Redfern Digital and CBBC have partnered to present a four-part series on digital retail in China. The first part explores why and how to enter the Chinese online retail market.
Why should I sell to China?
China’s market is huge and growing rapidly each year. As an example, during one of China’s biggest shopping holidays that happened earlier this month, known as Single’s Day or Double 11, Alibaba reported more than RMB 498.2 billion (£58 billion) in sales, which was nearly double the sales achieved during Double 11 last year (RMB 268.4 billion / £30 billion).
How can I sell into China?
There are many ways to sell to China depending on how invested you want to be and how quickly you want to move, but for a quick, low cost and low-risk method, trying via cross-border e-commerce is the simplest. And Single’s Day is a testament to that fact. For the majority of categories, brands should look to leverage e-commerce as their starting point.
What are the three most important factors to understand before market entry?
Understand your category opportunity. Don’t throw your money down the drain. Social listening and e-commerce data mining are inexpensive and can give you a deep dive into your category, product pricing, category saturation/competitors, opportunity, and consumers. Simple research will show you which categories or sub-categories are currently trending in the market. As an example, men’s skincare has been seeing surges in growth, with a 260% and 245% year-on-year increase for men’s lip care and men’s facial scrub respectively.
Understand your platforms. China has a plethora of different social platforms; starting out on the wrong one can have devastating effects on a brand, leading to brand dilution and wasted investments. Different platforms are more effective at either brand awareness or conversion to sales, understanding which platforms are best for which type of marketing activity will help brands to succeed.
Understand your brand’s current digital presence and online mentions. Look through Chinese social platforms such as WeChat, Little Red Book and Taobao, to understand the reputation that your brand has online and how widespread brand awareness currently is.
What are the different routes I can choose to follow when entering the e-commerce market?
Brands can choose to go the cross-border route or the domestic route, and have the option of going through private channels or public channels. Understanding the limitations and benefits of each channel is important to establish an overall market entry strategy.
When is the best time to launch a brand in China?
If brands are looking to enter China, then Q1 is likely to be the best time to do so. The retail season properly starts after the National Holiday and runs into Chinese New Year. After entering the market in Q1, the 6.18 mid-year festival, another one of the largest shopping festivals of the year, would be the perfect tester for the brand.
What are some of the difficulties that come with trying to enter the China market through e-commerce?
Building up your ambitions in e-commerce from concept to reality requires investments of time, resources and money. Market entry into China is costly and there are a number of factors that brands must consider in terms of budgeting for the market, such as regulatory compliance, intellectual property management, platform costs, working with agencies, and marketing expenses.
What is a trend in e-commerce that has become extremely popular recently?
E-commerce live streaming has become hugely popular, especially since the Covid-19 pandemic. This year, live streaming sales reached an estimated RMB1.05 trillion (£120 billion), and Viya, one of the top live streamers in China, alone sold more than the entire revenue of Carrefour China. That being said, competition can be extremely fierce when it comes to live streaming. If a brand does not have current awareness in the market, then they will often struggle to sell.