WHY THE DAIGOU IS SO

IMPORTANT IN YOUR E-

COMMERCE MARKETING

STRATEGY IN CHINA?

CHINA’S E-COMMERCE MARKET AT A GLANCE

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460 MILLION ONLINE SHOPPERS

• Already more than US $650 Billion in Sales • Expected to reach US $1 Trillion by 2019

Shoppers are: and buy:

• Apparel • Cosmetics • Home Decor • Maternity • Baby

• Electronics54%

46%

CHINA’S E-COMMERCE MARKET AT A GLANCE

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90% OF SALES THROUGH MARKET PLACES

POSITIVES ARE THAT: • Underdeveloped traditional retail sector • Ready consumers • Infrastructure developed

NEGATIVES ARE THAT: • Brand activation can be difficult • Highly competitive market • Sometimes competing with own distributors and partners

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WE NEED TO THANK DAIGOU

Today’s cross-border e-commerce has grown out of the so-called “Daigou” model, which involved small businesses, staffed by one or a few people living abroad, who brought or sent products back to China. The 2008 infant milk formula crisis contributed significantly to the growth of Daigou. Many successful Daigou are no longer small businesses, but have become major traders or key category players.

With the rapid expansion of cross-border e-commerce through the “Daigou” model, the Chinese government established experimental zones of cross-border e-commerce in 2013 for better regulation. Shanghai was the first city selected for such an experiment, followed by a further 11 cities by June 2016.

A series of regulations have helped the Chinese government to gain control over the quality, safety and manufacturing standards of imported products, and helped to ensure that taxes on these imports are properly traced and collected.

What is Daigou ?

Daigou is the name for a group of Chinese who are residing

abroad, buying on behalf of their families and friends back in

China. BBC news called them personal shopping consultants.

In 2016, the Daigou business was worth an estimated A$800M

in Australia and according to a research conducted by a

Chinese media lab the market could grow to a jaw dropping

150 billion USD globally by 2018.

The number of Daigou are said to be 70,000-80,000 in

Australia and 15,000 - 18000 in New Zealand.

代购

dài gòu

WE NEED TO THANK DAIGOU

ARE DAIGOU GOOD OR BAD FOR BRANDS?

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Just because daigou are sending your products back to China does not mean all is well for the brand owner! Brands need to understand the impact on pricing, brand perception and demand. Just look to the recent media highlights about infant formula being unavailable in Australian retail outlets given daigou are stockpiling it to send back to China.

For emerging brands – daigou offer a low cost, low risk way to grow market awareness and sales. It is not easy to start this process and for a new brand this

takes time and commitment.

NEW CHALLENGES - INCREASING ENTRY BARRIERS

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Cross-border e-commerce used to be a low-cost model that was equally accessible to everyone, making it an extremely attractive channel for small brands, who could enter the huge Chinese market and build a brand quickly with minimal risk. However, after several

years of development, some platform players or e-commerce specialists have become large enough to be more demanding (and costly) when it comes to the business potential of their

potential merchants.

Cost

Competition

Regulations

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Engaging Daigou

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KOL’s still represent a powerful way to develop brand trust and

awareness. KOL’s are considered a ‘paid media’ channel that can be extremely expensive and often

difficult to assess in terms of effectiveness. Neverless, KOL’s (if selected and used correctly) offer a unique way to quickly gain cut

through.

WECHAT KOL’S

COMBINE OFFLINE & ONLINE

Only brands with a trademark (either ® or TM) can

open flagship stores. The owner of the store must be

the formal representative of the brand or hold

exclusive authorization documents for setting up a

DaigouSales flagship eStore provided by the formal

representative of the brand.

Be sure you are ready to invest the necessary time

and resources into your eStore launch, as opening

and running an eStore on DaigouSales will require

brand commitment.

DAIGOUSALES

Flagship eStore

Fully Branded &

Authorised Distributor

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DAIGOU ENGAGEMENT STRATEGY

KEY TAKEAWAYS

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1. Establish your brand in your home market (first).. Retail support is import2. Hero Products are important in establishing the brand. In some cases, the hero products selling

in China are not the hero products sold in the home market.3. Engage Daigou to know your brand and position through formal programs4. The Daigou have created low-cost and brand-establishing opportunities for many brands to sell

online in China but prudent management in branding & pricing, and continued monitoring, measuring, and control is needed.

5. Offer ‘daigou only’ marketing information, content, and incentives6. Start broader Chinese marketing programs to support your brands awareness within China

Daigou is not your complete cross border solution but for many brands are a critical success factor in a China strategy.

THANK

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@reachchinagroup

@reachchinagroup

@reachchinagroup

@ReachChinaGroup

CHINA FOCUSED, BRAND

INCUBATION COMPANY