Recently there was an interesting discussion between one UK distributor and Chinese brand:
I’ve had a quick look around Amazon UK and Germany and can see that you guys are selling directly to the consumer which is obviously great margin for yourselves but makes it difficult / impossible to distribute into retailers and grow the volume for both parties .
What is your strategy around how to put products into retailers throughout Europe and Australia versus your online strategy of going direct to consumer yourselves ?
Yes, we have to admit the fact that we are selling on the Amazon. The main reason why we’ve been doing this is that we hope to get more exposure for our brand and products, so that the consumers from aimed market can get to know better about us. For sure we are not meant to make profit by this way, this is not the best way of getting great profit.
Now many brands in china are doing this way, making sales based on both business to business and business to consumer. And there are some factors on this. You know most Chinese companies are not good at global marketing, so it’s hard to build up brand recognition as it takes much time, effort, and costs. But with the development of cross-border e-commerce, the platforms like Amazon made it easy in making a brand known when entering a market.
Definitely, it’s our responsibility to make sure products are sold based on our online price control and we have our MAP price for each item. We know this is fundamental principles to obey if we do not want to ruin a market and make conflict to local retailers.
And we are always more interested in a long-term sustainable business relationship. So we are most eager to cooperate with distributors like your company who have strong distribution capacity. It means that we are willing to make reasonable adjustment on our online B2C sales strategy in order to create condition for our business cooperation.
I completely understand the predicament of bringing a new brand to market , and it has taken ourselves five years to get a foothold both in retail and online so it’s not something that can happen overnight .
The issue with not controlling online is the first thing that any retailer does is look at Amazon and eBay to understand more about the product consumer feedback, etc, but also how many people are selling the product and if the market prices stable . There is NO major retailer that is going to take the risk with a new brand nowadays if they don’t feel confident that there is a real strategy behind how to control online .
I think we can work with you to develop this strategy with a view that ultimately is to make both mediums work. As regards to marketing again I believe we can help out with growing social media-bloggers and brand awareness.
So it’s the situation that distributors, wholesalers and retailers who import from China are facing now, instead of just supply products to partner channels like you, a large incremental manufacturers in China have implemented the business model of selling direct to consumers. They keep regular stocks of their products in their domestic and oversea warehouses, set up their own B2C e-commerce team and hire e-commerce store operators to run their own stores on Amazon, Aliexpress, Ebay, Wish, etc.
Their marketing department create marketing stuffs including product pictures, banners, videos, etc, and regularly post on Facebook, Linkedin, Twitter, Instagram, Youtube to engage with their Fans. Product quality control, unique design, innovation and brand image are the priority for them. Nowadays, many Chinese brand manufacturers have changed and gone far beyond the “cheap price, low quality OEM factories”.
Why is there growing number of Chinese brand manufacturers selling direct to global consumers? The below factors may explain this:
- The development of cross-border e-commerce technology, platforms and talents, empowered China brands to sell direct to global consumers.
- Supply-side structural reform in China, running of low quality OEM factories is getting unpromising, they have been seeking a way out of the bad situation. Creating a brand has become one of the best choices for them.
- Control pricing and grow business: be able to set the tone on pricing, more likely to see strong results on sales by building brand awareness and deepening relationships with consumers.
- Accumulating rich data of global buyers’ order behavior and detailed feedback by selling online, which can be used to understand market demand and build strategies of improving customer experience.
- Brand awareness and image: better experiences build fans loyalty. Consumers enjoy to interact with brands directly as well. And more importantly, fans also interact with fans which greatly amplify brand effect.
So in spite of that Chinese brand may fear the possibility of angering their channel partners, the advantages of selling direct to consumers make it still much worth the “risk”. What you can do is to understand, embrace and utilize the change to build your connection with Chinese brands in order to grow your importing business sustainably.