How Online Retailers Can Sell into China
The incredible story of selling Australian cherries into China
The world of online retail is constantly evolving, even more so when retailers consider the opportunities they could have overseas – as Chris Morley has experienced for himself.
Chris is managing director of Premium Australia Foods – an Australia-based company with a thriving presence in China (just take a look at the listing for Tasmanian cherries on Amazon China). Throughout his career, he has noticed industry changes over time that affect online retailers today.
“No-one really saw how mobile would create couch-commerce – being able to buy things anywhere,” he says, explaining how far online retail has come since he entered the industry.
Chris believes the retail philosophies of ten years ago are also true today. The difference is that retailers are now able to fulfil consumer expectations using technology.
“If you go to a website now and a pop-up comes up, that replicates someone in-store offering you help. If the site tells you someone in Melbourne just bought an item, that’s replicating you seeing someone walking out of the shop with a purchase.” he explains.
But are retailers up to the challenge of adapting to new technologies?
“Online retailers don’t get enough credit for how nimble they are – you can put things up and make changes pretty quickly.
Look at website building and the costs involved – now you can use things like Wix and get a free website. They’ve got the basics and you can obviously upgrade, but costs have come down and technology is getting pretty easy.”
A Global Scale
These possibilities can lead to new markets and opportunities, with connectivity bringing people together as global citizens.
“We take advantage of that every day,” Chris says. “We make Australian food and sell in China. Connecting worldwide is so accessible.”
One of Chris’ most successful ventures has been importing cherries to China, as only cherries from Tasmania can be legally imported.
“We saw that cherries from Australia did really well online, the volumes they did were good and the prices they got were three times what we’d pay here. So we found an orchard and worked with them on the export requirements. We then started working with Amazon exclusively and they were excited – a good move on our part.
The pages where we sold the products were quite long, with a lot of information about the orchard and its owners. We really told the story about why these cherries are so good.
We sold two tonnes of cherries on the Amazon China platform and it was a terrific result. It proved what you can do when you put your mind to it. If we’d had thirty tonnes we would have sold them easily.”
While Chris may be in the food industry, other Australian retailers may also consider the Chinese market.
As for which products are currently selling well in China? “Vitamins, minerals, supplements are phenomenal business. Infant powder is another – they call it white gold in China.
There’s value in food production and healthcare. Even services.” As an example, Chris notes online education services for Chinese consumers as they become more aware of the need to be educated globally.
He also points out the favour of luxury brands in China, describing how Western products are often sought after, playing on the worldwide notion that Chinese products may be of poorer quality.
“The middle class and above don’t trust a lot of Chinese products. If they can afford it, they’ll look at international goods.” But what’s the appeal? “Products are presented differently, celebrities might have worn/used them. China follows a lot of Western trends.”
Retailers need to decide whether to keep selling from Australia or dedicate a separate storefront for Chinese consumers. Chris strongly recommend the latter.
“It’s important to have a presence in the market you want to sell to. Gain a local knowledge. Australian companies can seem alien, so when the retailers put that effort in, they see better results.
We went to where the consumers are and set up customer service there. If a customer orders, it arrives quickly. If they have questions, they’re answered. With online you can do that without too much resource outlay. That’s one of the best things about the internet.”
Booking a Flight
After considering the value of expanding internationally, retailers may decide to make the move – but it’s important to avoid rookie errors.
Chris recognises that companies often take the leap with insufficient preparation.
“I think the perceived level of understanding amongst consumers is too high,” he says, before going on to explain the importance of educating the consumer.
“Australian products are made to a high level, so they’re more expensive than a local product. Most consumers can accept that however you need to back it up with support and education.”
This may be down to retailers not knowing the type of research they should conduct. Chris recommends booking a flight and taking a look for yourself.
“The first thing to know is the market you’re going to sell into. It’s interesting how many people just don’t go. It’s really affordable to get a return ticket to Shanghai, get your boots on the ground and look at the market.”
A New Approach
Chinese law is also a factor to consider. While Western retailers promote their products through Facebook, Twitter or Instagram, China’s policy of Internet censorship prohibits these sites. Retailers consequently seek new approaches to online marketing.
“The way the Internet is monitored in China, things might be blocked out, fonts and elements change, so it’s better to set up a separate site in China that can be managed from Australia,” Chris recommends. “I just don’t think it’s feasible to do it without a hosted Chinese website.”
When in China, Chris recommends WeChat – China’s most popular social network. “It’s phenomenal,” he marvels. “It’s like all Western social media apps rolled into one. You can scan a QR code and shop online, share moments with friends – even send business invoices. It kind of takes over email, which took us a while to get used to.
The same principles apply as on Facebook or Twitter – presentation is key. You can have a blog, build up a user base and market to them through that.”
A Move to Shanghai?
As for the business owners themselves, a long term stay in Shanghai may not be a walk in the park.
Setting up premises and finding somewhere to live can be difficult for Australians. “You need to work with a Chinese entity. You’ll find groups like AusTrade very helpful, or a Chinese national who can help you out,” Chris suggests. “There are ways around it and they’re worth doing.”
Learning Chinese may also seem essential, although Chris claims he gets by with just the basics. “It’s also understanding the culture. Even if I did speak Chinese, there are certain meetings where I won’t progress any further because I’m not Chinese. That’s something to be aware of.”
Choosing a Platform
After making the decision to sell, retailers will need a platform. Chris fills us in on the top five.
- “AliBaba, everyone’s heard of, and they also own TMall.”
- “TMall is the biggest online marketplace, probably in the world. It sells everything from condoms to Mercedes Bens and holds 60% of online sales in China. Our company is responsible for our products, presence and customer service.”
- “Amazon China is similar to Amazon US. There’s no branding or marketing you can do. You can either store and distribute your product yourselves or choose fulfilment by Amazon.”
- “YHD is owned by Walmart. They’re basically a grocery site. You can have your own storefront and do your own logistics.”
- “JD.com is a growing player in the market and operates both systems – you can manage everything or move your product into their warehouse and they deliver for you.”
As for which is best, Chris says “Options depend on what resources you’ve got available, and there is of course cross border ecommerce which allows you to operate a Hong Kong site and import your products legally without having a Chinese registration.”
Looking Further ahead
After finding success in China, would Chris consider further international expansion? There are no plans, but that’s not so say he’d rule it out.
“China’s enough of a headache for me right now, there are developing countries with issues around the way they produce food, food safety and food security – things we as Australians take for granted. In South-East Asia, they face issues after going through rapid expansion and their food can’t adequately serve these growing populations. People have got more access to money so they can afford better products. We could expand to more South-East Asian countries but for now we don’t have the desire to do that. But that may change.”
Chris will be speaking at Retail Global 2016, sharing his thoughts on selling luxury goods in China and how they should be presented to Chinese consumers, as well as telling a few of his own war stories that could help retailers avoid making the same mistakes when it comes to expansion.
To get in touch with Chris, email him at firstname.lastname@example.org or visit www.thepathtoasia.com.au where he’ll be “more than happy to talk all things China and Australian products” with Australian retailers looking to make the move. As he says, “When you set up in China you’re not just competing against other Aussies, you’re competing against the rest of the world, so let’s stick together and take them on.”
Alternatively, keep up with Chris’ Chinese ventures by following him on Twitter @morleychris.