Shopify Pairs with JD.com to Win Cross-Border Sales

In Shopify’s latest move into China, the Canadian e-commerce platform has linked up with the Chinese retail giant JD.com to facilitate cross-border commerce between the US and China. The joint partnership will help international brands on Shopify set up their own storefronts on JD.com and allow them to access JD’s source network of dropshipping merchants. Meanwhile, JD.com will also help Chinese brands set up their own DTC channels through Shopify, a move that will bring more domestic brands abroad. The collaboration will link Shopify's millions of merchants worldwide with JD.com’s 550 million active customers in China. Yet, this move does not come without its obstacles. Shopify does not currently have servers in China, but its sites are still accessible through a VPN (unfortunately offering a much poorer user experience with slow-loading websites). Meanwhile, the e-commerce platform involves integrating third-party apps to use the additional features, making most sites and their resources (e.g. images, YouTube videos, Instagram content, analytics, etc.) inaccessible due to China’s censored internet. Shopify sites also do not index properly across Chinese search engines — a challenge for many merchants as DTC businesses rely heavily on social media platforms for advertisement and discovery. Since the Chinese consumer got accustomed to shopping within superapps and efficient marketplaces, the obstacles of a broken user experience and lower chances of discovery would be higher through JD.com’s existing user interface, which the consumer is already familiar with. Since Chinese consumers have gotten accustomed to shopping within superapps and efficient marketplaces, Shopify and JD.com’s collaboration probably won’t work unless the user interface is seamless. Entering China Shopify currently gets used by millions of merchants, popular independent brands, and start-ups due to its easy-to-use platform. On the site, small businesses rely on manual order fulfillment solutions. But merchants can now benefit from JD.com’s 1,300+ warehouses across China and the US. In China, these warehouses have been equipped with a combined 200,000 delivery personnel who fulfill cross-border orders. Therefore, this collaboration should see multiple benefits for three different parties: foreign brands entering China, Chinese dropshippers, and Chinese brands breaking into the West. Merchants outside of China can sync their listed products on JD.com’s marketplace through an integrated app on Shopify that offers intelligent translations and "smart" price conversions when uploaded. Once their shop gets completed, these international sellers can connect to 1.4 billion Chinese consumers through JD.com, with data analytics and global logistic infrastructure to scale. Registering your business in China usually takes around 12 months, depending on varying government authorities and procedures. But this partnership with JD.com will get a business up and running within three to four weeks, involving only a simple verification. The platform integration will enable Shopify sellers to migrate their products onto the marketplace fairly easily. Yet, breaking into China requires a lot more effort than duplicating a website or brand from Western markets. The design of a Chinese storefront on a JD marketplace requires many more loud visuals to entice consumers, unlike the black-and-white text on Western sites like Amazon. Moreover, a smart translation tool provided by JD.com may not be fully efficient since brands often fail at literal translations or grasping cultural notions. Fortunately, the retail giant owns an intricate database of the China market and its consumers and utilizes its insights to help small businesses and brands succeed. East to West Instead of building an online brand from scratch, Chinese brands now have a direct gateway to retailing in the West, thanks to JD.com helping them make their own Shopify website. Even though China is accustomed to a native mobile experience (sans web browsers) and has already excelled in welding social and commerce together, Shopify requires many plug-ins and integrations to connect with its consumers. Neiwai, China’s pride of a domestic DTC brand gone global, also chose to operate on Shopify during its US entry and utilized several plug-ins to localize its site to the American customer, integrating TikTok for social, Mailchimp for email campaigns, and Venmo for payments. DTC brands often carry a similar cookie-cutter aesthetic in the US. Therefore, Chinese brands tend not to resonate well with the American consumer, so they turn to American marketing firms to localize content and promotions. Being a Shanghai-based premium lingerie and loungewear brand, Neiwai has kept its minimalistic brand consistent between East and West. But its approach with UGC content differs depending on its marketing channels and influencers. However, the harsh reality is that the perception of Chinese goods in Western communities is still negative, primarily owing to political and cultural barriers. Western legacy mindsets and growing political tensions have created negative connotations for the quality and ethics behind Chinese-made products. But Shein has been the anomaly, as Gen Z and the Alpha generation are indifferent to its origin and have shown an abrupt shift in consumer mindset. Acceptance of DTC While the Chinese consumer traditionally has favored international luxury brands, generational behaviors have shifted this mentality toward appreciating "unknown" brands like the American luxury leather goods brand, Senreve. Rather than opting for classic legacy luxury brands, consumers have bought into the brand ethos and find value in its high-quality and affordable products. That is especially the case for customers who studied abroad and returned with a new sense of fashion due to their exposure to niche, Western brands. But this idea also stands in opposition to the rising guochao trend (aka China's booming pride in its homegrown labels). Just as many Americans support “Made in the USA" brands, the association with guochao brands and products has been increasingly positive. The revitalization of past hero brands such as Li Ning has garnered appreciation from Chinese consumers who love how tradition and history mix with fashionable and innovative designs. Consumers find domestic brands to be authentically in touch with their culture and of superior quality compared to imported brands that appropriate oriental elements for the sake of commercial viability. Will it work? Being a DTC brand is more than just a business model — it is a mindset that streamlines the supply chain and distribution processes and creates affordable quality products. Opening this gateway will, of course, be a challenge as it is not solely a supply chain and logistics issue to solve — there is also the issue of whether Chinese consumers will accept unknown foreign brands. Having to step around hidden minefields in the markets, brands must fully grasp the Chinese consumer mentality with the right product fit and communication channel to build connections with customers. Many famous Western brands have already exited China after being left in despair, suffocating from a crowded market and a disassociation with the Chinese market through lack of community building. Unlike the West, where they can merely focus on generational behaviors, brands in China must understand the difference between consumer segments across different tiered cities. The Western DTC marketing style has always worked with a lean budget and relied on word-of-mouth UGC content. But for DTC brands in China that work with lean budgets and WOM strategies, it's hard to compete with supercharged influencer campaigns starring Chinese idols. Lastly, most Shopify sellers source from China, and the savvy Chinese consumer can shop directly from local manufacturers at lower prices without considering a “cool” DTC branding. Moreover, with China’s strength in producing goods cheaply and quickly, brands risk getting imitated by local companies — at better quality and lower prices. This new partnership may give an operational advantage to Western sellers entering China, but the barriers of being accepted as a foreign brand remain. And it doesn't help that the Chinese consumer may not necessarily be shopping from up-and-coming brands, just the well-established and famous ones they have always preferred.

Shopify Pairs with JD.com to Win Cross-Border Sales

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Published January 31, 2022

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Shopify Pairs with JD.com to Win Cross-Border Sales