For Brands Looking to Enter the Chinese Market, Singles’ Day Offers a Pathway
Though hard to believe, the holidays are nearly here, meaning we’re closing in on two of the biggest shopping days of the year: Black Friday and Cyber Monday. Raking in nearly $7 billion dollars in sales between online and in-store sales in 2016, it can be hard to imagine a more profitable day for brands – until realize the full scope of Singles’ Day.
Singles’ Day – which is actually more akin to Amazon Prime Day due to its being leveraged by Chinese retailer Alibaba – takes place each year on November 11. In 2016, Singles’ Day raked in a whopping $20 billion in sales, nearly three times what Black Friday and Cyber Monday pulled in, despite being only e-commerce sales and limited to just one day.
So how can brands get a piece of this massive retail opportunity? As most in the industry know, entering the Chinese market is no easy feat. But Singles’ Day may actually pose an opportunity for foreign brands, especially if they’re working with the right partner.
Online marketplaces are your friend
When working to expand into new countries, brands face a number of barriers to entry, one of which can be finding a local retailer that is willing and able to sell their goods in their stores. Part of this is logistics – how will product get to the retailer? Will the brand set up operations within the country to supply the retailer, or will they be shipping product? The other – and often more difficult part – is culture. Business practices vary widely from country to country, and brands looking to enter new markets don’t always have the greatest visibility into the local customs or rules. And even if they do, most don’t have the time or money to invest in learning these customs and developing relationships with key contacts.
But for brands looking to enter the Chinese market for Singles’ Day, getting on the Alibaba marketplace platform will be key. Luckily for them, online marketplaces – by design – can ease many of these pressures. Because the nature of a marketplace is a variety of brands selling their goods through a single portal, there are generally far fewer restrictions for brands when it comes to selling via a marketplace than with a more traditional retailer. Choosing to sell through this route can oftentimes remove the problem of developing and cultivating numerous relationships within the new country, allowing brands to figure out the logistics in whichever way works best for them, versus compromising and adjusting to fit the needs of local supply chain partners.
But they’re not a failsafe
Despite marketplaces easing many of the difficulties faced when expanding to new countries, there are still a number of roadblocks brands can face. For example, despite 72 percent of Americans having at least one credit card, outside of the U.S. credit is used much less commonly, replaced with local forms of tender that brands may have no experience with. Additionally, each country has its own tax codes and rules that brands must follow to the letter, or face steep consequences.
Outside of financial matters, brands must be cognizant of remaining compliant with local regulations, especially those having to do with personal data – like Europe’s pending General Data Protection Regulation (GDPR) – given brands conducting online sales are likely gathering a significant amount of customer information.
When trying to expand into a new market, working with a trusted partner with a global footprint allows brands to ensure these location-specific needs are met and that they follow the letter of the law, ensuring they’re able to focus on what they do best: sell product. At ModusLink, we’re experts in both global and local business. If you’re interested in learning more about getting onto the Alibaba platform and expansion into the Chinese (or any international) market, check out our website.
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