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Melissa O'MalleyDirector, Global Merchant and Cross-Border Trade InitiativesPayPal
PayPal, which recently launched a service in conjunction with China’s UnionPay bank to provide a direct link between its global merchants and China’s online consumers, has issued a new e-book to help retailers who want to enter the market. “Selling into China” will be released just before the Singles’ Day holiday on November 11, which ecommerce giant Alibaba seized on as a massive online shopping sale. Other online retailers began cashing in, and by 2013, Singles’ Day sales were higher than those on Black Friday and Cyber Monday in the US. Melissa O’Malley, director of global merchant and cross-border trade initiatives at PayPal, spoke with eMarketer’s Lisa Barron about opportunities and best practices for cross-border ecommerce with China.
eMarketer: What opportunities does Singles’ Day offer retailers?
Melissa O’Malley: This is the world’s largest online retail event in 24 hours in terms of sales. The small- and medium-sized businesses that I’ve spoken to are really excited for the opportunity to address a captive audience that we know is going to shop a lot for a variety of products in that 24-hour period. When I started at PayPal 18 months ago, nobody had heard of Singles’ Day. Now, there’s much more awareness in retail circles.
One of the key things that US retailers interested in selling into China look at are the holidays there. When retailers look into a new market they look at when there is a propensity to buy, whether it’s for New Year celebrations or Mother’s Day or Singles’ Day, and that’s something businesses can tap into.
Some retailers are partnering with us for Singles’ Day. We are doing a lot of special offers and promotions around the holiday. For businesses, looking at ways to make your products not only known within the marketplace but also have them offered at very attractive prices is a great way to introduce your brand. But we also have companies that are going with marketplace strategies, so they’ll use an eBay or another online marketplace to test the waters. That’s part of the dynamism of the Chinese market. There isn’t a one-size-fits-all that works.
eMarketer: What product categories are the most popular for cross-border ecommerce in China now?
O’Malley: Clothing, shoes and accessories are the No. 1 category from a cross-border perspective, especially for Chinese consumers looking to buy from the US. That’s followed by consumer electronics, such as computers, laptops and mobile devices, and then cosmetics and beauty products. Chinese consumers are less motivated by cost savings and really motivated by product quality and authenticity.
When you look at the categories they’re buying, they are in line with why a Chinese consumer would buy from a US retailer. They want to be sure that they’re getting an authentic product that is of high quality.
eMarketer: What will be some of the biggest drivers for cross-border ecommerce going forward?
O’Malley: If you look at some of the things that have driven Chinese consumers to buy cross-border historically, one is the appetite for baby products. That has been spurred by domestic scares about products not being safe. So for a large contingent of parents with children under 5, the No. 1 category that they buy overseas is baby products, things like formula and milk. That’s very specific to the domestic situation in China.
What also drives people to buy cross-border in China is social. Sharing what you bought is very important in China. It’s a very social- and mobile-driven culture, and that tends to go along with people looking at influencers. What is someone buying? When you look at brands that are highly valued in China, it’s clothing that people are going to wear and have photos taken in. That is considered a real driver for people to shop cross-border. They want those quality authentic labels.
eMarketer: What are some of the key things companies need to know to succeed at selling into China?
O’Malley: Do market research. Sometimes they’ve made a very concerted effort to go into China because they’ve seen an appetite for the types of products that they have, whether that’s in the luxury market or, for example, vitamins. Vitamins are extremely popular for people in China to buy from the US. Again, there’s that authenticity and quality.
But it’s very different to display a jar of vitamins online than it is, for example, for an apparel retailer to do things like translate sizes, or show what clothing looks like on a model walking down the runway, or explain what a fabric is. A jar of vitamins looks like a jar of vitamins. But a pair of shoes may look very different, depending upon if you’re looking on a mobile device or a laptop or a tablet. So there are things that are very specific to the types of products that you’re selling.
Also, understanding the dynamics of the Chinese social media landscape is very important. It is so different from what Western retailers are used to doing. It’s just night and day. There’s no YouTube. You can’t just buy everything on Pinterest. It’s dominated by WeChat—understanding that ecosystem is important. You’re not going to be promoting via Twitter or via Facebook, or any of these normal channels where some retailers may have a very good following. So understanding that dynamic is a really important step because it’s a very different mentality.
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