China marks its busiest shopping holiday on Nov. 11, Singles Day. Last year, China's shoppers spent $17.8 billion online in just 24 hours.
But as 2017's shopping holiday approaches, PayPal notes that 89% of Chinese consumers favor the U.S. as a top online shopping destination, designating a huge opportunity to jump in on cross-border sales.
"In fact, our research shows that Chinese consumers choose to shop directly on foreign merchant sites mainly due to product quality and guaranteed authenticity," Melissa O’Malley, director, global initiatives at PayPal, told FierceRetail.
It is estimated that 140,000 brands will participate in this year's Singles Day and that 60,000 of them will be international brands. Historically, U.S. PayPal merchants have participated in Singles Day.
While PayPal does not have exact numbers for Singles Day sales for U.S. merchants, the number of small business exporters using PayPal jumped almost 33% from 2015 to 2016.
So what are Chinese shoppers looking for on Singles Day? According to a recent PayPal consumer survey, accessories (83%), clothing (68%), and food and health products (57%) were the categories most frequently purchased on these foreign merchants/marketplaces by Chinese consumers. And of those surveyed, consumers will make six purchases on overseas merchants/marketplaces per year. On average, these consumers spend more money on foreign sites than domestic shopping platforms.
For retailers getting started, O'Malley says they need to consider the drivers for Chinese shoppers' purchases across borders. These include secure payment (43%), proof of produce authenticity (38%) and costs shown/payments possible in their local currency (36%).
"Merchants need to take time to make sure their website feels secure for international shoppers. This includes everything from allowing consumers to shop using their local currency of choice, to translating website content to the local language," O'Malley said.
And while the payoff can be big, there are some initial hurdles that retailers need to tackle in order to enter the Chinese market.
Most importantly, there are the risks associated with transportation and logistics. In a PayPal survey of direct overseas Chinese consumers, among the five greatest challenges encountered while making direct overseas online purchases, four are related to logistics, namely:
- Longer delivery time compared to domestic shopping (40%)
- Inconvenience in returning products (31%)
- Transport logistics are not convenient and are difficult to operate (32%)
- Shipping costs are too high (33%)
But for retailers ready to take the plunge, O'Malley offers some tips on how to market to Chinese consumers.
- Offer free shipping: 30% of China’s online cross-border shoppers are concerned about counterfeit goods, and 26% are deterred from shopping cross-border when they are unsure of the return policy for shipments. To address these doubts, retailers should offer free shipping and returns.
- Learn the customs: Before deciding what products to feature, retailers should spend some time learning about the Chinese culture. Merchants can learn more about Chinese customs and taboos through PayPal's free online resource, PassPort.
- Offer local payment with ease: Scale sales quickly by offering local payment via partnerships with PayPal and UnionPay, where over 4.7 billion cardholders can seamlessly pay with their preferred local payment option.
- Go mobile: China has the world’s largest smartphone user base with more than 521 million smartphones. Eighty-four percent of Chinese online shoppers have purchased via mobile in the past 12 months, accounting for 35% of online cross-border spend. By having online stores accessible via mobile, retailers are opening up to an even wider range of customers and opportunities to sell.
O'Malley reminds retailers that there's still time to get a piece of the more than $17.8 billion in sales that are expected to occur on Nov. 11.
"Last year, around 90% of online shoppers in China used their smartphone at least once to make a transaction, making Singles’ Day an excellent opportunity for merchants to increase traffic to their mobile store and boost sales," O'Malley added.