Given China’s £310bn cross-border ecommerce market, one would think UK retailers would be lining up to figure out this veritable goldmine of opportunity.
Chinese New Year is a holiday that, according to some, outweighs Christmas in the West. This year, the Year of the Goat, signifies the coming of prosperity. For 15 days beginning 19 February, millions of Chinese consumers will go shopping with money gifted to them in traditional red envelopes. Yet, while Chinese New Year seems like a lucrative opportunity for UK retailers selling abroad, few have realised this zodiac milestone.
Indeed, they should.
With over 500m consumers online, China represents an obvious ecommerce market for UK retailers that sell outside of Britain. Cross-border ecommerce sales in China are poised to reach £310bn this year1, according to eMarketer. Moreover, China has already surpassed the US as the world’s largest retail ecommerce market.
By 2018, China will exceed £650bn in sales—more than eight times the estimated value of the UK market. To put that in perspective, British shoppers spent £810m online on Black Friday—the biggest day ever for online sales in the UK. In contrast, Black Friday and Cyber Monday sales in the US totalled £2.2bn combined.
In America, retailers are well-versed in the needs of the Chinese consumer and are preparing for the 2015 Chinese New Year with red and gold apparel and accessories, colours that invoke Chinese associations with good luck and joy. Neiman Marcus and Bloomingdales are selling New Year sheep and goat-themed products, like the Diane von Furstenberg Lucky Sheep Chinese New Year clutch – all of which ship to China.
So how do the UK’s top 20 retailers, excluding supermarkets and pharmacies, fare? Research shows that only 40% of them ship to China, compared to 75% of the top 20 US retailers. Many stores from Harrods to Debenhams to House of Fraser either turn away Chinese online customers or don’t localise their sites by providing prices in Chinese Renminbi. What’s more, for those retailers who do ship to China, Chinese shoppers are responsible for calculating their own duties and taxes— causing a sometimes large and surprising fee due upon delivery.
Yet, it’s not just that Chinese shoppers purchase goods during their own holidays, they also increasingly recognise Western holidays like Black Friday. Last year during Black Friday in the US, retailers such as Bloomingdale’s, Saks Fifth Avenue, Macy’s, Neiman Marcus and Ann Taylor enticed online shoppers in China through a partnership with Alipay ePass, a solution that integrates China’s largest and most preferred payment method Alipay with international shipping. Shoppers in China, who anticipated Black Friday discounts, were able to use Alipay to make online purchases, instilling their confidence in foreign retailers and brands.
At present, approximately 25% of digital buyers in China purchase cross border online goods today (this rate climbs to 66% in the UK). Yet, as the nation becomes increasingly more affluent, the number of digital consumers will only climb. Already, the average disposable income for urban Chinese citizens is up 10% this year to £2,105. Also, with current ecommerce technology advances, retailers will find it ever-easier to turn on international shipping and present highly localised brand experiences for Chinese consumers without making changes to their digital storefront.
It’s no secret that successful entry into China is a daunting task. However, with strong partnerships, UK retailers can and should take advantage of this growing market. Who knows – we could be just a few short years away from China’s consumers searching for great deals on Boxing Day.
Kris Green, Chief Strategy Officer, Borderfree