDougall.

There is a huge demand in China for Australian health and beauty products, including baby formula, skincare products, cosmetics and supplements and vitamins​,” he added.

McDougall, an academic who had previously lived in China for many years, also recommended that the products should be priced with consideration of significant numbers in Chinese culture, with each being rounded to 88 cents.

We found there was a huge gap in the market in that 18-28 age group and we thought it would be fantastic to launch products in China​,” said Erinjayne Plummer.

An “incubator for emerging brands”

Instead of daigou​’s traditional model of picking products off Australian shelves and either posting or delivering them to their customer in China in person, services like Daigousales use WeChat networks to market to them directly to them and fulfil orders on their behalf through its Sydney warehouse. Anything valued less than RMB166 (US$23.90) does not attract duty and can simply be posted to China.

The reason that ​Daigou exist is there is a massive fear and concern around health products in China that might be fake or cause bodily harm​,” said McDougall, who claims his “incubator for emerging brands​” has at least 10 merchants a week applying to use his marketplace.

For established brands, the brand might have product in Australia but not in China yet. If they have aspirations of launching in China, this is a low-risk, low-cost approach​,” he said.

They are recognising daigou as a legitimate channel to test products prior to officially doing a massive, expensive launch in mainland China. We even have Unilever selling Continental Soup on our site. They’re just testing it out​.”

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