A clear majority of Australian retail players active in China view the country as a lucrative market, yet just 20 per cent of respondents to a study on cross-border shopping are happy with their online market reach, according to new research.
New analysis of cross-border e-commerce in China by Frost & Sullivan in conjunction with Azoya Consulting showed Chinese consumers spent more than $US100 billion online on goods from outside of China in 2017.
The total online shopping market in China hit $US930 billion in 2017, and has been forecast to grow past $US1 trillion in 2018, making it not only the world’s largest online shopping market, but also its fastest growing.
Australia was the preferred country of origin for 37 per cent of Chinese cross-border shoppers, ranking the country fourth in preference for Chinese shoppers, trailing only Japan, Korea and the United States.
Frost & Sullivan and Azoya conducted a study of more than 1,000 cross-border online shoppers in China, as well as 100 international brand owners and retailers.
Around 90 per cent of Australian respondents said they saw China as a lucrative market, with that view backed up by the research.
On average, Chinese shoppers spend around $US2,410 on online shopping in 2018, with $US850 of that each year spent on cross-border purchasers, the research said.
Around 60 per cent of respondents said they expected to spend more over the next 12 months.
Frost & Sullivan Australia and New Zealand managing director, Mark Dougan, said Australian retailers and brands needed to carefully consider their best approach to reach Chinese consumers to take advantage.
“The complexities and challenges involved mean a one size fits all approach isn’t appropriate to meet market demands,” Mr Dougan said.
“They need to carefully determine which model will work best for them.”
The research found that for a third of Australian retailers expanding into China, marketplaces such as Tmall Global or JD.com are the preferred entry point.
But just 21 per cent of retailers said they were satisfied with sales on those platforms, with a lack of direct customer access, high commissions, upfront costs and high levels of competition the top concerns.
“While Chinese marketplaces may seem an easy way to set up an online channel into China, they often generate disappointing sales and marketing results, particularly the lack of ability to connect directly with Chinese customers and to control their business,” Mr Dougan said.
“Marketplaces may not necessarily be the best approach for Australian retailers and brands in the long-term.
“Instead, they need to take a broader view to set up a smart channel strategy with multiple touchpoints to approach customers and command healthy growth for the business.”
The study showed Australian retailers were increasingly moving towards conducting their own sales in China, with 63 per cent of respondents planning on establishing warehousing or distribution centres to meet demand.
Azoya managing director Don Zhao said retailers needed to approach Chinese consumers through multiple touchpoints, in order to build trust and command a healthy profit margin.
“Retailers are increasingly establishing their own websites as the core of their strategies to connect directly with Chinese consumers, accompanied with marketplaces and social media strategies, while at the same time retaining flexibility and control over their business.”