Speed is Key to Capturing the Cross-Border Customer

The ability to get orders into the hands of consumers rapidly and to directly connect with them, while providing price transparency, are among the keys to success in cross-border ecommerce into China, Alibaba’s Tobyne told Multichannel Merchant’s Growing Global 2015 audience

Tobyne says you definitely should never send anything to a Chinese customer that takes five to seven days to deliver. Even if there are higher costs, you need to meet their expectations. Once a Chinese customer puts a negative review on your store on Alibaba sites Tmall and Taobao, it’s hard to get it taken down, because reviewers have to do it themselves.

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To facilitate rapid delivery, and to avoid China’s 17% value-added tax on imports, Tobyne says merchants should consider parking inventory in one of a handful of Chinese free trade zones and using a local fulfillment partner. To do business on Tmall or Taobao, for instance, Alibaba requires merchants to have an in-country partner to handle returns. Meeting the two-day delivery window that Tobyne said is critical to winning the Chinese consumer would require some type of local fulfillment operation.

Global ecommerce marketplace Rakuten recently established a program that enables U.S. merchants to sell on its marketplace in Japan. Blue Nile and OtterBox make up the first class of new entrants who plan to open virtual stores on Rakuten Ichiba this year, which expands opportunities for sellers offering hard-to-find items in Japan. Rakuten is also supporting its Rakuten Ichiba initiative with a logistics solutions to help its customers get products from the U.S. into Japan.

While the global marketplaces can help you ship items faster to cross-border customers, that also sometimes means you need to set up business with an in-country business partner.

Macy’s, Inc. has formed a free-standing joint venture with Hong Kong-based Fung Retailing Limited to explore retailing in China, one of the world’s largest and fastest-growing consumer marketplaces. For now, Macy’s will offer customers on Tmall a relatively limited assortment, and the goods will be stored in Hong Kong. But over time, assuming it works well, Macy’s CFO Karen Houget says the idea would be to have the goods housed in China eventually and see how much of the website it needs to modify to fit the consumer in China.

Lifestyle and performance footwear seller Skechers had been using third-party distributors to sell in Central Eastern Europe. In February, Skechers announced it would transition its business in Central Eastern Europe from third-party distributors to a new wholly owned subsidiary, Skechers CEE, Kft.

Skechers plans to double its CEE sales in the next three to five years through an expanded offering of men’s, women’s and kids’ product and a growing distribution base in new and existing markets that includes department, specialty and Skechers retail stores.

Kate Spade & Company and Walton Brown, a subsidiary of Asian fashion retail and brand management group The Lane Crawford Joyce Group, formed joint ventures in January focused on scaling and accelerating Kate Spade & Company’s growth in Greater China. The partnership will leverage the expertise of Walton Brown, and the global demand for Kate Spade & Company products, to establish a strategic network of stores in key cities, enhanced by a robust organizational and marketing platform across China, Hong Kong, Macau and Taiwan.

The partnership will align Kate Spade & Company’s existing businesses in China, Hong Kong, Macau and Taiwan under one combined structure. With an equal partnership structure, Kate Spade & Company and Walton Brown will actively manage the business together for at least 10 years.

Tim Parry is Managing Editor of Multichannel Merchant.