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Tips and tricks to scale your business from the experts in eCommerce

What you Need to Know About the Growing Chinese eCommerce Market

Posted by Emilie Fritsch on Oct 22, 2014

Taobao or Tmall

China is currently the largest eCommerce market in the world after having surpassed the U.S. in 2013, with sales topping 300billion USD. However, China is one of the most difficult markets to enter and the competition is fierce. Global luxury brands and local Chinese brands have aggressively increased their eCommerce marketing efforts making it difficult for smaller brands to compete. So although it is not impossible to enter China’s rapidly growing eCommerce markets, it is highly competitive. Below is a list of workable strategies that non-Chinese eCommerce companies can adopt to compete in the Chinese market.

Sell on Taobao or Tmall

If you want to sell anything online in China, then Taobao and Tmall are your go-to eCommerce destinations. China’s shoppers and entrepreneurs alike are turning to these influential platforms as they are easy to access and are ideal marketplaces for start-up brands to showcase their products. Both of these platforms house over 70,000 eCommerce brands. They allow brand merchants to sell their goods across Greater China without having to create a China specific eCommerce site. Selling on these platforms will allow your brand to test a potential product in China without spending extra funds needed to translate your site. Taobao and Tmall will act as portals for your brand, potentially bringing additional traffic to your eCommerce site.

Modify the Business Model for Chinese customers

EBay entered China in 2002 with the acquisition of EachNet, a domestic player in the consumer-to-consumer market. However, EachNet initially used eBay’s business model and charged sellers for auction listings and sales which was a massive turnoff to many potential sellers. By contrast, when Taobao came along, it charged nothing for seller listings. Their marketplace provides much more than mere product listings and it actively makes product recommendations and provides suggestions and tips, promoting a sense of social community. Conversely, EachNet focuses more on price information and product listings, similar to eBay’s style in the U.S. As a result, Taobao’s site is well-liked by Chinese consumers.

Find a Local Partner

Finding a local partner is a MUST. You must find a consultant or local business that can help you manage Chinese social media platforms and your Taobao/Tmall accounts. Find someone who speaks Mandarin fluently and has experience with the Chinese online retail environment. Many Chinese residents have a virtual private network, which enables them to break through the governmental Google, Twitter and Facebook blocks by encrypting their overall online browsing. However, please note that China uses completely different social media platforms to the ones used in other countries. These platforms include: Ozone, Weibo, Renren and Kaixin.

Adapt your offerings to better befit the social habits of Chinese consumers

Owing to a highly collectivistic culture, Chinese consumers rely heavily on social networks, reviews and recommendations when making a purchase decision. Consequently, Chinese customers are also avid content providers. In fact, Chinese consumers are more social online than U.S. consumers. Thus, U.S. companies have to make customer service a top priority, as any bad word of mouth can spread like wildfire and cause more damage than it would in a Western country. Some organizations believe that the key to success in China is superior information technology. Therefore they tend to focus more on system integration than on customer needs. But meeting customer needs is the most important determinant of success.

Don’t underestimate the importance of mobile

Many of China’s Internet users surf and buy online via their mobile phones. Smart phones are popular in China as it enables users that cannot afford a computer to access the internet. However, mobile purchases account for only 5% of the total spending. Nonetheless, it is important to have a mobile compatible website where Chinese Internet users can learn more about your brand and/or purchase your products. The mobile segment is only likely to grow and as a result it will therefore become increasingly important to have a mobile accessible website or app, or even both.

Be flexible and creative in strategies - in response to regulations

China is a fast-evolving economy whose business environments as well as the rules surrounding them are often nontransparent and uncertain. So U.S. businesses entering China need to be fully aware of the consequences of operating in such an environment and need to be flexible in their strategies. Google, for example, decided to re-enter China in early 2012 with different product offerings. The company is now focusing on products and services that are less censor-sensitive, such as maps, shopping services and mobile platforms.

In a market like China’s, where local knowledge and culture are crucial to success, more thought should be given in the business strategy process on how to better serve local customers and adapt in a rapidly changing market.

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Topics: eCommerce, International Markets, Marketplaces