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The opportunities for start-ups to sell original products online in China

By ESC Editorial Team, over 5 years ago Business
The opportunities for start-ups to sell original products online in China

The online marketplace has become the main destination of choice for China’s designers. According to statistics, the online transaction volume of their original products has multiplied over the past few years, worth nearly RMB 10 billion. There are about 50,000 designers who started their businesses on Taobao and attract more than 500,000 buyers a day to their products. The generation of post-90s and post-95s are loyal customers of original brands and focus more on individuality and uniqueness than brand awareness. This generation also represents the majority of branded designers that are active online and account for more than 30%. Most of them have overseas study experience or graduated from design institutes.

Target a small group of consumers 

Xiaolong is a designer in Beijing and runs a business called Viken Plan on Taobao that sells silk stockings in unique styles. When he started up in 2014, he decided to focus on a niche market to target a small consumer group rather than selling the trendiest items. Market demand for stockings was estimated at RMB 20 billion in 2015. However, most stockings have similar patterns and styles and cannot meet people’s demand for customised products and aesthetic needs. In other words, this is almost a new market with great opportunities.


Viken Plan founder and some of his works

Placing your brand in a specific category makes it easier to impress consumers, he said. “I do not intend to make it big, but to create stockings with novel and fashionable elements to resonate with like-minded consumers.”

During these four years he has designed 200 different types of stockings and gained 163,000 loyal followers, including famous stars. Some of them are interested in purchasing all the new items to include in their collection.

Xiaolong said that 90% of his customers are from the post-90s and post-95s generation, and surprisingly, 30% are male who buy for themselves, but mostly for their friends as a gift. On Double 12, 2018, a male customer spent RMB 5000 to buy all the products in the store. In the opinion of Xiaolong, this is an area with diversified requirements.

Offline to Online

Many local designers initially sell their products through a selected shop. On the one hand, their potential customers are a minority and therefore the products may not be widely accepted on the usual sales channels; on the other hand, small-scale production causes difficulties in supply chain management and put them in a disadvantageous position when negotiating the price with the factories. However, selling in a select shop was not a perfect choice neither. The brand owner had to depend entirely on fashion buyers to sell to consumers and therefore had less control over marketing and could not capture consumer preferences. In addition, the costs were considerable because select shops would charge high fees to cover their expense of the physical store.

Dayao is the founder of BIZZCUT, a popular brand on Taobao. In 2015, he set up the online store on Taobao, and after three years of development, BIZZCUT has more than 571,000 followers. They are mostly at twenty-somethings, keeping up-to-date with fashion trends and wanting to buy the most cutting-edge stuff at a reasonable price. Lower input costs make it possible to lower the price that is acceptable to more customers. A sweater by BIZZCUT is primarily under RMB300.

At the Double 12 shopping festival 2018, BIZZCUT collaborated with Gavin Thomas, a US kid and now China’s most popular social media star, to jointly release a sweater. It was sold over 10,000 times and increased the day’s turnover of the store by 800%.


Gavin wearing the sweater of special edition

Why is Taobao an ideal online marketplace for original products?

The first choice for China’s local brands to tap online space is Taobao. Here are the reasons why:

In 2013, Taobao launched a section called Qiangdiao (Taste in English) for stores of original design. It provides independent designers with support and resources on traffic, supply chains and intellectual property protection and helps them find potential partners for collaboration. BIZZCUT x Gavin Thomas is just one of the ten cases of cooperation between original products and KOL/influential bloggers promoted by Taobao in 2018.

Since 2015, Taobao has been attaching great importance to quality and personalised products and is helping the lesser-known, self-created brands to get more exposure through several new accesses on the homepage. Also, they are encouraged to participate in the offline activity initiated by Taobao, such as the Taobao Maker Festival and the iFashion Week that is held twice a year.

As with many local start-ups, the main problem for foreign brands to expand in the Chinese market is channel and capital. The shift from offline to online is inevitable and use of developed e-commerce platforms such as Taobao will be a cost-effective way.

Read more here to check The most popular cross-border e-commerce apps to reach Chinese consumers.

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