10 facts you need to know about the e-commerce platforms in China

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In the past year of 2020, the number of chinese online shopping users had reached 710 million, and the total volume of e-commerce transactions reached 37.21 trillion yuan, an increase of 4.5%  when compared to 2019. The Chinese market can be compared to a cake, as it is being baked it grows generating more opportunities to overseas brands to have its own piece. According to iiMedia Research, in 2021, China Haitao (purchase from cross-border e-commerce) users will increase to 158 million, and the volume of cross-border import e-commerce transaction will increase to 3.01 trillion yuan.

 

Tmall Global, JD Global, Kaola, Little Red Book and VIP are the leading cross-border e-commerce platforms in China. In this article, Jademond’s Social Media Manager, Levana Lau, answers some of the most common questions regarding ECommerce in China, such as:

  • What are the differences among these platforms?
  • How much you need to invest?
  • Which is the best option for you?

 

Quick glance of the leading cross-border e-commerce platforms

 

 

Taobao (Tmall Global) and JD (JD Global) are fit for all kinds of general products; Little Red Book, VIP and Kaola are female-dominated platforms, so if your target audience are young ladies, these platforms are the best fit. In all these platforms, younger users who are born after the 2000s are the main customers followed up by the ones born between 1990 and 1995.

 

10 facts you need to know

 

1 – Open application or invitation

 

For all the five platforms, you can apply to register a store by writing an email to the BD department, considering you have all the qualifications and certificates requested. However, for Little Red Book, if you want to sell several brands’ products, you can’t apply to register a store unless you have their invitation, since LRB only sends invitations to famous brands and groups. However, the general rule is that, if you’re not a popular brand/group who is selling several brands’ products, such as NET-A-PORTER, you’d better go with one store for one brand, once you could make the best use of the platform’s traffic in this way.

 

2 – Deposit

 

All these five platforms will charge a deposit when you register the store, which will be returned once you close the store:

 

 

3 – Platform usage fee

 

Besides Little Red Book and Kaola, all the other three charge a yearly fee from its partners:

 

 

If you are selling your products in more than one category, the deposit and the platform usage fee will be charged according to the higher valuable one. Eg. If you are selling food and cosmetics, the deposit for food products is 100,000 RMB and for cosmetic product is 50,000 RMB, you will have to pay 100,000 RMB deposit.

 

4 – Commission rate

 

Little Red Book has a low deposit and platform usage fee, but it charges a high commission rate, up to 20%. in this scenario, Brands must work on lowering their operation cost, especially the global logistics fee.

 

 

5 – Logistics and fee

 

To best guarantee the customers’ shopping experience and provide safety to all transactions, on JD Global, Tmall Global and Kaola, you can only use their own warehouse and logistics system. Generally there are two options for overseas brands:

 

  • Send the products to the platform’s domestic warehouse located in one of the Chinese Free Trade Zone (after customs registration). The platform will send the products to the customers from the FTZ warehouse. This is the best and fastest logistics solution.

 

 

  • Send the products to the platform’s overseas warehouse, when the warehouse system receives an order, the platform send the products to the customers from the overseas warehouse. When the package arrives in China and the customs clearance is finished, it will be transferred to the platform’s domestic logistic to complete the delivery.

 

 

The warehouse fees includes:

 

  • Warehouse: About 0.5$-1.5$ for per cubic metre
  • Checking and putting all your products into the warehouse: About 0.1$-0.2$ for per product
  • Handling the orders: About 0.5$-1.2$ for per order.

 

Actually the Little Red Book and VIP also encourage brands to use their own logistic system. If you decide to ship your products from your own overseas warehouse and by other logistics company, the delivery period will be very long, at least 7~10 days. During the waiting period, some customers may give up and cancel the orders asking for a refund, therefore you have to ship the package back from the midway. Returning products would also be a problem mainly after the customer already received and opened it.

 

6 – Customs registration

 

All products need to be registered in the Chinese customs system before being sold in any cross-border e-commerce platforms, which requires lots of paperwork and all kinds of certificates. However, if you sell your products on the Miniprogram, and send the packages directly from your overseas warehouse, you won’t need to register the products in the China customs system.

 

7 – Delivery time

 

Both, JD Global and Kaola, request all packages to be shipped within 72 hours after the orders are placed, otherwise, there will be a penalty, except for customized products.

 

 

8 – After sales service:

 

From all the after sales rules, the most important one is that you have to provide “free return and refund within 7 days”, considering the products are not damaged and as good as brand new, except for customized products. It may increase your logistic cost, which is unavoidable. However, if you sell on the Miniprogram, you can only allow customers to return the products if it is defective or damaged. In this aspect, the Miniprogram is more merchant-friendly.

 

9 – Payment receive

 

For JD Global, Little Red Book, VIP and Kaola, all the payments that the customer made will be into the platform’s finance system, you can see all the transactions in your store’s management backend. These payments will be transferred into your bank account each month or when the amount reaches to a certain value. All the platform’s fees, like commission rate, will be deducted from the payments automatically.

 

Tmall Global may require you to register and verify an overseas Alipay account to receive the payments directly. You can transfer the payments to your bank account at anytime.

 

10 – Affiliated mainland China company

 

Except Tmall Global, all the other four platforms to request you to have an affiliated company which was registered in mainland China. JD Global and VIP only request an affiliated Chinese company to be responsible for handling the order’s returns; Little Red Book and Kaola request the affiliated China company to have qualifications for running importing business, and have been registered in the China customs.

 

 

Which platform is the best option?

 

From all the above information, you should have a clear answer in your mind, all depends on what you have and what you need:

1) If you have enough budget, you can choose any.

2) If you don’t want to invest that much at the beginning to test the market, and your target audience are mainly female, then Little Red Book would be the best option.

3) If you would like to guarantee the cash flow of your bank account, then you’d better choose Tmall global. You don’t need to find an affiliated China company to work with either.

 

Don’t miss the big market!

 

Digital Marketing’s final goal is to increase the long term sales, starting a cross-border e-commerce store to make profit from China’s huge potential market should be part of your marketing strategy. 158 million users are shopping and buying imported goods from the cross-border e-commerce platforms, therefore your products should be in their baskets.

 

If you need more information on starting a cross-border e-commerce store, feel free to contact us by clicking on HERE.

Siyong is a self-starter. She began her career in Jademond as an intern assisting on Chinese content creator. Now her expertise crosses in content marketing, social media marketing and SEO. Her passion in digital marketing makes a quick learner and strong goal achiever.

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