Tackling China—the World's Most Lucrative Ecommerce Market

Emilee Valken

July 24, 2020

China is an ecommerce goldmine—there are 800 million internet users in the country with over half of the population active on its most popular channels. That being said, China is also an intimidating unknown for brands considering international expansion outside the US.

In a recent webinar hosted by Pattern, experts from our international team dove into the fundamentals of the Chinese market and what brands should know as they think about taking their product there.

Why China?

The level of growth occurring across China’s ecommerce channels—even in the midst of the COVID-19 pandemic—is exciting. The area’s Gross Market Value in 2019 was $1,935 billion, and its biggest platforms are pulling numbers to rival Amazon.

China Ecommerce Logistics Specialists, GMV | Pattern

“I really think the top two players of China will eclipse all of Amazon Global in the next several years,” said John LeBaron, Pattern’s Chief Revenue Officer.

The ecommerce platform Alibaba, which encompasses Tmall, Tmall Global, and Taobao, is dominating the Chinese marketplace, accounting for 50.4% of online sales. According to Joanna Perry, Pattern’s Head of Global Marketing, Tmall grew by 10% in the worst of the pandemic and Alibaba at large has a GMV of $945 billion.

China Ecommerce Growth on Tmall During 2020 | Pattern

Consumers love these platforms, and the brands that are effectively using them are finding lots of success.

“If you’re not already selling into China and you want to start,” Perry said, “I think we would all agree that Tmall global selling crossborder is the best place to start.”

Alibaba Marketplace Growth in China Ecommerce | Pattern

Things to know about China

China’s approach to customer service and distribution differ from the US, and those distinctions are important to keep in mind as you consider if expansion is right for your business.

“You’ve got to understand that the culture is different and they might have a different paradigm when they’re dealing with you,” said Chris Vincent, Chief International Officer at Pattern.

The Chinese concept of face

According to Vincent, one of the most important things to keep in mind as your brand considers China is the idea of face.

“It’s almost like dignity and prestige wrapped up into one thing,” Vincent said. “Face really can stop people from giving you an honest answer about things if they think that it will diminish their face or make them lose face.”

Maintaining face is particularly important to keep in mind when building business relationships and partnerships within China. It can also impact your growth in the market.

Desiree Wong, Senior Consultant for Pattern, said Chinese consumers equate the brands they’re using to their social status. In previous years, affordable luxury brands have been huge business for just that reason, so focusing your marketing on face can help.

Customer service and delivery

Most customer service in China is carried out via live chat, and according to Vincent, 80 to 95% of all transactions for your brand will touch customer service in one form or another. This is because Chinese shoppers are very careful about what they purchase. They need to know that they can trust the businesses they’re buying from and that the products they see are the products they’ll get. That’s why brands need to offer stellar customer service.

Customer Service and China Ecommerce Trade Partner Team | Pattern

“A well-trained customer service function is worth its weight in gold in China,” Vincent said.

Chinese consumers need as much information as they can get before making a purchase. Wong says brands should use 360 images, videos, and live-streams on platforms like Tmall to provide that information.

“For each single product, you’ll need even more than the A+ content on the Amazon US to illustrate what the benefits of the products are and also how it would look if they received the products so they won’t have any surprises,” Wong said.

Chinese consumers also expect to get their products very quickly, said Vincent. With 1 day shipping being standard in the Chinese market, considering the logistics of your shipping as you enter that market is another thing to think about.

Sales holidays in China

Similar to Amazon Prime and Black Friday, sales holidays in China drive billions in revenue and can lead to lots of growth for brands who do them right. JD’s 618 festival, a sale occurring on June 18th, and Singles Day, China’s version of Prime Day, are great examples of major market holidays there.

In fact, Singles Day crushed Amazon’s US Black Friday sales numbers in the first 20 minutes of its launch. It goes to show the value in that market.

Standing out in China

There are many ways your brand can stand out in China. According to Wong, using capabilities like live-streaming and interacting with customers through microblogging are a few examples. Tmall has the ability to reward customers based on their engagement with brands, and that engagement can help you stand out. Providing marketing through local influencers who can spread the word about your product and increase its face value is one way you can increase engagement.

Marketing in China on Ecommerce | Pattern

Thorne, a supplements brand based in the US, made their entry into China with the help of Pattern by holding a sports event and inviting influencers and media to spread the word. This in addition to other marketing tactics brought Thorne $2 million in sales their first year. Read more about Thorne’s success in China here.

4 things to consider in a China ecommerce trade partner

Having a partner that's just as invested as you in your Chinese ecommerce store and growth is important, but it's even more important that you choose wisely when going with a China ecommerce trade partner.

We suggest you consider these four areas when evaluating a trade partner to do business with in China:

  1. Make sure you have access to data.
  2. Get someone with category and localized market expertise.
  3. Make sure they have on-platform and off-platform channel capabilities.
  4. Find experts in evaluating your product category ecosystem.

China ecommerce partner evaluation process | Pattern

Next steps

Pattern is launching a store in China for US supplement brands that are looking to sell their products in the Chinese market. As Chris Vincent stated, launching a store on your own can cost upwards of $100,000 and 25% of expected sales volume goes straight back to marketing. This can be difficult for companies that currently have no brand awareness in China.

Whether you’re a supplement brand wanting to launch in the Pattern store, a brand looking to expand into the international marketplace, or you already trade in China and are looking for a partner to help you succeed—we can help. To learn more, schedule a demo with one of our China ecommerce experts below.

China Ecommerce Data Trade Partner | Pattern

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Sept 6, 2022

Global Ecommerce Weekly News: 6th September 2022

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Aug 30, 2022

Global Ecommerce Weekly News: 30th August 2022

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Aug 23, 2022

Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)