Alibaba, Vipshop, JD.com, and Amazon all want a piece of Australia

2017 marked the beginning of retail disruption in Australia. One by one, the world’s biggest e-commerce retailers went Down Under to open up shop. Alibaba led the charge, followed by VIP.com, Amazon, and JD.com in early 2018. The e-commerce lynchpins are eager to earn their keep of global market share, and with e-commerce purchases accounting for a mere 7% of total retail, Australia is a relatively unpenetrated market.

What’s the size of the opportunity?

In 2017, Australians spent approximately US$18 billion in goods online, compared to US$261 billion in brick and mortar stores. Australian e-commerce is expected to grow at an annual rate of 9%, reaching US$21 billion by 2022. The growing e-commerce industry has been brought forth by the same factors driving the industry worldwide – mobile phone use, internet penetration, and the growth of the spending power of millennials, who prefer to shop online.

A recent survey by the National Australia Bank (NAB) showed that 70% of Australian consumers bought products from overseas via cross-border e-commerce, with 40% buying from American sellers, 32% from Chinese sellers, and 22% from UK sellers. A key driver of this trend is Australia’s Goods and Sales Tax, which beckons in goods under USD$742 (AUD$1,000) tax-free. At home, Australian retailers must charge 10% GST on all goods.

The same report showed that of all e-commerce purchases, just 20% were made by Australians purchasing goods from abroad. This signals that the majority of Aussies still like to shop within their borders. Although with last year’s onslaught of cross-border e-commerce companies making foreign products readily available, this figure seems destined to change.

Alibaba enters first

In February 2017, Alibaba opened up headquarters in Australia in Melbourne, making it the first cross-border e-commerce titan to do so. Just one month earlier, Prime Minister Malcolm Turnball and Jack Ma committed to bringing more Australian sellers onto Tmall. Australia is the top five countries selling on Alibaba’s platforms. Alibaba estimates that 1300 Australian and 400 New Zealand companies use its networks to sell their wares. Alibaba has made a verbal commitment to invest in the logistics and infrastructure needed to further enable local businesses to go global, providing additional cross-border opportunities for SMEs.

Vipshop enters the market

Chinese e-commerce retailer Vipshop entered the Australian market in Nov. 2017 with a 5,400 square foot distribution center in Sydney and a plan to recruit more Aussie brands to sell on its platform. Vipshop has the third largest consumer base in China, of 300 million people, after e-commerce lynchpins JD.com and Alibaba. Vipshop aims to become a gateway for Australian sellers looking to enter the Chinese market. According to a statement by the company’s Head of Global Buying, Vipshop hopes to procure AUD 500 million of Australian goods in 2018 and plans to double the figure the following year.

Amazon follows suit

In December 2017, US online retail giant Amazon entered the Australian market, in what Australians were calling the biggest retail disruption in recent history. While Australians were accustomed to buying from the US Amazon site, December’s revelation allowed them to buy local from AU Amazon enabling faster shipping times. Amazon opened a warehouse in Melbourne in December – a strategic move given that most of the country’s population is on the east coast – but that doesn’t mean that Australia’s sparse population and vast distances won’t pose problems for the company.

JD.com joins the crew

This month, JD.com opened its first Australian office in Melbourne’s Central Business District. Singing a similar tune to its Chinese counterparts already working in the region, JD.com will engage business development leaders to sign up local SMEs to sell on the platform. JD.com, a Chinese e-commerce retailer with 266 million customers, also plans to invest in regional warehouses and a distribution network. The platform already sells Australian food, dairy products, vitamins, and cosmetics to Chinese consumers, and with this new venture, will provide a bridge for more Australian brands to access the market.

Australia’s cross-border opportunity

Chinese business development leaders are scouting the continent for local brands to sell on their platforms, making it plain that cross-border isn’t just a one-way opportunity. McKinsey estimates that cross-border e-commerce is an AU$50 billion industry. While there are no official statistics on the number of goods exported from Australia to China, it estimates that Australia is the fourth most popular source behind the United States, Japan, and Korea.

Australian homegrown brands such as Swisse Vitamins, A2, and Weet-Bix may already be household names for Chinese consumers. But for the e-commerce players who recently entered the country, the search for historical, high-quality brands has just begun.

Link: http://www.theperseids.cn/news/no/household-4.html

Source from: cifnews