The Chinese eCommerce industry is booming and is continuing to experience a steady pattern of growth, as referenced in our eCommerce infographic from this week. With Chinese eCommerce well on its way to be worth $540 million by the end of 2015, companies who have invested in eCommerce and are seeing success, are beginning to make the move to China.
Tmall Global, Alibaba Group’s online marketplace is one of the resources online retailers from around the world are turning to. Tmall Global allows foreign companies who don’t have a China business license, to sell their products on the marketplace to Chinese customers. Already, 5,400 retailers outside of China are using Tmall Global to sell their products. While not all foreign companies have seen success on Tmall Global, many have. One company shared that their sales reached $3.55 million on Singles’ Day, a big online sales day in China. This particular company saw a higher level of success on Tmall Global than anticipated, this was equated to the fact that the company maintains a brand that is known among Chinese shoppers, and was well known before they entered China.
The key to success seems to be entering China when there is a demand for your product and/or your brand.
With a China business license, companies are able to sell their products in China using their own eCommerce site. Well known cosmetics company, L’Oreal, is the next company that will be investing more time and money into their efforts in China. In 2014, L’Oreal’s eCommerce sales reached $909.3 million, 10% of which came from China. It is the recent growth of eCommerce in China that has convinced L’Oreal to adjust their Chinese strategy, so far their distribution capabilities have been enhanced. L’Oreal is expecting to see growth in their eCommerce sales in 2015, with the help of additional efforts in China.
As the popularity of shopping online in China grows, so will the number of companies expanding their eCommerce efforts. But, it has to be done in the right way. There is the possibility of failure. Only time will tell how many foreign companies will find success in China, which could impact Chinese eCommerce all together.