Skin care company gets an assist in entering the Chinese market
Like many retailers, wanted to penetrate the emerging Chinese market with its online sales site. But also like many retailers, the provider of skin care products had limited resources to crack that market, so it looked for a partner to help it navigate the obstacles to selling in China. Ultimately, Algenist chose BorderX Lab and its Beyond app.
Beyond helps Chinese buyers navigate to Algenist’s website, providing content to make Chinese consumers aware of products and show them how they could improve their skin. “They provided a lot of product reviews and editorial material that would engage customers and get them to come to our website,” says Irene Shin, Algenist’s digital marketing director. “Then they helped us with all the logistics in actually handling the sales.”
Among the logistical issues are payment and shipping; Beyond also is responsible for customer service issues, including product questions and order cancellations.
Customers send their orders to BorderX, which then purchases the goods from Algenist and sells the products to the customer. That allows Algenist to be paid in U.S. dollars; Beyond collects from consumers using credit cards and payment vehicles common in the Chinese market. Algenist ships purchased goods to BorderX, which then forwards products to customers. The process removes the need for Algenist to deal with foreign currency and payment systems or foreign shipment issues.
“The way this works has been great,” Shin says. “It has been real smooth without a lot of hiccups. And the account managers we have worked with are very hands-on and helpful.”
China market is just part of Algenist’s efforts to sell internationally: The company also sells in Europe, Southeast Asia, Korea, Canada and Mexico. Since working with BorderX, Algenist has seen an increase in sales to China. Sales through BorderX in the first half of this year alone were 53 percent higher than in the same period in 2017, Shin says, and BorderX has been among the top three sales affiliates for Algenist for more than a year.
Algenist’s experience is typical of retailers trying to sell into the lucrative Chinese market, according to Jeff Unze, president of strategic partnerships for BorderX Labs.
Retailers usually have two choices in selling to Chinese customers, and both have obstacles. Companies can set up a warehouse in China to handle sales and shipments, but that requires a significant expense and a major long-term commitment, Unze says.
Alternatively, they can become partners with a Chinese firm, but then they could lose control of product and pricing. “The partner may even undersell you on price,” Unze says, “and you might see brand degradation.”
Other obstacles include compliance with Chinese regulations such as a requirement for animal testing of health and beauty products — a process that was once common in the United States but that has been attacked by animal rights activists. “That means sacrificing your image in the international market, where animal testing is frowned upon,” Unze says.
Handling payments can be difficult for most retailers because the credit cards and payment programs used most commonly are not accepted by most U.S. retailers. What’s more, shipping from the United States is expensive, and customer service issues are problematic. “Chinese consumers can be persnickety in how they are treated. Government regulations can be strict, and they can shut you down if they believe you are not treating your customers right,” he says.
Even getting product known in the Chinese market is difficult, Unze says. “They don’t have a lot of the search engines we have in the U.S.,” he says. “They rely more on editorial content and social media to find out about U.S. products.”
To counter that problem, BorderX has workers in China who write articles about its customers’ products. “We have a team of 12 people who write about 50 articles every day. These articles get customers acquainted with products and direct them to the websites where they can purchase them. This content drives about 70 percent of the sales we see,” Unze says.
In contrast to the United States, the Chinese do more online shopping via mobile devices than personal computers; Unze says about 80 percent of ecommerce sales last year came via mobile phones.
Besides editorial content, social media is widely used to promote sales in China. Unze says Chinese consumers post three times more than Americans on social media. BorderX’s social media postings have payment capabilities built in.
BorderX is currently working with about 50 U.S. retailers and another 10 from Europe in selling to China. Sales are growing rapidly, Unze says, up five-fold during the past year.
Most of the sales are related to fashion and beauty, product categories in high demand by China’s growing middle class. The products also are a good fit for BorderX’s practice of providing editorial content. “Fashion and beauty represent an opportunity to tell a story about the product. We teach people why the product is worth buying,” Unze says.
And while China was originally targeted by BorderX because of its growing middle class, the firm is looking to other markets. It just recently entered Hong Kong and is looking at the Middle East and South America.
Lauri Giesen is a Libertyville, Ill.-based business writer with extensive experience in covering payment and finance issues.