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Cracking China Remains Holy Grail for European E-commerce Players

With China now one of the world's largest e-commerce markets, there is a new generation of digital businesses looking to facilitate cross-border sales between European vendors and the mainland's growing army of acquisitive e-consumers.

Photo: SAP Anywhere: A one-stop cloud-based system for e-commerce management.
SAP Anywhere: A one-stop cloud-based system for e-commerce management.
Photo: SAP Anywhere: A one-stop cloud-based system for e-commerce management.
SAP Anywhere: A one-stop cloud-based system for e-commerce management.

For anyone involved in e-commerce, China is clearly the country to crack. In 2015, retail e-commerce sales in China totalled US$672 billion, with 375 million people buying online. Sales are expected to grow to $911 billion in 2016 (with 423 million online buyers, up 13% year-on-year), $1.21 trillion in 2017 and $1.57 trillion in 2018, a rise of 133% over three years.

In September 2016, the value of the online retail sale of physical goods was RMB2.8 trillion, representing some 11.7% of the total retail sales of consumer goods. Figures from 2015 suggest that China accounted for 50% of global retail e-commerce sales, while almost half of all Chinese consumers had ordered basic items online, such as grocery products. Overall, the same figures show that some 75% of Chinese consumers have used a mobile phone to buy a product.

Not surprisingly that a significant proportion of the exhibitors at the London E-commerce Expo was already involved in the Chinese market. Of those that weren't, nearly all were keen to remedy that.

Over on the SAP Anywhere stand, Kevin Reinhardt, Product Strategy Lead with the German software provider, revealed that his company had had a China connection from the day it launched, back in October 2015. This was thanks to its tie-in with China Telecom, the state-owned telecommunications giant.

Explaining just why establishing a mainland presence was so important, Reinhardt said: "When you look at the stats for China, that really is the country to go for. If you figure out that market, you pretty much have the other regions sewn up. In China, they're mobile first and they're massively on social, which is where we're going in the West. So if you've got a product that works for the Chinese market, you're ahead of the curve."

According to Reinhardt, SAP Anywhere was set up specifically to cater to small businesses. He said: "We offer a cloud-based solution, allowing retailers or service companies to manage their e-commerce, inventories, digital marketing and CRM, customer support – everything essentially and all through one platform. A small business might have five, six, independent systems. We consolidate everything so that the information flows from one system to another, simplifying the workload."

Another company heavily committed to China is Avenue 51, a London-based specialist in the mainland's e-commerce sector. It works closely with 51 Parcel, a sister logistics company with a focus on shipping from the UK to China.

Established two years ago, Avenue 51 claims to account for 50% of all e-commerce activity between the UK and China, shipping about 50 tonnes of goods a day. In its second year, it has turned over more than £15 million, up from £3 million in its first trading year.

Explaining its operating model, Chao Liu, the company's Co-founder and Chief Commercial Officer, said: "We specialise in British products sold on Chinese platforms, such as Alibaba and VIP. In the case of Waitrose, for instance, we sell a lot of its wine into China. The product is placed on Alibaba and Chinese consumers buy it there. They pay for it, then the order comes from Alibaba to the Avenue 51 database. We send that information to Waitrose and they do the pick-and-pack, and then send the wine to us. We then send it on to the freight-forwarders for distribution in China."

According to Liu, many European brands see selling into China as a huge challenge. He said: "The market is massive, but there are a lot of hurdles. All your product information has to be in Chinese, plus the way that Chinese consumers want to see products displayed is totally different to what Europeans expect. Culturally, that's something of a hurdle.

"In terms of political hurdles, you're looking at how to get it customs-cleared and how to pursue payments – things that a lot of people find difficult. Even when you try to integrate with the Chinese platforms, a lot of their IT guys don't speak English. It can take more than year to achieve any real level of integration."

Among those companies looking to expand into China is Channel Pilot Solutions, a German online multichannel marketing specialist. Launched in 2013, the company now has 60 employees and some 600 clients.

Explaining the company's USP, Ramin Rezai, its UK Country Manager, said: "A merchant – it could be a brand manufacturer or a retailer – wants to sell products through different sales channels, not only on its website. What they find is that, when selling on Amazon, eBay and the like, there are a lot of different requirements that need to be met, with each category set up in a different manner.

Photo: Avenue 51: Fulfilling UK-China transactions.
Avenue 51: Fulfilling UK-China transactions.
Photo: Avenue 51: Fulfilling UK-China transactions.
Avenue 51: Fulfilling UK-China transactions.
Photo: China-centric: The London E-commerce Expo.
China-centric: The London E-commerce Expo.
Photo: China-centric: The London E-commerce Expo.
China-centric: The London E-commerce Expo.

"Instead of setting up their feeds to multiple channels, they can sign up to a service like Channel Pilot. This means they can give us just one set of data, and we're able to list them on different channels. We're also able to optimise their data so that it's presented in a manner that's more attractive and attracts more qualified traffic. At the same time, we can also assess how the products are performing. If a product is generating too many wasted clicks, our solution would be to remove it from the listing, making sure that only the top 20 or 30 most-clicked products are listed."

The company has recently expanded into North America and currently supports more than 2,000 sales channels in up to 40 countries. Detailing its future plans, Rezai said: "China is one of the markets we want to expand into. Selling abroad is always a great idea and we can help companies prepare for it, with regard to translations, logistics and tax. We want people to become more aware that it's not just a question of listing a product and hoping it sticks."

Over at the 247 Commerce stand, Consultant Raj Madabushi maintained the 10-year-old British e-commerce software specialist was seeing an increased amount of interest from online vendors in China and Hong Kong. He said: "We provide multi-channel e-commerce software and users to websites using the Magento e-shopping platform. Magento is now number one in the market, largely because it's easy to use, more advanced and offers more features than other platforms. Out of 1,000 retailers, more than 900 now choose Magento."

Typically, a vendor in China or Hong Kong can use 247's cloud-based software to log in regardless of their location, and then manage the complete e-commerce process. Madabushi said: "That includes the listings from all the channels, downloading the orders, processing the orders from eBay and similar market places and competing with other similar businesses.

"They can also manage the stock control and inventory, warehouse management, supplier integration and so on. We take the feeds from the suppliers and we can load the inventory into the system. Once it's in the system, with the click of a button, you can put that inventory into any of the channels you want to sell on."

Another convert to the Magento cause is Lewis Sellers, Managing Director of Harrogate-based Pinpoint E-Commerce. Launched six years ago, Pinpoint is a full-service digital agency specialising in building websites and the Magento e-commerce platforms.

Sellers said: "When operators move into e-commerce, they need to plan for future growth. You have to choose your platform wisely, always bearing in mind whether you need to scale quickly or not. Magento scales from small to very large, servicing such retailers as Nike and Mothercare – businesses doing huge volumes. Other platforms may not be quite so flexible."

The motto "Think Global, Act Local" has a particular relevance in the world of e-commerce. It has also been taken to heart by Poland-based WebInterpret, a business specialising in helping companies to sell internationally through localisation.

Explaining how this works in practice, Eva Kondratowicz, the company's Customer Care Team Leader, said: "We translate and localise people's products for international sites. Our clients have their shops on eBay or Amazon or their own online shop. We take this information, translate it and list it on an international site, creating a mirror image of their shop.

"All they have to do is manage their original domestic shop and we translate all the changes – the prices, the stock levels, the titles and so forth. We also optimise the international sites, using the search keywords that are most popular in a given country.

Photo: Returning to London’s Olympia in September 2017.
Returning to London's Olympia in September 2017.
Photo: Returning to London’s Olympia in September 2017.
Returning to London's Olympia in September 2017.

"We also offer a shipping service that clients can use. We pick up goods from the seller and deliver it to a Royal Mail or FedEx hub. As we handle a considerable volume of packages for our clients, we get much better rates than they would be able to get individually."

The London E-commerce Expo was held at London Olympia from 28-29 September.

Martyn Cornell, Special Correspondent, London

Content provided by Picture: HKTDC Research
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