Cross-Border E-Commerce 101
--ChatLabs, Kollective Influence, & NiHaoPay Webinar Recap
Cross-Border E-commerce Overview:
In China, cross-border e-commerce is often called “haitao”(海淘), loosely translated as “searching for goods from overseas”. Several platforms are positioned to meet this demand.
TMALL Global: One of the biggest cross-border e-commerce platforms by Alibaba Group. Integration with TMall marketplace allows customers to find overseas products that are not yet available in China. TMall overseas fulfillment (TOF) provides a new solution for new brands in China that want to test the Chinese Market but cannot yet sell on TMall Global
JD Global：One of the key players in the market place, but not as popular as TMALL Global. JD Global is a late starter compared with other platforms, but it has big potential for future cross-border e-commerce.
WeChat: The all-encompassing messaging app that users turn to for everything from sharing pictures to booking plane tickets, and all shopping and playing in-between. It’s on every Chinese user’s phone, and companies run both Official Accounts (for content and customer service) and Mini Programs (like a mini app within WeChat, mostly for e-commerce) to reach buyers.
Differences Between Cross-Border and General Trade
*Some brands have developed innovative offline cross-border e-commerce. For example, Sephora allows customers to order products only available overseas from within their China brick-and-mortar stores for direct home shipment.
Cross-Border Ecommerce Market Size and Recent Growth
China’s “haitao” shoppers number nearly 211 million (about half of the European Union’s population).
In 2020, according to the research by iMedia, the total sales of cross-border e-commerce in China is coming close to 1.8 trillion dollars. And it seems the trend will only increase, with shoppers eager for more. The lifestyle app RED (小红书) boasts over 200,000 articles teaching people how to purchase products overseas.
In this year’s Double Eleven shopping event, 31,766 brands sold on Alibaba’s cross-border channels in one day, and US brands became the largest contributor to the cross-border e-commerce market space.
Why Is Haitao So Popular?
- Price: Luxury goods are often 30% more expensive when purchased from within China, so cross-border e-commerce allows shoppers to save significantly.
- Trust: Chinese shoppers are keen to ensure the authenticity of their purchases, and a sense of buying more directly from the source gives buyers reassurance.
- Travel Behavior: Duty-free shops in airports allow customers to reach global brands. However, people are gradually beginning to prefer spending their time on experiences rather than shopping when traveling.
- Product Exclusivity: Millennials are interested in purchasing unique brands and products. For example, Millennials are increasingly interested in “clean beauty,” but those brands are typically unavailable within China.
- Infrastructure: Cross-border e-commerce has seen a huge rise in logistical solutions for shipping and payments, making the haitao shopping experience more widely accessible.
- Covid-19: Since the travel restrictions and lockdown, cross-border e-commerce is the only way for Chinese customers to purchase global brands.
How to Use WeChat to Reach Chinese Consumers from Abroad:
WeChat is one of the easiest ways to start cross-border e-commerce and build brand awareness in China. It can be compared to SMS messaging in the West where brands can reach consumers with a personal touch. But where WeChat outcompetes email or SMS in B2C communication is that every stage of the customer experience journey can be created right within the app. From awareness and engagement to conversion, and loyalty.
Building your brand within the WeChat ecosystem means your brand would become a friend to the user. Your brand’s Official Account would be right next to friend & family chats in a user’s main feed. And what it also means is that browsing in your e-commerce store would fit in seamlessly with the rest of your customers’ digital life.
Most importantly, you can even create a personalized WeChat experience for your customers based on data from your CRM. For example, you can customize your Official Account menu bar based on whether or not they’re a loyalty member or even their geographic location.
WeChat even offers capabilities to drive user conversion with the most seamless and hassle-free purchase experience. This includes a one-click information fill-in for the user’s phone number, first name, or shipping address. Furthermore, with WeChat Pay, a user can make purchases directly from within your e-commerce mini program without ever having to leave the app or grab their wallet.
This social app can also effectively compound your marketing efforts with organic user acquisition campaigns as it is inherently a social messaging app. For example, you can encourage users to share your e-commerce mini program by creating shareable wishlists.
Cross-Border E-Commerce Marketing & Promotion in China:
WeChat Conversion Loop:
As mentioned above, WeChat is way more than a simple newsletter. Customers can learn about your brand, access customer service, join loyalty programs, and receive promotions and offers all within this app.
Above: Engaging Mini Program with branded stickers (to use in conversations with friends), an offline exhibit, social e-commerce, and a virtual boutique tour.
Private traffic refers to the ability to reach customers and drive sales via closed channels, private forums where brands otherwise might not be able to reach the customer. More and more brands are using private traffic to target customers. Directing customers to promotional group chats, Mini Programs, or 1:1 customer services.
KOL have been key for brands aiming to land in the Chinese market. However, KOL campaigns can be both time consuming and extremely expensive. Additionally, widespread sponsored content by Chinese celebrities and KOLs have resulted in consumer fatigue.
KOCs (Key Opinion Customers)
KOC is a termed coined for influential everyday consumers, whose value is based on their relatability and trustworthy nature. For Millennial Chinese consumers, this personable, friend-like appeal can have a powerful impact on purchasing decisions.
Chinese overseas students and young professionals are often early adopters and trend-setters among their social circles in China. This makes them perfect KOCs.
For brands that are adopting cross-border e-commerce as a main entry point into China, having strong presence on platforms like RED is critical.
China Cross-Border E-Commerce Payment Solutions:
Union Pay (银联): Government-owned, the only licensed card network in China. There are over 6.8 billion credit & debit cards in circulation.
AliPay: “The Paypal of China,” but it has 2X more users, with 800 million active users. It has nearly 50% of the e-commerce market share in China.
WeChat Pay: “Venmo + WhatsApp.” It has 1 billion active users and owns more than 90% of market share when purchasing digital goods.
NihaoPay connects overseas brands with all of these payment solutions, removing common online payment roadblocks.
Many foreign brands are starting to look to China with the rising popularity of cross-border e-commerce “haitao” shopping. To capture the attention of the Chinese consumers, you must meet them where they are at -- on WeChat. Set up and optimize your experiences to build your brand awareness, drive engagement and conversion, and even leverage the user’s social capital to acquire more customers.