By Angus Street
China and e-commerce are a perfect match - just like gin and tonic.
However, Australian business needs to be aware that the only truth to this comparison is a walloping headache and a deeply depressive state of mind from drinking the elixir of quick wins.
China’s e-commerce market has been pitched as an easy, simple and cost effective solution to export your products to China, the reality is that e-commerce in China is complex, fast paced and brutally tough.
How can this be though? Especially since there are over 700 million internet users in China, 47% of whom are online shoppers that are pushing the value of the online shopping market to around US$1.5 trillion by 2018.
While the numbers are impressive, there are a number of variables that make the Chinese e-commerce market difficult and complicated, such as the power of the large online retailers, China’s competitive digital landscape and the cost of driving shoppers to your online store.
China’s e-commerce market is dominated by Tmall (Alibaba’s B2C platform) and JD.com. They are the multi-category marketplaces that dominate the Chinese B2C e-commerce landscape, accounting for approximately 55% and 25% market share respectively.
While their impressive reach gives your business access to the majority of the China market, the complexities of trading with each of these online retailers should not be underestimated.
Assuming, your business gets passed the strict eligibility requirements for registering as a merchant on Alibaba’s Tmall or you meet the minimum capital criteria as a seller on JD, the upfront capital to set up a online shop for the China market can cost your business up to $50,000.
The next stage, after securing an online shop your business will need to invest heavily in advertising and marketing because organic search traffic on these platforms is minimal. To attract online traffic, you will need a well defined marketing strategy, that includes paid search engine and banner display advertising, for each e-commerce platform as well as regular Chinese search engines such as Baidu.
Additionally, your business will need to invest in a range of marketing communications channels, including: microblogs (Weibo), social media (WeChat), instant messaging, customer referral, video sharing and photo sharing.
This investment cannot be offset through existing English language social or marketing channels as these channel partners are unique to the China digital landscape. To make matters interesting, these channels rarely integrate with your purchase funnel, as the big three platforms - Alibaba, Tencent and Baidu, all operate independent eco-systems that compete against each other; from search, social media, e-commerce and payment gateways.
So while e-commerce presents significant opportunities for Australian exporters, it should be seen as a glass half-full-opportunity because without the right insights, strategy, execution and support you could wake up with a nasty hangover.