Selling to China Through Cross-Border E-Commerce. A Handy Guide for Businesses in 2020

Have you decided that 1.4 billion Chinese consumers are a market that your company wants to access, but you’re still struggling to set up your presence in China? It’s estimated that in 2019, e-commerce sales in China hit $1.935 trillion USD and for businesses outside of China, cross-border e-commerce (CBEC) can be an effective way to reach Chinese consumers. Consumers of all ages buy products online from domestic and foreign brands. The most popular CBEC purchases are cosmetics (84%), apparel and footwear (82%) and electronic products (74%).

In order to help brands to understand more about cross-border e-commerce regulations and get the most from the major e-commerce shopping festivals, I’ve created a dedicated mini book called Selling to China Through Cross-border E-commerce.  

In contrast to the West, China’s e-commerce sites don’t function simply as the final stage to compare prices, read reviews and complete purchases. They’re places to make new discoveries about products, socialize and share interests and concerns. 

While traditional e-commerce sites still drive the most sales in online retail, social e-commerce in China is a gateway for brands to access specific communities, test products, build awareness, connect with customers and more. On the other hand, social e-commerce sites help make trends and what motivates consumers to purchase clearer. 

What are these social commerce sites and apps like? Which is best for my brand? To give you some answers, here are the 4 main business models of popular social e-commerce platforms.

1 Content Sharing Platforms

The content sharing model is based on consumers trust in other consumers, influencers, key opinion leaders (KOLs) and key opinion consumers (KOCs). Brands and retailers can post ads or they can cooperate with KOLs to create content to inform potential buyers about their products and guide their purchasing decisions. KOLs and trusted consumers give products credibility and desirability.

KOCs are a role specific to China and heavily used on WeChat. KOCs are personal accounts listed under someone’s name but they’re administered by brand employees and users are aware of this arrangement. These accounts publish information, content marketing and many also do a wide range of customer relationship management tasks such as handling complaints, making product orders, handling returns, issuing coupons, promoting sales and more. This role was developed as a workaround on the highly influential WeChat social media platform as it’s built for person to person contact so this method is not only functional, but also feels more personal and can deliver the immediate action that many Chinese consumers demand. It also enables a low cost ad network as advertising rates on WeChat are very high.

Over the past few years, content has progressed from simple photographs with text and links to short videos and live streaming with immediate purchase options. These e-commerce platforms typically monetize through fees for marketing services or revenue from commissions on sales. Commissions are growing because of this focus on short videos and live streaming and the resultant increase in sales.

Prime examples of content sharing platforms: Xiaohongshu and Mogujie.

2 The Group Buying Model

This is the Groupon model. It can be further divided into small group purchases and community purchases. Small groups are either groups of friends or people who have similar needs or interests who haven’t met in person. Community purchases are made by people who live in the same neighbourhood, complex or building. Their ability to put in bulk orders enables them to get large discounts.

Prime examples of group buying platforms: Pinduoduo, Meituan, Meiri Youxian (Miss Fresh)’s Meiri Pinpin, Niwonin.

3 Memberships

The membership-based model is a new form of social e-commerce. Users can only join after getting an invitation from members of the platform. They then buy a package of products which functions as their membership fee payment. After the new user makes this purchase, they can start to buy products on the platform at reduced prices. Members can also earn benefits such as discounts or coupons, by referring new members or by selling and promoting products from the platform through their own social media accounts. Platforms also help members sell products by letting them know which items are popular and providing them with online training and promotional materials.

Prime examples of membership platforms: Yunji and Beidian.

4 We-commerce

As a part of social e-commerce we can also mention we-commerce. WeChat salespeople were the first businesses to appear on WeChat. They display items on their Moments page, in WeChat groups or in direct messages. Customers send messages to the person who’s selling the items, tell them which item they want to buy, pay through WeChat Pay and then they’re delivered. The price of products sold through WeChat salespeople is always much lower than the market price. However, the quality and authenticity of the products are hard to guarantee.

Since those early days, WeChat has come a long way and We-commerce is all about e-commerce mini programs now. There are 170 million WeChat mini program users per day and 76% of WeChat mini programs are connected with an official company account. E-commerce mini programs are the second most popular type of mini program, with services first and travel in third place.

If you want to know more about other platforms, regulations and major e-commerce shopping festivals, check out my mini book. 

To request your full copy of the mini book "Selling to China Through Cross-border E-commerce" visit our website. https://chozan.co/selling-to-china-through-cross-border-e-commerce/

If you’re wondering how to get into the China market and have questions about your digital media presence in China, contact us to schedule a consultation.