How Third-Party Logistics Can Unlock Cross-Border eCommerce Opportunities in China

 

Chinese eCommerce presents an unignorable opportunity for foreign businesses.

As international travel is stalled by COVID-19, marketplaces like Tmall are helping brands find a huge domestic audience in China – with cross-border B2C sales totaling nearly $29 billion in 2020.[1]

Capitalising on this growth will not be easy. A recent report from Deloitte and Tmall argues that robust and efficient supply chains are key to success in cross-border eCommerce.[2] And while brands may try, establishing effective supply networks in a foreign country is complex and expensive.

This sets the stage for third-party logistics providers to position themselves as a vital bridge to the Chinese market. But in order to do so, they will need to integrate with Tmall Global – and doing so presents some serious challenges related to data flow.

In this article, we’re going to explore exactly what those challenges are – and offer an alternative approach that will make data far easier to access. But before we get into that, we need to explore exactly why Chinese eCommerce is so important for foreign brands.

Understanding the Cross-Border Boom

With a fast-growing economy and a population of increasingly affluent consumers, China has long been a vital market for foreign brands. Chinese consumers are estimated to account for over a third of global luxury goods spending,[3] and 68% of them believe foreign goods are of better quality than domestic ones.[4]

Historically though, these foreign goods were bought by Chinese consumers on their travels – with tourists spending reaching a high of over $277 billion in 2018.[5] When the pandemic hit, all of that tourist spending disappeared. And in order to continue serving this huge base of Chinese consumers, brands were forced to pivot to cross-border eCommerce.

The result has been an undeniable boom. But the transition to cross-border eCommerce has been far from smooth. eCommerce margins are generally thinner than bricks and mortar trade, meaning fulfilment and logistics are of even greater concern to brands. And while China boasts a world-beating eCommerce infrastructure, it differs from Western eCommerce in two important ways.

First, Chinese eCommerce is concentrated in a small handful of extremely powerful marketplaces. Tmall alone accounts for over 63% of all B2C transaction in China[6], making it more than twice as dominant as Amazon is in the States.[7] Combined with JD.com, these two marketplaces process nearly 90% of all consumer transactions online.

The second difference is far subtler than this, but causes far greater problems for foreign brands – and it has to do with data flow.

The Data Difficulty

Western platforms like Facebook and Google base their business models in large part on providing businesses with data – and therefore make collecting, analysing and actioning data extremely simple and intuitive. 

Tmall and JD.com base their business models on consumer trust, and have been less focused on data. This means logistics companies looking to integrate with these marketplaces will struggle to access information they would normally take for granted – from order confirmations to basic product data.

It is not exactly that data is kept secret from providers; rather, accessing and using it is very complex and costly. There is a complex approval process, which generally requires a Chinese business registration and infrastructure that is hosted in China. And once you have been approved, it is extremely difficult to locate the exact information you need.

The Tmall API contains over 40 endpoints, and determining which of these endpoints you require is difficult. Worse, the documentation for this API is only available in Chinese – and plenty of endpoints aren’t formally documented at all.

While it is literally possible to build your own point-to-point integration with Tmall’s API, doing so is unrealistic for most companies. It would require you to establish a Chinese entity, apply for developer accounts and provision cloud infrastructure in China. Then the actual development would demand a significant upfront investment, as well as ongoing maintenance costs. And it would create confusion and delay every time Tmall updates their API. 

Instead, logistics providers need a way of overcoming this data problem and seamlessly integrating with marketplaces like Tmall Global. And that’s exactly what INTEGRAT3 offers.

How INTEGRAT3 Can Help

INTEGRAT3 exists to make data easy in Asia. With a single API, we automatically download the information you need and transform it into business-ready data that will allow logistics providers to thrive.

By removing cost and complexity, we make the Chinese cross-border eCommerce market accessible for ambitious businesses. And by automating the process, we give you the time to focus on what you do best.

 

If you’d like to hear more, book your demo today.

 

 

 

[1]https://market-insights.upply.com/en/against-the-downturn-cross-border-e-commerce-in-the-europe-asia-trade-lane

[2]https://www2.deloitte.com/cn/en/pages/consumer-business/articles/trends-in-china-post-pandemic-imported-goods-market.html

[3]https://www.schroders.com/en/bm/asset-management/insights/equities/five-trends-to-watch-in-chinas-consumer-sector/

[4] https://www.practicalecommerce.com/china-is-dominating-ecommerce

[5]https://www.statista.com/statistics/249702/international-tourism-expenditure-of-chinese-tourists/#:~:text=International%20tourism%20spending%20of%20Chinese%20tourists%202008%2D2019&text=The%20contribution%20of%20Chinese%20travelers,U.S.%20dollars%20while%20traveling%20abroad.

[6] https://www.statista.com/statistics/866847/china-b2c-online-retail-market-platforms-by-transaction-share/

[7] https://www.digitalcommerce360.com/article/us-ecommerce-sales/

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