How big is the market for overseas sportswear in China?
With sales worth over £16.5 billion in 2016, the market is huge. China’s middle class – over 225 million people – is becoming increasingly interested in health and fitness, fueling demand not only for sports attire but athleisure sportswear.
Chinese shoppers are also increasingly looking overseas to buy their favourite brands, creating an ideal opportunity for UK sportswear retailers to enter the market.
How do the Chinese shop?
Online shopping is the natural choice for Chinese consumers, particularly via mobile. Despite the highly-publicised success of Chinese retail marketplaces, such as Alibaba and Tmall, shoppers looking for sportswear products prefer to buy directly from a retailer or a brand’s website. According to a recent report, standalone Chinese websites have become the number one channel for online sales for Adidas and Reebok, and sales for the two brands are expected to reach over £3.5 billion by 2020.
Counterfeit products are a major issue in China and buying direct guarantees authenticity. Furthermore, buying online is less expensive than purchasing an item which has entered China via traditional bulk trade import and incurred additional costs as a result of taxes and custom duties.
Online shopping in China means shopping on mobile - more than 70.7 per cent of Chinese retail ecommerce sales were via mobile devices in 2016 and the trend is for this figure to grow. Over 90 per cent of purchases on Alibaba were made on mobile devices in Singles Day 2017, while the British sports discount retailer GetTheLabel’s website sees over 50 per cent of sales via its China site on mobile. So any Chinese website needs to mobile friendly as a priority.
What other challenges should sportswear retailers be aware of?
Chinese shoppers expect high quality, authenticity and fast delivery when they buy from UK sportswear retailers. Of these, delivery is the biggest potential challenge, especially when products are warehoused in the UK.
If retailers cannot guarantee immediate availability of stock, customers might well cancel their order, so they need to ensure good stock levels plus a slick shipping experience – less than 14 days will give UK ecommerce retailers a competitive advantage. To achieve this, retailers need to hold local or near-shore stock, accompanied by sensible logistics approaches such as direct shipping or bonded warehouse shipping. Employing a specialist local ecommerce specialist within China is advised. They will not only manage stock levels based on their experience and estimations, but also ensure the retailer maximises merchandising and marketing opportunities.
Returns are a perennial headache for retailers and even more so, if they are based overseas from the customer. Chinese consumers have been spoilt by domestic marketplaces such as Alibaba and JD.com, which offer easy return and refund policies. Retailers who operate on these marketplaces are encouraged or even forced to accept these policies, otherwise the marketplaces won’t even open the door for them in terms of marketing campaigns.
As a result, Chinese customers have high expectation with regards to returns with crossborder e-commerce and overseas merchants should implement refund and return schemes that are as flexible as possible. Many overseas retailers request that customers pay for any tax and logistics costs, which, unsurprisingly, is hugely unpopular. A no quibble returns policy with no additional costs will reduce the retailer’s bottom line but would appeal to customers. It’s about finding a balance.
What are the best ways to market to Chinese consumers?
On one hand, Chinese shoppers are notoriously fickle and demanding. They have also become accustomed to expecting regular promotions and special deals - core drivers in the development of e-commerce in China over the past decade – and are adept at seeking out bargains on a daily basis. At the same time, rising income levels and a growing middle-class bring with them a rising demand for quality and design.
In order to compete, sportswear brands and retailers need to make sure they factor in promotions into their overall digital marketing in a smart way, which they will be able to attract picky customers with quality products and great deals, while maximizing revenue and avoiding damaging brand value due to over promotions and discount.
One approach GetTheLabel takes is to hold flash sales promotion along with interactive campaigns. For example, the retailer occasionally kicks off a ‘Mysterious 10 Minutes’ campaign and asks fans to guess when the discount will be released, which increase customers’ interests and retention.
Ecommerce digital marketing in China is constantly evolving. Consumers are tiring of traditional channels and are more likely to pay attention to recommendations by KOLs (Key Opinion Influencers) whom they trust. Countless influencers have emerged in the past couple of years on social media platforms such as WeChat and Weibo and built up vast communities of consumers with like-minded interested lifestyles and shopping behaviours. GetTheLabel collaborated with one Chinese fashion KOL which worked well in both brand awareness and sales.
However, Chinese consumers are becoming accustomed to KOL marketing as more and more brands and retailers are using it, so it’s important to select a KOL who fits well into your target audience, rather than merely a popular one with huge numbers of followers. In order for a UK retailer to succeed in China it must engage these social media stars in strategic and incentivised campaigns.
Where are the growth areas?
Discounted sports brands are becoming popular and offer an accessible and affordable way to purchase well-known names. GetTheLabel is finding success by attracting Chinese customers with famous brands and popular items and then introducing them to other niche items.
The discount sportswear retailer enjoyed over 47% of GMV (Gross Merchandise Volume) in the first six months since it entered China with their stand-alone Chinese website with the help of a local partner. During Black Friday - the biggest online sales festival for cross-border goods in China – the retailer saw over 13 times of their average sales.
Overall, despite some challenges, China offers UK sportswear retailers an exciting opportunity and sports clothing and shoes look set to see continued growth in China for the foreseeable future.