Cross-border selling research

Cross-border online shopping spending in China has exceeded $132.87 billion, almost eight times larger than Australia’s total online shopping market, according to new research by Frost & Sullivan in conjunction with Chinese retail strategy experts Azoya Consulting.

The study reveals that 87per cent of Australian respondents see China as a lucrative market, with huge opportunities arising from affluent Chinese consumers seeking good-quality products from other countries. Despite this, only 20 per cent are satisfied with their current online capabilities in reaching Chinese shoppers.

“With China now the world’s largest online shopping market, Australian retailers and brands need to consider the best approach to reach Chinese consumers if they want to take advantage of this booming opportunity,” Frost& Sullivan Managing Director Australia and New Zealand Mark Dougan said.

“The complexities and challenges involved mean a one-size-fits-all approach isn’t appropriate to meet market demands. They need to carefully determine which model will work best for them.”

The study of 1,000 cross-border online shoppers in China, as well as 100 international brand owners and retailers in Australia, New Zealand, the US, Canada and the European Union, was conducted this year to understand the strategies, expectations and experiences of online sales in China. Mid-size and large retailers with annual revenue of more than $73 million participated in the study, with 36 per cent earning collective annual sales of more than $1.33 billion.

According to the study, a quarter of China’s 500 million online shoppers bought through cross-border e-commerce in 2017. On average, these shoppers are spending nearly $1,128 a year on cross-border purchases, with 60 per cent expecting to spend more over the next 12 months. Top categories include fashion (22 per cent), beauty and cosmetics (20 per cent) and mum and baby (15 per cent). With Australian retailers and brands mainly targeting the mum and baby category, there are huge opportunities to expand into other retail areas to meet consumer demand.

The study indicates that 37 per cent of Chinese online shoppers prefer to buy from Australia, behind Japan (72 per cent), Korea (60 per cent) and the US (55 per cent). There are, however, distinct gender differences, with females favouring Asian countries, particularly Japan and Korea, while men have a stronger preference for products from Australia, the US and Germany.

Selling online is the primary approach Australian retailers currently use to expand sales into China, with 32 per cent leveraging marketplace, such asTmallGlobal or JD.com. However, only 21 per cent of retailers are satisfied with their sales in these marketplaces. Respondents cited challenges such as lack of direct customer access, high commissions eating into margins, upfront costs to establish marketplace stores, and high levels of competition, particularly around price.

A more detailed analysis can be found in the report ‘The Cross-border eCommerce (Haitao) Opportunity in China’, which is available at shop.azoyagroup.com/.

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