Aventura Group has been operating in the world’s largest e-commerce market for about a decade, specializing in assisting international brands to enter and scale in China. For a few years now, the concept of direct-to-consumer (“D2C”) brands has been gaining momentum. Until recently, it was predominately Western D2C brands that conquered global markets. The last couple of years have seen a trend shift – now an increasing number of Chinese D2C brands go global, and with huge success.
Technically, the term “direct-to-consumer” describes a sales channel rather than a type of company. But the D2C model has completely transformed the retail industry, leveraging “Social Commerce”, i.e. sales generated through social media.
TikTok facilitates an “Eastern Wave”
TikTok is not only the most downloaded social app globally, but the platform has been a launch pad for Chinese brands to transform themselves into D2C sellers in global markets. Compared to traditional, mature social media platforms, TikTok has exploited its advantages as an emerging player by offering brands more traffic support. The most prominent example of a company using Social Commerce to its fullest potential, across TikTok and other social media platforms, is SHEIN, the Chinese ultrafast fashion company.
Founded in 2008, it was not until very recently that the SHEIN phenomena has been picked up internationally by the mainstream media. The company has set a new standard for ultrafast sales on a global scale. By monitoring social media behavior with the assistance of artificial intelligence, SHEIN has been able to cut the time for creating a collection from three weeks (which earlier was the industry’s gold standard set by Zara) to a mere three days. In terms of sales on the US market, SHEIN surpassed both H&M and Zara last year. And in April 2022 Bloomberg reported that SHEIN is in talks with potential investors for a new funding round that could value the company at about USD 100 billion – more than the valuation of H&M and Zara combined!
Chinese merchants with local sourcing advantage dominate Amazon
Many consumers in the West have purchased Chinese brands through Amazon – often without knowing it. In fact, recent studies suggest that as many as 59% of the top sellers on Amazon are based in China. This may not be a surprise since Chinese merchants have a sourcing advantage operating out of China. Utilizing Amazon as the preferred platform for accessing a global consumer base, Chinese brands with international ambitions have learnt to adapt their branding strategies and marketing tactics to appeal to western consumer’s tastes and preferences.
Anker beat both Apple and Samsung
One such success story is that of Steven Yang, who in 2011 quit his job at Google to sell mobile accessories on Amazon. He ended up creating the world’s largest mobile charging brand Anker. The business grew from selling power banks into multiple categories ranging from charging cables, smart projectors to smart home accessories. Crossing the USD 1 billion revenue mark in 2020, Anker is today the largest seller on Amazon. Investing heavily in branding and creating high quality and affordable accessories, Anker managed to beat Apple and Samsung at their own accessories game.
Simplifying cross-border e-commerce
The list of Chinese brands that have been hugely successful outside of China is long, and the potential is high. This opportunity has been recognized by the leading global e-commerce platform Shopify and China’s second largest online retailer JD.com who recently teamed up. The collaboration, announced in January 2022, aims at connecting Shopify’s 1.7 million worldwide merchants with JD.com’s 550 million active customers in China. However, more importantly, the partnership seeks to simplify access and compliance for Chinese brands and merchants looking to reach consumers in Western markets. JD.com will support quality Chinese brands to set up their D2C-channels through Shopify, and enable Shopify merchants worldwide to access JD’s supplier network through the JD Sourcing platform.
More Chinese D2C brands to come
The days of China being nothing but the source of cheap, unbranded goods is very much behind us. And with the support of social commerce and global e-commerce platforms, coupled with distinct supply-chain advantages, there is a vast pool of emerging Chinese brands looking to cut out the middleman and sell their products directly to international consumers. Moving up the value chain and competing on a world stage is not without challenges. Leveraging our cross-border e-commerce capabilities, we look forward to working closely with the ones willing to take the leap.