Diversifying into the e-commerce space, AusPost’s platform development venture to help local small-to-medium retailers sell into the Chinese market is tracking well.
Last year, Australia Post partnered with software development firm Market Engine to build out a proprietary market management platform that would enable it to act as the middleman between local sellers and Chinese marketplaces like Alibaba.
The HTML5 platform – which integrates into Alibaba’s Tmall business-to-consumer online store – was developed in six weeks, and the organisation has been testing it with clients over the past eight months.
Since its launch, the online platform has attracted more than 30 retailers to the government enterprise’s books, including Swisse Vitamins, Olive Oil Skin Care Company, Cullen Wines, Jeans West and Bellamy’s Organic.
According to a recent iResearch report, China’s online population is more than 50 times Australia’s internet population of 12.7 million, and in 2013 China became the world’s largest online retail market when sales reached US$307 billion.
Therefore the market represents a massive opportunity not only for Aussie businesses looking to develop cross-border trade, but for service operators like Australia Post looking to diversify and take advantage of such opportunities.
By establishing partnerships with the likes of Alibaba, Australia Post is hoping to open the door for local SMB e-commerce players, who lack the scale and firepower to expand on their own, to sell into China by taking care of the red tape for them.
So how does it work?
- Sellers interested in gaining access to the lucrative Chinese market need to meet several requirements to be accepted onto the AusPost proprietary platform, namely that they must have a reputable Australian brand with business registration and a brand trademarked locally.
- Sellers must have large supply of their particular product – over 500 stock keeping units (SKU) – available, preferably in the categories of baby, maternity, health supplements or non-perishable foods, and products must be made in Australia.
- Once accepted, sellers input their item, sale price, amount of product available and photographs of the item into the Australia Post software.
- Australia Post quality-checks the information and translates it into Chinese for Tmall. From there, AusPost takes over the rest of the process, thanks to partnerships with Tmall and China Post for warehousing and shipping.
Power Retail caught up with Ben Franzi, GM, Global eCommerce Platforms and Marketplaces at Australia Post:
“We’re focused on delivering e-commerce opportunities and solutions to help online retailers grow and make it easier for them to do business.
“We’re doing this by establishing partnerships with major international e-commerce players and, significantly, our agreement with Alibaba’s global shopfront, Tmall, has opened the door for small and medium Australian businesses to access and sell into new China without a Chinese business license.
“Tmall Global charges US$25,000 for a refundable deposit and a US$10,000 yearly fee, depending on the number of categories the merchant subscribes to. The types of ongoing shopfront costs that businesses need to manage in addition include annual rental fees and sales commissions.
“For those wanting to take advantage of the one-stop service through Australia Post, we don’t charge an on-boarding fee, but we do provide product translations, customer service support in China and a competitive logistics delivery rate in China. In return, retailers benefit from the broad reach and revenue opportunities that comes with Tmall’s high visitor traffic, not to mention the trust and reputation that is associated with the platform.
“Tmall safeguards the authenticity of items on its site by ensuring shopfronts are only operated by brand owners or their licensed agents. By doing business with specific businesses, Tmall ensures a level of merchandise quality that promotes strong consumer confidence among its 500 million-plus registered users.
“Since signing the joint agreement with Alibaba last year, Australia Post has so far signed up more than 30 companies. While the service is still in its infancy, we are continuing to engage closely with Australian businesses looking to grow their presence in new markets by testing how we work with them and the different platforms on offer.”
The strategy to expand into new areas of e-commerce was a key item contained in the organisation’s Building Future Ready strategy, which aims to diversify away from its loss-making letters business and into more profitable areas. This service is just one of many growing digital solutions being offered by the organisation as it works to decrease reliance on legacy operations by reshaping its core services as online systems.
It has so far diversified into digital services with its MyPost offering (mobile delivery management), Parcel Lockers and ShopMate. It’s also offering e-commerce providers like eBay APIs to expose key AusPost functions like the postage price calculator on their websites.
As with yesterday’s announcement that new start-up Sendle and delivery service Toll have partnered to provide small businesses with an alternate logistics solution, this collaboration signifies the growing need for organisations to join forces in order to offer businesses complete end-to-end solutions.