Selling on Global eCommerce Marketplace

S.Abidi

Research Advisor

GOG-AMA Centre of International Trade

Editor, Foreign Trade Update

Global eCommerce Market• Global market - $1800 billion in 2018. 2023 -

$2674 billion

• Growth – 10.4% (2019-23)

• Fashion is the largest market – 25% share

• Next is Food & Personal Care – 10%

Country/ Region Market size – 2018 Growth

USA $ 517bn. 14.2%

China-50% of global market

$ 723bn. 10.9%

Japan $89bn. 5.8%

Korea $ 65bn. 5%

Malaysia $3.7bn. 11.8%

ThailandSingapore

$4.3bn.$5bn.

10.4%14.7%

• User penetration – 52% . Rise to 61.2% by 2023

• Average revenue $467.32

Global eCommerce Market

• Operator of the ecomm site does not own the inventory

• Provides much larger inventory or choice to customers that any store

• Operator fully or partially operate the logistics

• Easier customs and other formalities

An Amazon USA warehouse

Online Buying Process

• Discovery

• Engagement

• Entertainment

• Validation

• Transaction

Use Video in Entertainment

Tell a storyBe brief-30 sec.

Be human

Online Buying Process

• Discovery

• Engagement

• Entertainment

• Validation

• Transaction

Use Video in Entertainment

Tell a storyBe brief-30 sec.

Be human

Sell Unique-Rajlinen• Odd size bed sheets for recreational

vehicles

• Sells 10,000 bedsheets for RV, many customised

• Supplement seasonal sales with regular bedsheets

• Price lower than brand leaders

Sell Unique – Odd size

Tiny Home100-400 sq.ft.

Tiny HomeUSA-10,000 (2017)

Growth 68%2-5000 home sales

per annum

Declutter your lifeLive simply

Get out of crowded cities

Odd size blankets and other items

Sell Unique

Engraved spoonsCost -$5,00 Sale price - $13.00

Donald Trump Toilet PaperCost $0.10 Sale price $13.00

Listing of Products-Framing TextUse right keywords

Use thesaurus and see other ads.

Bedsheet, bed linen, BeddingSize-King, Queen, cmSingle, Double, Twin

recreational vehicle, you can also use RV, camper, camping van,

camping bus, caravan,motor home, house trailer, trailer,

camp trailerCotton, natural, organic,

sustainable, Colours, shades

Design-floral, solid, vertical stripe or zig zag pattern

British & US EnglishFlat & apartment

Spelling – color /colour

Make Your Product Stand Out

• Invest in professional photography

• Make short video, if required (30 seconds)

• Put adwords on Google site

• Advertise in specialised media

• Make use of social media

• Take help of marketplace (Amazon)

Cheeky Chunk Umbrellas

There are many products for which there is no demand in India but good demand in USA

Managing & Learning

• Keep precise accounts

• Understand marketplace fees

• Returns costs – Add 10% to price for returns

• Don’t sell too cheap to grab orders

• Manage special sales such as black Friday, cyber Monday, holidays etc.

• Invest in ecomm software

• Read ecomm blogs

• Attend online & offline courses

• Listen ecomm podcasts and webinars

• Read ecomm books & guides

• Collaborate with similar interests

Amazon Global Selling Program

• Access to nine countries besides USA

• Fulfillment by Amazon Services – Complete logistics from door to door – Free Prime 2-day delivery service

• Amazon Sponsored Products – Gets preference in customer visibility

• Amazon Store

• Amazon Brand Registry – Headline search ads with logo up to three products

Amazon Business

• Platform for B-to-B

• Many exclusive features like business pricing & offer quantity discounts. Only business customers see business prices

• Display quality certification

• Sell professional services

• Customers in US – 50% of top 100 hospitals

• - 55% of Fortune 100 top companies

• - 40% of largest local governments

Etsy USA

• Marketplace for unique & creative products

• Paintings, Prints, Hand crafts etc.

eCommerce Market

• Sales to grow by 30% to reach $2000 billion in 2019

• 55.8% of world’s online growth

• Alibaba Group 53.3% market share in 2019. Drop of 5%

• Newcomers including Pinduoduo snatching growth

• E-commerce is expected to make up 24.2% of total Chinese consumption by 2020, up from estimated 9.9% in 2014.

• China has the world’s largest mobile Internet population with 527 million users.

• Nearly half of China’s total online shopping GMV (gross merchandise volume) was generated by consumers using mobile devices in the first quarter of 2015.

Tao Hai-Cross Border ECommerce

• Sales to grow by 30% to reach $2000 billion in 2019

• 55.8% of world’s online growth

• Alibaba Group 53.3% market share in 2019. Drop of 5%

• Newcomers including Pinduoduo snatching growth

• E-commerce is expected to make up 24.2% of total Chinese consumption by 2020, up from estimated 9.9% in 2014 and 18% in 2018

• China has the world’s largest mobile Internet population with 527 million users.

• Nearly half of China’s total online shopping GMV (gross merchandise volume) was generated by consumers using mobile devices in the first quarter of 2015.

Tao Hai-Cross Border ECommerce

• Sales through cross-border channels like Tmall Global or JD Worldwide

• Sales through entities in Free Trade Zones

• All products are kept in Free Zones or overseas till sold

Tao Hai-Cross Border ECommerce

• The product faces lower Chinese regulatory, testing, and approval hurdles.

• The time-to-launch can be a few months shorter than with in-country.

• VAT/tariff are applied post-purchase (as opposed to pre-purchase with in-country).

• New-to-market brands often undertake market discovery through cross-border to gain an understanding of consumer preference as it relates to SKUs, pricing, and communication–without having to invest heavily in inventory, offline marketing and primary research.

• There are some minimal exemptions for duties and customs that apply to the cross-border model.

Social Medial Platforms-Wechat & Weibo

• Establish your presence on social media

• Tiktok (DouYin in Chinese) is quite popular these days to deliver short video to the young audience

• Unit logistics costs, which in one form or another are passed to the customer, tend to be higher, since product enters China one order at a time. Also, shipping fees are a bit higher than with in-country, since China Customs has to process each individual order as it enters the market. Cross-border also involves a prohibitive returns process and can mean less customer connectivity

List of products approved for cross-border trade given in handbook

New Cross-border rules

• Single-transaction amount increased from 2,000 RMB ($291 USD) to 5,000 RMB ($727 USD)

• Yearly amount of cross-border purchases increased from 20,000 RMB ($2,909 USD) to 26,000 RMB ($3,782 USD)

• Within these limits, customers won’t pay any import tariffs, and will have their import VAT and consumer tax collected at 70% of the statutory taxable amount.

• New items added to the positive list

• 63 new items categories were added to the positive list for cross-border purchases. The new allowed categories notably include sparkling wine, beer, health care products, and fitness equipment.

• The complete list in Chinese language is given in the handbook

• The cities included in this cross-border tax-rebate were expanded from 15 to 37 cities.

New Cross-border rules

• Single-transaction amount increased from 2,000 RMB ($291 USD) to 5,000 RMB ($727 USD)

• Yearly amount of cross-border purchases increased from 20,000 RMB ($2,909 USD) to 26,000 RMB ($3,782 USD)

• Within these limits, customers won’t pay any import tariffs, and will have their import VAT and consumer tax collected at 70% of the statutory taxable amount.

• New items added to the positive list

• 63 new items categories were added to the positive list for cross-border purchases. The new allowed categories notably include sparkling wine, beer, health care products, and fitness equipment.

• The complete list in Chinese language is given in the handbook

• The cities included in this cross-border tax-rebate were expanded from 15 to 37 cities.

• Postal tax rate reduced.

Example - Food and medicine: lowered from 15% to 13%

Textiles, electrical appliances: 25% to 20%

Cross-Border trade is a pilot project for Chinese government.Rules & regulations will continue to change as time demands

Wechat Account• To open a Wechat business

account to reach Chinese people within China, you need a Chinese company

• By opening a company in these free trade zones, you are “checked off” as a Chinese company – while also getting those FTZ benefits

Free Trade Zones • Use FTZ to reach Chinese customers

• Partner / Distributor in China (no business of your own)

• JV (Joint Venture)

• WFOE (Wholly Foreign Owned Entity)

Financial Benefits of locating in FTZ

• 15% corporate tax

• Reduced Cross Border RMB Loans of 3-4%

• Foreign Talent Exemption from Personal Income Tax

• Pilot Project Support

• Assistance in Relocating to Qianhai

• Office Construction Support

Quinhai Free Trade Zone

The only platform supported by the government to encourage the cooperation between Shenzhen and Hong Kong Warehouse goods without paying any duties

After opening an office in FTZ, open WechatA/cShip B2C direct from FTZ warehouse. Customer pays duty to China Post Office

Tmall & Aliexpress (Alibaba Group)

Tmall – 32 % market share20,000 brands in over 4,000 categories from 77

countries and regions2014-2017 growth 10x

Tmall overseas fulfilment centres-Not yet available in India

Indian furniture on Aliexpress

Fabindia on Tmall

Hidesigncrossbag on Aliexpress

Most popular products

GrowthCereal 477%Dairy, Eggs, Honey 402%Sugar 395%Meat & Seafood 278%Clothing 209%Live Animals 209%Coffee, Tea & Spices 199%Gems, Precious Metals, Coins 180%Cotton 179%Alcoholic Beverages 175%Cocoa 173%

GrowthLeather 169%Milling Products 166%Ethnic & Tailored Clothing 163%Vehicles 161%Fur-skin & Artificial Fur159%Wood 158%Cereal & Milk Preparations 155%Pharmaceuticals 151%Other Food Preparations 150%Oil 54%Art & Collection Items 7,061%

China eComm (Cross Border Trade)

• User penetration

2019 – 59%

2023 – 68.5%

Average revenue per user

$850.60

Per head limit

Per transaction - $75.00

Per annum - $ 2900 $3700Chinese government continuously expanding the scope of cross-

border e commerce. Relaxing customs inspection and inland duties

Health food market2017-$34 bn.2021 - $43bn.

China-Cross border ecommerce Marketplace

• Large brands

Tmall Global, JD Worldwide, and NeteaseKaola

Small brands

wechat

45% imported products

Entry -China-Cross border ecommerce

1. Using Third Party Logistics

2. Establishing exclusive bonded warehouses

China-Cross border ecommerce

• Bonded warehouse »: These warehouses are warehousing facilities dedicated to storing overseas goods. It allows sellers to send their products to China without being subjected to commercial import duties or quality control measures.

• The consequence of this type of warehouses was the rapid growth of cross-border.

• a new tax on imported products was created in 2017

• The government allowed the creation of 5 new zones for these « bonded warehouses » in Dalian, Hefei, Chengdu, Qingdao, and Suzhou.

•https://www.chinaimportal.com/blog/fulfillment-centers-china-hong-kong/

Africa-Ecommerce Platforms• 21 million e-shoppers in Africa

• $5.7 bn. Sales.

• Major markets

➢South Africa-$2.7bn. 15% growth

➢Nigeria

➢Egypt – 33% growth rate

➢Kenya – 10 million new mobile money a/c registered in 2018

➢Libya-highest number of shoppers online

• Drivers

❑Growing use of mobile technologies

❑Growing urbanisation & industrialisation

Growth 10% per annum

34 countries

Internet growth

24%

Japan/Korea-Ecommerce Platforms

• Japan - $73bn. Market. Growth 9%

• Third largest market

➢Amazon, Rakuten and Yahoo! Shopping (Lohaco)

Largest in Japan and third largest in the worldPartners of Rakuten

OFX, SellerActive, Cloud Conversion, SellerCloud, ChannelSale, Payoneer,

Etail, PackageBee, World First