When it comes to Chinese online marketplaces they are numerous, large and competitive. Alibaba, JD.com and Tmall are no strangers anymore to the worldwide audience. So let’s take a look at some of the other influential players. In this article, we delve into the characteristics and recent developments for 3 other marketplaces you might be less familiar with: Kaola, VIP.com and Ymatou.
In iiMedia Research’s 2017 Competitiveness Index, these 3 marketplaces ranked number 1, 3 and 5 respectively. One is among the first Chinese online marketplaces allowing foreign brands to sell to Chinese consumers, another the first Chinese retail partner of the London Fashion Week, and also included is one that owns the largest network of bonded warehouse areas in China. No need to guess who is who, just read on!
Preparation for a Successful Online Multi-channel Strategy in China
When following a multi-channel eCommerce strategy a marketplace store can provide merchants with more exposure, increased sales volume and new ways to acquire first-time customers.
However, when opening a store on a marketplace, there is a lot of strategising involved. You need to handle branding, design, product offering and execute a unified eCommerce strategy over multiple channels. Consequently, your multi-channel strategy should include a data-driven and customer-centric approach combining brand eCommerce and marketplace data.
Chinese online consumers almost exclusively purchase their goods from third-party online marketplaces, rather than stand-alone websites. For example, 65% of consumers engage in purchases on the global channels of Chinese eCommerce websites.
Depending on your market, entry mode and product category you can select the most suitable marketplace to maximise your exposure and return on investment.
Look for the Right Chinese Online Marketplaces
The majority of Chinese domestic eCommerce platforms have a section dedicated entirely to products originating from outside the country.
Just like it is only possible for companies with a Chinese entity to open a store on a domestic platform, only firms with a foreign entity are allowed to setup a shop on cross-border marketplaces. This also counts for the sections dedicated to foreign products on domestic B2C platforms.
The major difference with online platforms such as Amazon, is that Chinese online marketplaces provide a centralised platform. Customers can purchase goods from different merchants or stores and make a single transaction via the overarching checkout system.
Kaola, VIP.com and Ymatou all count as online malls and are among the most well-known platforms. Read more details and relevant developments for each one below.
One of the most popular ‘pure’ retailers is Kaola. Owned by Chinese internet company NetEase, it is popular with white-collar citizens aged 20-40. Launched in 2015, it carries over 5.000 brands from 80 countries. In 2017 they had the largest cross-border B2C market share with 24,2%, even before Tmall Global and JD.com. In addition to official brand stores, Kaola also sells products through a first-party model and offers large-scale direct purchasing at reduced prices.
A success story on this platform is French fashion brand Kidiliz. Gael Estublier, International Group Director of Kidiliz, said: “Kidiliz Group and NetEase Kaola began collaborating in late 2016, and today, NetEase Kaola has become one of the largest sales channels for Kidiliz brands in China.”
In addition to Kaola, NetEase also launched Yanxuan in 2016. In the second quarter of this year, combined net revenue of both platforms was 660 million USD. Where Kaola is a leader in an existing business model, Yanxuan is at the forefront of a new eCommerce model. They push their own brand and work with Original Design Manufacturers (ODM) to produce their products. This lessens IPR and production problems, while being able to guarantee consistent high quality products at competitive price.
Ymatou was one of the first cross-border eCommerce marketplaces that allowed overseas franchises to sell directly to Chinese consumers. Launched in 2009, it used to be a big player on the Chinese market. However, competition is tough and its market share last year was only a humble 5,8%.
But they are still going strong and Ymatou has been quite a trendsetter in campaigning and special promotions. They already started with Black Friday promotions in 2013, although reportedly it was not a huge success.
However, a year later their revenue already rose to 15,63 million USD. And during 2016’s Black Friday events, Ymatou said they earned 9 million USD worth of goods in the first 10 minutes. Customers purchased products from 80 different foreign countries. Australia, Japan, Korea and the Netherlands are some popular countries of origin.
They are still going strong and had special promotions again during this year’s Spring Festival shopping carnival from January 15 to 17. Customers were able to buy more than 800.000 imported goods from 83 countries including clothes, shoes, bags, cosmetics, fine jewellery and health care products.
Zeng Bibo, founder and chief executive officer of Ymatou.com mentioned that Chinese consumers’ demand for premium brands and high-quality imported products is still growing.
Launched in 2008 as Vipshop.com, the company listed launched Vip.com in 2013. It is the third largest party on the Chinese cross-border eCommerce market with a share of 15,7%. Vip.com is one of the few Chinese online e-commerce platforms involved in ‘flash sales’. Using ‘virtual outlets’ and ‘flash sales’, the website offers 12 to 17 luxurious brands at big discounts every morning at 10. Each product is on sale for 3 to 5 days.
Vip.com is working on different partnerships to further it global expansion and was the first Chinese retailer to become an official sponsor of the London Fashion Week. Earlier this year, Jenny Jioe, Managing Director of Fashion at Vip.com said: “The fashion market in China is extraordinarily sophisticated and fast paced, and hungry for new design talent.”
The two Chinese internet giants JD.com and Tencent poured a combined 863 million USD into the company last year. A senior employee of Vipshop said that these partnerships allow Vipshop to provide more resources and WeChat-based services to their luxury brands so they can better target their audience. “We are working closely with Tencent to identify new growth opportunity within the WeChat ecosystem, in particular, developing social commerce,” the employee said. “We are also helping with brand education.”
If you enjoyed this article, we suggest you take a look at our piece on Chinese Marketplace Store Setup for instructions on setting up a storefront on one of China’s popular eCommerce marketplaces.
Guiding You to Success
Hungry for even more info about China’s online marketplaces? Check out our recent article on setup fees which also includes some of the above-mentioned marketplaces. Looking for some practical advice and information to guarantee success for your eBusiness? TMO Group published the perfect roadmap to get you started in China cross-border eCommerce.
Are you looking for more information and tips on how to start your eCommerce business successfully in China? Then be sure to take a look at our China eCommerce Market Localisation Starter’s Guide. Like what you read? Then you can directly purchase the in-depth China eCommerce Market Localisation Guide here.
The guides are based on our 20+ years of experience and composed by our team of eCommerce market researchers. Be sure to check out our Resources page for the complete series of guides which cover: (A) eCommerce Market Localisation, (B) eCommerce Store Localisation and (C) eCommerce Legal Localisation.