Here's how Chinese online shoppers spent $1.1 trillion on foreign brands in 2017

Alibaba's 2017 annual report on Tmall reveals the countries, categories and specific products finding success selling to China's online shoppers.

Here's how Chinese online shoppers spent $1.1 trillion on foreign brands in 2017

Chinese consumers’ insatiable appetite for overseas goods is estimated to have brought in RMB 7.7 trillion (US$1.21 trillion) in cross-border ecommerce sales last year, according to the 2017 Tmall Global Annual Consumers Report jointly released by Alibaba and data-based integrated marketing platform CBNData.

The sheer scale of sales partly came from the C2C daigou marketplaces, which boomed after the 2008 infant milk scandal that triggered the trend of overseas shoppers reselling foreign infant formula brands to Chinese consumers. These channels which have been plagued by counterfeit products complaints have nevertheless in recent years been overtaken by B2C platforms Tmall Global and Global, which allow international brands that do not have a physical presence in China to sell to consumers directly. Cross-border ecommerce sales are estimated to account for 20% of total ecommerce sales in China last year, while B2C platforms take up more than 75% of the cross-border sales.

Cross-border ecommerce and overall ecommerce sales 2012-2018
(purple = cross-border ecommerce, red= overall ecommerce sales).

Among the B2C cross-border platform players, Tmall Global has the largest market share at 27.6%, followed by (20.5%), Global (13.8%), (9.8%) and Amazon (9.1%), according to sales figures from the last quarter of 2017. During Singles Day last year, Tmall Global amassed more than 70% of the total cross-border ecommerce sales orders. Australian pharmacy chain Chemist Warehouse hit its RMB1 billion sales mark in seven hours on Singles Day last year; while other big-ticket items sold during Singles Day include three Aston Martin racing yachts.

Alibaba has often touted Tmall Global as a testing ground for brands and retailers to establish their footprint in China, as opposed to its other ecommerce platform, Tmall, which imposes a higher entry barrier. Goods sold on cross-border platforms such as Tmall Global are distributed through bonded warehouses and receive preferential tax treatments as well as quarantine exceptions from the Chinese government. US retailer Costco had just opened its first flagship store on Tmall last year after having been on Tmall Global for three years. Macy’s employed VR during the 2016 Singles Day to give Chinese consumers buying on its Tmall Global site a taste of shopping at its US stores.

Meanwhile, close to half of the shoppers on Tmall Global are identified as members of the "post-90s" and "post-85s" groupings—Chinese youths who contributed to almost 40% of the sales on the platform. 

Age distribution of shoppers on Tmall Global ("95" = the "post-'95" group, born between
1995 and 1999; 90 = 1990-1994; 80 = 1980-1989; 70 = 1970-1979; blue = other).

Alibaba listed several qualities of these age groups, such as a preference for niche brands and besides being highly influenced by hot trends. For example, sales of French label Saint Laurent's Sac De Jour bag peaked on Alibaba during early July last year, after an effective product placement in Chinese drama series My Previous Half Life

A Sac De Jour handbag (right) saw a sales increase after it appeared in a drama series.

Female consumers from tier-1 and tier-2 cities are cited as the most fervent shoppers on Tmall Global. According to data from Alibaba, the high spenders from this group like to buy wine, rosehip oil and bluetooth music players on Tmall Global. Beauty and skincare products contributed to 30% of sales on Tmall Global, with facial masks as the most purchased item from the category. Korea remained on the top five countries list on Tmall Global despite the THAAD fallout that prompted a government-led boycott on Korean brands. Meanwhile, food and health supplements came up as the second most popular category, followed by baby- and maternity-related products. 

Top 10 foundation brands on Tmall Global

Here are the 5 countries and their respective top product categories:

1.     Japan 

  • Diapers and baby products
  • Beauty and personal care products

2.     US

  • Health foods and supplements
  • Baby products
  • Bags

3. Australia

  • Health and nutrition supplements
  • Baby products
  • Milk powder for adults

4. Germany

  • Milk powder
  • Dietary and nutrition supplements
  • Cups/kettles

5. Korea

  • Beauty and personal care products
  • Cosmetics

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