A significant majority of Australians see China as a lucrative e-commerce market, but Australia lags behind other countries when it comes to attracting them
New research by Frost & Sullivan, in conjunction with the Chinese retail strategy experts Azoya Consulting, looked into how Australian retailers and cross-border shoppers in China feel about commerce between the two countries.
It found that 87% of Australian retailers and brand owners think that China is a lucrative market, with “huge opportunities” arising from the search by affluent Chinese consumers seeking quality products from other countries.
The study found that a quarter of China’s 500 million online shoppers purchased through cross-border e-commerce in 2017.
On average, the shoppers spent nearly US$800 (AUD$1065) on such purchases, and 60% planned to spend more over the next 12 months.
The top categories were fashion (22%), beauty and cosmetics (20%) and the mother-and-baby category (15%). Australian retailers and brands are mainly targeting the mother-and-baby sector.
The study also showed that only 37% of Chinese e-shoppers preferred to buy from Australia – 72% preferred Japan, 60% preferred Korea and 55% the US.
While tales of daigou stripping baby formula off shelves tends to make the mainstream media in Australia, the primary method of selling to Chinese shoppers is actually online, the study found; 32% of retailers have used marketplaces such as Tmall Global or JD.com. However, only 21% of retailers said they were satisfied with their sales on these platforms; most Australian retailers are investing in their own capabilities to conduct direct online sales into China.
The new research showed that 63% of Australian respondents plan to establish a warehouse or distribution centre in China to meet inventory demands from consumers. This is one of the leading factors that influence purchases from foreign suppliers, as well as payment options, easy to use websites and Chinese language customer support, the researchers say.
The study suggests that international retailers should focus on basic e-commerce capabilities to succeed in China, including efficient digital marketing, local logistics networks, a range of payment options, Chinese language customer service and content.
In addition, they need a robust social media strategy, including partnerships with influencers or key opinion leaders, and market trends to reach and engage Chinese consumers.
The study results follow a number of initiatives in the Chinese market space, such as the deal between AuMake and Chemsave which is planned to drive daigou into bricks-and-mortar Chemsave stores; and the launch of the Australia China Daigou Association in February, which hopes to formalise the channel.
The Association’s president and CEO of Daigou Sales, Matt McDougall, recently wrote that the integration of daigou sales was an important part of pharmacy’s future.
“Just look to the Regents Park Pharmacy, 20 kilometres from the Sydney CBD, whose business is estimated to turn over $300 million annually by selling into the Daigou community,” he wrote in a blog on the company’s website.
“For others, they have established bespoke relationships with Chinese customers who are looking to secure a supply of vitamins or infant formula. But for the vast majority of Australian Pharmacy owners they have yet to understand how to participate.”