The sudden growth of Chinese eCommerce may mean good things for online sellers

Inventory Management

Whether merchants are based in North America and selling internationally to Chinese customers, are domestic retail entities or are planning to launch a marketplace in the region per the recent policy changes, the recent Chinese eCommerce growth can only bring good news. Internet Retailer recently reported that JD.com, China’s largest online retailer, got a lot bigger last year, with nine-month sales seeing a 102 percent jump compared to 2013.

Moreover, the sheer number of people shopping on JD.com has jumped significantly, with the number of active shoppers increasing to 45 million in the third quarter, which is double the reported figure from the same time in 2013.

Looking at the bigger picture

Overall, JD.com ranked No. 1 in the Internet Retailer 2014 China 500 list. While the eCommerce site is still behind the gross merchandise value of sales observed at Alibaba’s Web marketplaces, the fact of the matter is that the site is still a trend-setter in the Chinese eCommerce space. The fact that the website has seen such substantial growth over the past year can only be good news for merchants that also want to tap China’s monstrous customer base through online stores.

The fact that JD.com has seen such substantial growth over the past year can only be good news for merchants that also want to tap China’s monstrous customer base through online stores.

Many merchants have looked to expand internationally in the past couple of years. After all, there are no physical limitations that would prevent customers from shopping at online stores, regardless of where retailers are based.

The only limitation is logistics – do retailers want to take the time to localize websites and product offerings to the Chinese audience? Do they want to make the appropriate policy adjustments (such as allowing or barring returns on foreign purchases)? Do they want to take the time to establish international distribution centers to serve foreign customers? Do they need to reach out to local drop shippers or is it worth it to send packages internationally? Are any of these investments worth the business period?

Is capitalizing on foreign markets right for you?

For retailers, looking to maximize their reach, there is no denying that foreign markets are attractive prospects. Compared to North America and developed regions, some of these emerging economies present untapped customer bases that are only now growing accustomed to online shopping. In that regard, they are clean slates, and merchants serving these regions have a real opportunity to become the go-to sellers for specific products and goods.

Target was pulling out of Canada because the merchant just could not make the sales necessary to justify the cost.

However, international expansion is not always the solution, and many over-eager retailers have suffered losses from their expansion attempts. Even big-name brands have been forced to close down shop in foreign territories when they could not make sales figures. CBC reported recently that Target was pulling out of Canada because the merchant just could not make the sales necessary to justify the cost.

Before making any investments to reach foreign markets, retailers need to think critically about their goals and determine whether expanding internationally is the right move for their long-term objectives. Once they have taken this initial step, they can begin creating a roadmap that will help them plot out their expansion efforts.

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