Guide to selling on Kaola.com, the Chinese leading Cross-border website and app in China (better than tmall last year).
Kaola is China’s No.1 cross-border import retail e-commerce platform. It was launched around 4 years ago by Nasdaq-listed NetEase – one of China’s leading Internet and online game service providers.
Kaola provides a platform for international brands to sell their products securely to Chinese consumers and for Chinese consumers to purchase safe, high-quality international premium goods in a convenient way.
Even though still young compared to its major counterparts like Tmall or JD, Kaola has been China’s leading cross-border e-commerce platform with the market share of more than 25% for consecutive 6 years.
This part is dedicated to providing information regarding Kaola and how to start selling on the platform.
PART OF ALIBABA GROUP
“Amazon China and NetEase Kaola, are negotiating to merge their overseas purchase business, but it is Alibaba that purchase the Crossborder platform Alibaba to Buy Kaola Unit From NetEase for $2 Billion source
- Launched in 2015,
- NetEase Kaola carries more than 9,000 brands
- Main industry: apparel, maternity and infant care, household appliances, personal care
- 27.5% market share in cross-border e-commerce in 2018
1. KAOLA’S COMPETITIVE ADVANTAGES
High-quality overseas products at a competitive price
NetEase Kaola’s continuous success is generated from its high reputation for delivering cost-effective, high-quality and trustworthy products.
This competitive edge lies in its unique model. Kaola establishes strong relationships with international brands and directly purchases most of its inventory from brands overseas, bypassing intermediaries and local distributors to lower costs, the benefit of which is passed down to consumers.
On the other hand, NetEase Kaola provides a one-stop solution for foreign manufacturers to enter the China’s complex market. By handling cross-border logistics, warehousing, online operations and after-sales services, NetEase Kaola enables foreign manufacturers to reach Chinese consumers on a broader and faster scale.
Until now, it carries over 5,000 brands from 80 countries.
Large user base with high purchasing power
Kaola has 30 million active users, and target customers are professionals and white-collar workers aged 20-45, with high buying power-seeking quality, authentic brands.
The main products demanded by Kaola shoppers are baby formula and baby products, packaged foods and nutrition products, cosmetics, household and personal care products, apparel and accessories and small consumer electronic products.
Kaola also owns the largest bonded warehouse in China and an extensive network of third party logistics providers, all making sure that products will arrive at consumers’ houses at the shortest time.
Strong buyer community
Beside selling, Kaola also contains a tab name “种草社区 “zhong cao she qu” which is more a forum or community for sharing. Here you can get advice and feedback from former users about products. This community writes a lot of articles on different areas: fitness, tourism, foods, lifestyle, book, fashion, education and so on.
As Chinese people rely a lot on peer-to-peer advice, it is important and beneficial for e-commerce platforms to maintain such community activities to increase conversion rate, as well as for brands to enhance their e-reputation and credibility by joining the conversations, dealing with bad feedbacks or gaining insights about customers…
2. BENEFITS FOR BRANDS TO BE ON KAOLA
- Kaola has been ranked as the number one E-Commerce platform for 6 years in a row. Kaola will not only contribute to your online sales but also reinforce your brand credibility in Chinese consumers’ eyes.
- Kaola buys products directly from foreign companies, giving you the opportunity to save costs and reduce the hurdles dealing with distributors.
- Kaola focuses a lot on food products, a product category that will see increased imports in the coming years. This is opportunities for foreign food producers.
- Quick payments, as NetEase has big cash reserves. According to the CEO, Ms. Zhang Lei, payments should be done within 7 days.
- Using the media resources of NetEase (its parent company) in combination with the platform’s marketing capabilities, KAOLA.COM can help enterprises to establish their brand credit and enlarge the brand influence, enhance the cohesion and loyalty of consumers.
3. COST OF INVESTMENT
There are 3 costs you should be aware of:
- Initial deposit (refundable)
- Commissions / revenue share
- Yearly cost / product category fee
Initial deposit (refundable)
The deposit is kept by marketplaces, to make sure that you can cover unforeseen costs, such as claims, and more.
Deposits are fairly the same, when comparing marketplaces, and stretches between USD 10,000 – 15,000.
Commissions / revenue share
You’ll also need to pay parts of your revenues to the marketplace.
Commission stretches between 2.0 – 10.0%, depending on the product type.
Yearly cost/product category fee
You need to pay a yearly membership fee of USD 1000.
4. ENTRY PROCESS
You have two options if you want to sell on Kaola:
Sourcing cooperation (Direct procurement from Kaola)
Since Kaola.com is a proprietary trading platform, their main method of cooperation will be to purchase directly from the brand.
You must first possess legitimate corporate entities, valid brand authorisations, good brand reputation, and operation status.
Follow these 4 steps to apply to be a merchant:
A. SUBMIT APPLICATION ONLINE
The application should include the following information:
Introduction about company
Introduction about brand
Online store website
Annual sales (online & offline)
B. WAIT FOR KAOLA TO CONTACT
Kaola needs to make an evaluation, to see if your brand and products meet the criteria. Keep in mind that Kaola mainly wants high-end brands that have operated for a couple of years.
C. RECEIVE OFFER LETTER
Kaola sends you an offer, and you can continue to finalize the registration process.
D. BECOME A PARTNER
Once approved, you’ll become a business partner.
3rd party store (PoP store or Flagship store)
With this model, you set up a shop on Kaola’s website and sell directly to Chinese consumers.
We advise you to contact a local partner to help you handle the registration process at ease.
5. KAOLA IS TO EXPLORE THE HUGE POTENTIAL GROWTH IN THE HIGH-END E-COMMERCE MARKET
While enhancing its dominant position in the cross-border e-commerce market, NetEase Kaola is targeting the entire high-quality e-commerce market.
The rising middle class and affluent young families in China are constantly seeking premium products to fulfill their aspiration of living a high-quality life just as their western counterparts.
According to a research report recently released by the Boston Consulting Group, about 27% of the world’s total consumption growth by 2021 will occur in major economies, bolstered by the rising income level, the growing upper-middle-class and affluent families.
Among these economies, China’s consumption level will see an increase of nearly US$2 trillion by 2021, driven by the growth of upper-middle-class’ consumption capacity.
The promising growth prospects for China’s high-quality e-commerce market presents huge opportunities for NetEase Kaola, as the platform has been focusing (and continue to do so) on providing foreign high-quality products at the right price along with excellent shopping experience to maintain its market-leading position.
6. KAOLA EXTENDS ITS OFFLINE PRESENCE TO ENHANCE CUSTOMER EXPERIENCE
Kaola plans to open 15 new brick-and-mortar stores during 2019 in a bid to keep up with the new retail boom in China.
The availability of online-offline shopping (the so-called Omni-channel strategy) is giving customers a united, convenient and enhanced experience. All major Chinese tech giants including Alibaba, Tencent, JD, Xiaomi, and Meituan have made similar moves.
Kaola’s stores will feature interactive screens which allow for browsing products and viewing popular items, as well as testing areas for cosmetics. The company hopes the features will decrease customers’ decision-making times.
Last year, NetEase Kaola opened two offline shops in Hangzhou and Zhengzhou, the capital of the central Henan province.
NetEase also partnered with CenturyMart in 2017 to make its products available to the supermarket chain Jingxuan Store, a rival to Alibaba’s Hema grocery store chain.
7. In conclusion
Kaola has made significant moves to compete against giants like Alibaba or JD.com. Its efforts have made the platform the No.1 cross-border e-commerce site within a few years.
Taking advantage of a less rigorous entry process as well as its current and upcoming huge investments and obvious ambitions, brands should definitely consider selling on Kaola.com as a method to enter the China market.
- This article is originally published on Marketing to China.
- The above is the author's personal opinion and is not the opinion or policy of ChemLinked.