A growing number of Chinese daigou shoppers are buying their products online as they look to the convenience of this medium as well as fearing a backlash from Australian consumers when sourcing goods from Retailers like Coles and Woolworths.
The DaigouSales.com eMarketplace has become one of the fastest-growing marketplaces where Chinese daigou can buy Australian goods and have these sent directly to their buyers back in China. The site takes advantage of the Chinese government’s cross border policies that apply to consumers buying goods for personal use from retailers and brands in other countries.
To learn more about DaigouSales Women Love Tech interviewed Dr. Mathew McDougall. Here is an edited version of that conversation.
Tell us about DaigouSales.com
I have been thinking about how to best help Australian brands get into China without the large costs and risks associated with getting started. I wanted to leverage the Chinese daigou’s living in Australia and develop this channel as a first step into the Chinese market.
DaigouSales’s goal is to work with high-quality Australian brands and take their products to the 300 million or so middle-class Chinese consumers via the daigou community. We built our D2C (daigou-to-consumer) e-Marketplace in WeChat as this is China’s most popular social media platform, boasting 970 million active users. Additionally, there are an estimated 50-70,000 daigou living in Australia who are all regularly buying Australian products and sending them back to their contacts in China. All these factors led us to the decision to launch DaigouSales in mid-2017.
What is the difference between what you sell and what consumers can find on Alibaba’s marketplaces like Tmall and JD.com?
First of all, we are specifically focused on the daigou community and provide them with access to high-end, quality Australian products. Daigou are unique shoppers as they are not buying for themselves. They have been requested by someone back in China to source a particular product then they seek it out, purchase it and send it directly to the requester back in China. So with our platform, the daigou buyer can do all of this online and we even do the shipping for them.
Also, while other players mainly sell retail (B2C) our platform is a wholesale marketplace, where daigou has their own online StoreFronts to promote and sell products from within the marketplace. Our strategy focuses on helping daigou sell products directly to their shoppers.
This business model enables consumers to purchase products via their trusted daigou contact at better prices and to save time in making their selections.
Why is DaigouSales.com growing so fast?
Our strategy is to address the pain points, both of the daigou shoppers and of the Australian brands who have aspirations of selling into China.
One way we do that is by greatly reducing delivery time. Now, we are sending our orders by airfreight three to four times a week and operate a centralised warehouse in Sydney, Australia with several in several free-trade zones in China. (China has created free-trade zones in several cities where imported goods can be stored without going through customs, then sent through an expedited customs process when ordered by an online shopper).
We also have sped up the payment process. In China, the buyers pay in RMB and for our Australian brands we settle in Australian dollars. Australian companies want to reduce risk and improve their cash flow so we have worked hard to ensure smooth cross-border payments.
How many brands do you sell now?
Over the past five months, we have selected 60 Australian brands to work with and these brands have combined around 2,000 SKUs. There are many more Australian brands looking having an eStore but we have introduced a selection process to ensure we can match the types or products our daigou (and in turn, their buyers) are looking for.
How are Australian brands selling?
The major Australian brands entered China’s market very early, with many more now leveraging cross-border e-commerce. Additionally, Australia has been a hot travel and study destination for Chinese so these factors combined have developed the awareness for ‘Brand Australia’ as being ‘clean, green and desirable’.
For this reason, Chinese consumers have sought out our infant formula, health and wellness products and high-quality wines. This said, for new and emerging brands the prospect of going into China is one fraught with risk and high cost; the Chinese market is the most competitive in the world so without a plan most will fail.
Do you allow brands to operate a store on DaigouSales.com and sell directly in China?
Yes. DaigouSales is the first place brands should go so that they can start to educate the Daigou community and gain some local Chinese supporters. The daigou community are a great brand advocate and will drive awareness (and interest) back in China.
D2C is the first step then once the brand gains traction it can add on the B2C and B2B strategies.
How about small brands or companies? Can they be successful in China?
We also pay attention to promoting small and niche brands. Wattle Health, an Australian infant formula brand, joined our platform this year and we have seen fantastic support for their products. Now is a very good time for second-tier Australian brands to enter China because consumers have started to seek distinct and personalized products. I believe those small but unique brands will shine in China.
What is the best way for a brand to market when they sell via DaigouSales to China?
I suggest brands shouldn’t spend big on paid ads in the first three months. Instead, they need to first spend time engaging with daigou and understanding what they are being asked for from their Chinese buyers. For example, Chinese consumers will ask their daigou contacts to recommend some new products, like face masks that consumers rub on the face or new natural skincare products.
DaigouSales holds monthly sales events and product training days for brands to meet, exhibit and educate about their wares. It is these types of events that lead to daigou becoming interested and curious, hopefully turning them into brand advocates to promote back into their Chinese networks. Once the brand knows which SKUs are popular, they can participate in sales events such as Singles Day (takes place every Nov. 11) or Golden Week promotions to drive more eStore traffic. You can also increase your sales by spending on group buying promotions, flash sales and sampling programs.
Is there any other advice you can offer brands looking to sell in China?
Daigou as a channel is not for every brand but for those brands looking at going to China, I don’t know any that have been successful without a degree of support from the daigou community here in Australia.
It is a channel that will require brands to rethink the way they do business and one that will take time. I suggest brands take a 12-month view on using this channel and join the “Australia China Daigou Association” to get more involved.
China is a huge opportunity for Australian brands but it takes hard work and much effort.