Lime Light Guest Post Series
Jeff Unze, VP Bis Dev, Boarder X Lab. Jeff has worked in the Chinese internet space since it’s early beginnings in 1999 where he headed ad sales and marketing at Sina.com. Jeff co-founded Lucky Pacific Networks, the first Asian-focused performance media company and holds an MBA from Thunderbird -The American Graduate School of International Management. Currently, he runs business development for BorderXLab building merchant relationships for one of the leading cross-border e-commerce apps in China (BieYang). He speaks regularly at industry conferences on cross-border marketing in Asia.
China is the world’s biggest e-commerce market, currently twice the size of the US, and three times its size by 2020. It’s alluring for both US and European retailers, but many are confused about how to go to market in China. it’s easier than you might think.
Previously, marketing to China required logistics, localization, payment integration and a local partner. Brands turned to marketplaces like TMall and JD, that require $100,000 setup fees, six-figure advertising commitments, loss of brand control and bad revenue share terms.
Today, China’s newly wealthy are sophisticated “hai tao” (overseas) buyers, who visit international websites to find the best the world has to offer. 20% of all digital shoppers bought something from a foreign site in 2016 according to McKinsey’s 2016 iConsumer survey. The market size is expected to be $50 billion USD this year.
Which products are the right fit? Baby and mom items dominate, composing 50% of cross-border volume. Fashion and beauty products are next, both affordable and aspirational luxury brands do quite well. Health and tech products are also significant slices of the market.
Four categories of traffic partners dominate performance in China.
- Cash back and deal sites can drive tens of thousands of customers to your .com. The downside is low cart conversion when users are linked out to an English site that doesn’t have Chinese characters, payment options, or logistics. Less than 1% of Chinese have international credit cards, fewer have PayPal.
- China Influencers (key opinion leaders), with great names like “Mr. Bags” and “GoGoBoi,”, do a great job culturally positioning brands to build instant credibility. Many take liberties with placement, however, cyber-squatting on social media brand pages and portraying themselves as official channels. Few also have purchase functionality which hurt conversions.
- China resellers are online retail partners that take advantage of China’s logistics, payment, and localization asymmetry to make money. They offer international products for sale on their site at a premium. They take payment from their customers via Wechat or Alipay and then place the order directly on merchant’s international sites, and ship to a US freight forward address. The downside is final customer information is not passed to the merchant, and pirated products often make their way into the product mix.
- China eCommerce apps are the last category of cross-border options. Shopping apps help users buy the way they want (65% of e-commerce in China is done via smart phone). Some of the apps do other functions, as well, such as discovery via user or professionally generated content articles.
How do you find these partners? Your affiliate network rep should have a database of good places to start. You can do a quick search in your affiliate network for Chinese names as well. There are also a number of KOL agencies that can also point you in the right direction. The opportunity is huge and well worth the time required to vet and check China channels.