Speaking with Power Retail, Maggie Zhou, the managing director of Alibaba Group in Australia and New Zealand details how brands like Chemist Warehouse and Woolworths have executed successful cross-border strategies.
Successfully breaking into the Chinese e-commerce market has long been a struggle for Australian retailers, with logistics and cultural barriers often being cited as some of the biggest hurdles for Aussie businesses.
Considering China far out-paces the US when it comes to e-commerce, both in terms of sales and growth, with 33.6 percent of all retail sales in the region expected to come from digital channels by the end of 2019, China represents a valuable trade opportunity for retailers across the globe.
“China and Australia hold a positive and mutually beneficial trade relationship that, in recent years, has been boosted by the China-Australia Free Trade Agreement, opening up endless opportunities for countless businesses,” Zhou says.
This strong trade relationship between Australia and China was reflected during Alibaba’s 2018 11:11 Global Shopping Festival, which saw Australia ranked fourth in the top ten countries and regions selling to China on Tmall and Tmall Global.
“Australian brands have a natural advantage in China as their high-quality products are well perceived and trusted by Chinese consumers. There is currently a major market for companies selling health products to China due to Australia’s ‘clean and green’ image. Other Australian industries also currently selling well in China include food, wine and beauty,” she explains.
This in itself is reason enough for Aussies to look at breaking into the Chinese retail sector. But, with the growing popularity of global online shopping and new tech that’s actively breaking down trading barriers, there’s now even more reason to look further afield for customers.
Key Cross-Border Considerations
“Advancing technologies help reduce problems associated with international payments, shipping times and language barriers,” Zhou says.
However, this doesn’t mean that entering a new e-commerce market will be as simple as replicating your local strategy in an international setting. Zhou says there are still plenty of considerations to factor into a cross-border plan.
“One of the most important considerations for global expansion is that businesses must do research to understand their target customer. Australia has an active Chinese migrant community, such as Chinese students, who can provide valuable feedback on the taste, smell and packaging of your product—or even a brand’s retail experience.”
She also suggests that Australian brands should implement the right tech infrastructure before attempting to break into a market as complex as China. “Whether this be a Chinese website or cloud infrastructure through Alibaba Cloud or a payment system such as Alipay”, she says. Not surprisingly, this also encompasses finding the right local Chinese partners to help connect your business to local shoppers.
Common Cross-Border Hurdles
Much like Australia’s online retail sector, China’s e-commerce industry is in a constant state of evolution. New tech, emerging trends and shifting consumer expectations are actively re-shaping the Chinese market on a continuous basis. According to Zhou, this means flexibility is key for overcoming hurdles like order fulfilment and establishing brand awareness among local consumers.
“Adapting to change and being flexible with your business strategy is key to success,” she says.
“Whilst Australian companies naturally have strong country brands which local producers can leverage, to become successful in China, companies must focus on developing an authentic brand story and how they can strategically position their brands amongst Chinese consumers.”
Aussie Success Stories
Australian brands such as Chemist Warehouse, Metcash, Lorna Jane and Woolworths have all leveraged Alibaba’s local platforms to build cross-border operations in China into their wider business model.
“Chemist Warehouse has continuously worked hard to build a strong reputation amongst the Chinese consumers and has, in turn, become extremely successful,” she says.
“During the 2018 11:11 Global Shopping Festival, Chemist Warehouse remained number one for overseas merchants on Tmall Global, achieving RMB100 (AUD20.7) million in less than seven hours and exceeding total sales of the previous year. In fact, Chemist Warehouse’s Tmall Global store is the largest in the world by gross merchandise volume,” she continues.
Lorna Jane has also found success in China, stemming from its partnership with Alibaba and since expanding into plans for further trade within the profitable region.
When announcing plans to further expand the homegrown fitness and apparel brand into China in late 2018, the company’s Founder, Lorna Clarkson said her products appealed to a large consumer-base across China, especially considering the strong growth of other Aussie wellness brands, such as Swisse and Blackmores.
The company’s decision to focus on China as a key international revenue stream came after the business found success on Alibaba’s Tmall platform. According to Clarkson, the company’s sports bras quickly became the number one item in their category on the platform.
Looking beyond its online success in the region, Clarkson’s husband, Bill Clarkson said the business already has a strong digital presence but would be looking to expand its physical store footprint as well, to correlate with rising consumer and investor interest in the region.
“The interest has been very strong and has exceeded our expectations,” he said.
Given the overwhelming popularity of Australian brands in China, Zhou believes cross-border trade into China is a natural progression for Aussie retailers that are looking to expand beyond their local operations.
“Consumers shop online for a range of products from all over the globe. By setting up a successful cross-border strategy, companies can not only shop items that are often too expensive, but they can also source products not yet available in their country,” she says.