Updated: 2013-08-16 09:00
By He Wei (China Daily)
The keenness of county-level shoppers to buy global cosmetics and clothing brands online is also drawing more foreign players to China's e-commerce market. Buyers from smaller regions spent an average of 765 yuan for Estee Lauder skin care products on Tmall, Taobao's sister unit, where business vendors sell to individual customers. In contrast, large-city residents spent only 652 yuan on similar purchases.
The findings coincided with a study conducted by global consultancy firm McKinsey & Co in March, which indicated that online spending has played a key role in lifting total consumption, especially in less-developed areas of China.
"We found that though income is still low, online purchases still tend to be higher, as customers have online access to products and brands previously not available, especially in locations where many retailers do not even have physical stores," says Richard Dobbs, director of McKinsey and lead author of the report.
Qi from the Shanghai Commercial Economic Research Center reiterates that online shopping has been the main catalyst for economic growth, especially when it comes to uncorking the demand from lower-tier cities. "It is important for merchants and companies to build brands that resonate and inspire trust with customers online," he says.
Unlike first-tier consumers whose purchases are largely governed by exposure to products, Qi says emerging customers are usually novices for whom buying a refrigerator, a pair of jeans or even a box of diapers may be a first-time experience.
MaryAnn Richardson, founder of Makeup By MaryAnn, a UK company that sells makeup brushes and other fashion essentials, says that having a presence on Alibaba, China's largest e-commerce platform, has helped several Western companies to engage, converse and participate in business negotiations with entrepreneurs from diverse backgrounds.
"Having access to so many companies under one platform, especially those who are able to produce bespoke items at affordable margins, is of great importance to start-up businesses," she says, adding that it also gives companies enough brand exposure.
Building trust in China's marketplace has been the biggest contribution of Chinese e-commerce companies like Alibaba and Tencent.
Online shopping in China is no longer just clicking the "buy" button and has more to do with interactions, discussions on the latest trends and rating of products and services. Such interactions and communication creates trust, and more importantly, empowers the buyers, rather than sellers, experts say.
Scotland-based Sumayyah Nasaruddin, founder of Love to Dress, a fashion company, says the Chinese e-commerce platforms have been of great help to her fledgling business. "I design long-sleeve Western maxi dresses for Muslim women and manufacture my products in China using suppliers identified through the Alibaba platform," she says.
"The products and services on platforms like Alibaba are not only easy to use, but also helps us to check the authenticity of the other party in China. E-commerce has made it possible for us to cross borders without wasting time and money."
Chinese companies are also equally unequivocal in their praise for such platforms.
"I initially started using Alibaba as an additional platform to sell my products to overseas clients. But that has changed and it is now my primary source of overseas business, and accounts for more than 50 percent of my total profits and orders," says Zhou Mingwang, owner of Yiwu Mingwang Jewelry, a small export-oriented company in Yiwu, Zhejiang province. In the past five years, Zhou has received more than 200 requests annually from foreign buyers through Alibaba, with nearly 50 of these customers becoming regular clients.
"Alibaba has provided a regulated platform for companies to expand abroad and is also a hallmark of trust for foreign buyers," Zhou says.
However, he feels that Alibaba should lift the threshold for merchants to sell online. "I think they can set even higher standards for future entrants to ensure a fair playing field as well as a good reputation for the marketplace," he says.
Du Deyue, a balloon exporter from Yiwu, says that he normally receives about 10 requests a week from foreign buyers who have discovered him through Alibaba.
"The platform has enabled me to get in touch with potential business partners," says Du, who owns Xinxin Balloon.
Though Du still runs a small shop at the Yiwu International Trade Center, he says he hardly gets any business at the facility.
"Most of the foreign companies prefer to use the e-commerce platform, prompting us to follow suit," he says.
China's e-commerce market is not only vast but full of diversity, says Louise Martin, personal assistant to the director of Backbone IT, a British company that launched a Chinese language web portal to sell luxury goods in 2011.
Known as ilovewest.com, the portal is a standalone website which allows Chinese consumers to make purchases in yuan, using AliPay, China's largest online payment provider.
She says ilovewest.com sells luxury apparel bought from the UK's high street shops as well as items made to order for Chinese customers, such as jewelry. She says products normally take around seven to 10 days to deliver to Chinese customers, using DHL services.
"China's e-commerce market is vibrant and filled with younger generation customers who like to make online purchases. We've also been active on Weibo to promote our portal," Martin says.
She says that though ilovewest.com is currently not using larger portals like Taobao, it is something that the company will certainly do in the future, considering the amount of traffic and reputation it can add to the company.
From left: Zhou Mingwang, owner of Yiwu Mingwang Jewelry; Qi Junsheng, business director of the international department of Alibaba's B2B unit; Dong Xu, analyst at Analysys International. Photos Provided to China Daily