Why you may be underestimating your Chinese consumer base.

For eCommerce and marketing professionals looking at web traffic and trying to figure out where the opportunity lies, it is likely you are underestimating your Chinese consumer base.

First, a couple of questions all eCommerce storefronts should ask:

  1. Is my website accessible by consumers residing in Mainland China

Because Twitter and Facebook are both blocked in China, some plug-ins and extensions used by eCommerce platforms are not allowed through China’s firewall, preventing your entire site from being viewed by those in China.

  1. Are my products being sold in China, either through brick and mortar stores, online marketplaces such as Tmall.com and JD.com, the same or close to the same price as on my home website?

  2. Do I accept a form of payment popular with Chinese consumers (either China UnionPay or AliPay)?

Depending on the answers to these questions, your real and potential Chinese consumer base is likely much larger than your website traffic data shows. The most likely scenario for US eCommerce merchants has the following characteristics:

  1. Website is visible to Chinese consumers but not customized for content and language.

  2. Products sold domestically in China are on average 20% more expensive than the same products on the home website.

  3. No popular Chinese forms of payment is possible on the home website.

The common reaction by Chinese consumers to this scenario is to employ a third party to make the purchase in the United States, ship the product domestically in the United States, and then have the item(s) forwarded to their home address in China.

Consumers in China generally utilize the following third parties, listed in order of preference, to complete the purchase:

  1. Family members or close relatives – If the individual in China has a family member living in the US, that person will act as a front for the actual buyer. Using their US credit card the relative makes a purchase, takes delivery in the US, and then either sends it to China via FedEx, UPS, or more likely a company specializing in China freight services such as SF Express, US Express, or Yunda. They may also simply hold on to the item and bring it back on their next visit, thereby avoiding having to pay shipping and/or customs.

  2. Former classmates, coworkers, and close friends – Essentially the same process as above, where the individual in China acts as a front for the actual purchaser, but shipping is the more likely solution to get the items purchased to China.

  3. Professional third party buyers – There is a whole industry dedicated to serving the Chinese customer, facilitating payment as well as logistics, to help Chinese consumers get products as delivered to their door as cheaply as possible.

What this means for eCommerce storefronts is that they do not have visibility all the way back to the individual actually making the purchase. Important data is missed, membership lists are incomplete or inaccurate, and sales are lost.

In order to get an idea of how big an opportunity this is, first look at website traffic and how much is coming from China and weight that against your current marketing dollar spend in the Asia Pacific region and China specifically. Next, analyze where the most common point is where you lose that potential customer, whether at the home page or do they get to checkout before abandoning the purchase (cart abandonment). Finally, make sure your site is actually viewable by a Chinese consumer. If it is not but you have noticed your brand available on Taobao.com, then your Chinese consumers are likely using a VPN in order to view your site, thus masking their actual location to your server.

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