I was scrolling down some blogs when I dug out the story of man named Mr. Liu who struggled with his overseas purchases. Mr. Liu first went into overseas online shopping a few years ago with an attempt to purchase a Kindle on the Amazon US Website. At that time, the Kindle could not be purchased on the Chinese Amazon website. After reading some guidelines, he tried to buy the Kindle online only to find out that he didn’t have the appropriate dual-currency credit card. Thankfully, Mr. Liu got help from some of his friends and he finally got to complete his purchase using an Amazon gift card bought on Taobao. Half a month later, he received the Kindle.
Overseas purchasing has become quite a trend in China. If you want a simple example, just input “overseas purchasing” on the Taobao search engine, and you will get hundreds of results. The good news is that thanks to a new policy, overseas online shopping now need not be as complicated and painful as what Mr. Liu had experienced.
What is this policy?
In March 2013, China State Administration of Foreign Exchange finally allowed some third party payment platforms to provide e-commerce consumers with cross-border consignments, as well as foreign sales and business purchases. Pilot areas included Beijing, Shanghai, Chongqing, Zhejiang and Shenzhen.
What does it mean? Well technically, from a consumer point of view, the policy makes overseas online shopping easier by allowing cross-border transactions. As explained by one manager from Tenpay, Chinese consumers will be able to pay for products on international e-commerce websites using domestic third party payment platforms. For them, there will be no need to worry about dual-currency credit card issues no more.
From a seller point of view though, things just started to get more complicated, as the new policy already significantly raises the level of competition. Many domestic sellers admitted that doing business online is getting harder and more competitive than ever before.
What about logistics?
To deliver a product to China from overseas, there are two main options. The first one would be to send products directly from the online shop’s main warehouse, and the second one would be to go through a third party logistics aggregation company. As very few websites support international delivery all the way down to China, sellers usually use a third party logistics aggregation company in the foreign country, often operated by Chinese, which then delivers the product to the client.
SF-Express has already made inroads into this new opportunity. As one of the leaders in the domestic logistics industry, it is making the first move with a platform that can support overseas online shopping. SFbuyhttp://www.sfbuy.com/ launched a month ago and is currently in its testing phase.
Overseas online shopping may remain as a niche segment, but it could be disruptive in the upper rungs of the e-commerce market where quality, variety, and safety trump low price in terms of consumer priorities. This is a high value opportunity not just for the entrenched market leaders but for new players as well. It is only the beginning, I will keep you posted.
By Hanna Chen