When it comes to cross-border e-commerce, fashion brands have a lot of options. They can sell on Alibaba’s Tmall Global, Amazon’s marketplace, or one of the many other cross-border platforms. But should they also be selling on Kaola?
So, What is Kaola? And should fashion brands specifically utilize it? Let’s discuss!
China digitalization and growth of cross-border e-commerce
Retail has completely changed in the past decade and most specifically the past couple of years. For all its pros and cons, retail has significantly shifted online no matter where you are in the world. The rise of the e-commerce industry seemed inevitable. It’s not only here to stay but it’s still growing at a significant rate.
The digitalization of China and the massive demand of its consumers have triggered businesses and brands to vie for digital real-estate and relevancy to take advantage of all the business opportunities. And, you can bet that not only local brands are benefitting from all this e-commerce hullabaloo but also a ton of foreign investors too. With that comes the rise of the Chinese cross-border e-commerce platforms.
As the world’s second-largest economy, China is a key market for many brands and retailers. But selling products in China can be tricky, as there are a number of different eCommerce platforms to choose from, and consumers have high expectations. In this blog post, we’ll take a look at one of the most popular Chinese cross-border e-commerce platforms, Kaola, and ask whether fashion brands should sell on it.
What Is Kaola & how does it fare in the Chinese eCommerce landscape?
Did you know that the Chinese e-commerce industry is set to take about 64% of China’s total retail market share around 2023? Those are the projections and we believe that that’s going to be realized. That’s about $1.9 trillion worth of sales, and with the massive purchasing power of the Chinese public, we really think that that’s quite plausible.
It’s also quite true that China currently has a very digitized market and, as a matter of fact, 57% of its retail buyers buy online. Another piece of good news is that Chinese buyers trust and buy from e-commerce platforms as opposed to independent sellers online.
Enter Kaola, China’s 2nd largest cross-border e-commerce platform, globally recognized and partnered with a ton of the world’s top brands and businesses.
It was launched in 2015 by NetEase, a Nasdaq-listed company and China’s leading gaming and internet brand. Kaola was the name chosen by its founders because they want their users to be like the marsupial that is always lazy and relaxing.
Kaola offers some of the most competitive and cost-efficient pricing for the products sold on its platform, something that it has been known for.
Why Kaola Should Be the Go-To Platform for Fashion Brands
Let’s take a look at the numbers first. Kaola has got a user distribution that’s significantly concentrated on people aged 20 to 40 years old. This age bracket makes up about 80% of its users and also 80% of said users are women.
That tells you a lot about the potential of the platform for fashion brands, right?
Common sense tells you that these are the people that buy a ton of clothing and apparel, not just because they can afford it but because it’s necessary. These are the age groups that are constantly socializing, working, and love to dress up.
And, it’s also common knowledge that women buy more clothes compared to men. But, don’t get us wrong when it comes to fashion, Chinese men’s tastes are also evolving. The status quo tells us that Kaola is a platform that is ripe for the taking and is best suited for fashion brands.
It’s not just the demographics but Kaola also has the largest bonded warehouse all over the country, so they can afford to take in large-scale purchases and, at the same time, offer them at a lower price.
Also, fashion brands all over the world have taken a liking to Kaola and how they operate. With this kind of development, Kaola has been known in China as the e-commerce platform for fashion brands and it’s prudent that you set up shop in it too.
On the topic of eCommerce for Fashion and Luxury brands in China, Read as well: How to Build an Efficient E-Commerce Strategy for Luxury in China? – a compact post to guide you through China’s eCommerce best practices.
How To Start Selling on Kaola?
There are three main costs that you need to be aware of if you want to sell on Kaola. These costs are also commonly required on other e-commerce platforms. We’re referring to the initial deposit, commissions, and yearly costs.
Initial deposits are required so platforms can cover any unforeseeable costs, claims, etc. Initial deposits vary and may range from around $10,000 to $15,000. In comparison, Tmall Global has the most expensive of all cross-border eCommerce platforms at around $25,000.
Next is the commission or revenue share. Commission on what you sell on the platform may vary from 2% to 10%. It varies per product.
Lastly, the yearly cost or product category fees are around $1,000.
Now that we’ve got the payments out of the way, let’s talk about opening a shop.
On Kaola, you have two options, sell through a procurement route or sell through a 3rd party store, aka Pop/Flagship store. This keeps things simple.
With a procurement route, Kaola purchases goods directly from you. The first thing that you have to do is to send in an application to Kaola’s website. Your application should include the following:
- Product category
- Company name
- Introduction about company
- Company website
- Brand name
- Introduction about brand
- Brand website
- Business model
- Major clients
- Online store website
- Annual sales (online & offline)
- Contact person
Then, wait for Kaola to evaluate your application and decide to contact you back. If yours is a high-end brand and has operated for at least a couple of years then you will have a significant chance of getting approved right away.
Once you receive your offer letter that indicates that you’ve become a Kaola partner, they can then introduce you to the many marketing agencies they are partnered with or other service providers that you’d need to get in touch with.
Setting up a pop or flagship store means that you’ll sell directly on their website. All you have to secure or make sure is to have a legit corporate entity, good credit standing, operating status, and brand authorization that’s valid.
So, how can merchants increase their sales on Kaola? If you’re used to operating in the western hemisphere then know that things work a bit differently here in China.
In order to increase your sales, learn how to adjust your store according to the taste of the Chinese consumer. Advertise native ads on the platform, recognize Chinese and Kaola shopping festivals, and always make it a priority to enhance your online reputation as that aspect will rake in a ton of business opportunities for you.
Benefits of Selling on Kaola
The top benefit of selling on a platform like Kaola is that they generate A LOT of traffic regularly. That’s millions of users loitering and ordering products from the platform and, if you play your cards right, you will get in front of your ideal client quite easily and earn profit to propel your business to the top.
Kaola is also relatively easier and simpler to operate compared to, say, JD Worldwide and even Tmall Global. The latter two have more stringent requirements and higher fees so smaller brands will benefit more if they sell on Kaola.
Fashion brands specifically will always have a significant space on the platform and, at the same time, foreign businesses will have a significant chance to be successful on it.
Kaola may be a strong platform but, compared to Tmall, its user count is still relatively low and they tend to reach out more to foreign brands because domestic businesses prefer to sell on their competitors instead.
Some may consider these as drawbacks but to others, these aspects are still room for more opportunities. Not all platforms are perfect anyway and Kaola does also have its weaknesses. Besides, it’s a company still growing and its users will soon follow.
Sell on Kaola, the Conclusion
There are a few other worthy cross-border e-commerce platforms that you can explore but Kaola is a must if you want to get your brand or business out there. With its robust set of features and tools that are readily available to its users, your growth once you’ve established yourself on the platform is almost guaranteed.
The platform also does not show any signs of slowing down as they are evolving constantly and always putting up a fight against some of the other giants in the industry, namely Tmall Global and JD Worldwide.
Kaola has been established as a partner of some of the most recognizable brands and businesses all over the globe and you can take full advantage of that.
Need help setting up shop or navigating the intricacies of the Chinese retail and e-commerce industry? Why don’t you contact us today and let’s grow your business!