Many companies are intrigued by the China market opportunity, and the macro data certainly supports the promise.
Eric Li from JD Worldwide remains bullish on the China ecommerce opportunity and highlights the usual suspects in terms of leading product categories among Chinese cross-border shoppers which are: mom and baby products, cosmetics, health supplements, electronics, and sports gear.
Access to this huge market comes with a price, though. To figure out what those costs look like, we cornered Eric in the kitchen at one of our events to have him break down some of the costs associated with setting up a China entry strategy using a cross-border ecommerce marketplace like JD Worldwide.
To clarify, JD Worldwide means selling direct to consumers from overseas or a free trade zone, whereas JD.com means a distributor or your company has moved inventory into Mainland China on a wholesale or bulk level.
While every company’s needs vary, we walked through some considerations around the JD Worldwide model in this podcast:
- Third Party Logistics Companies – These can be stateside companies that help you manage the warehousing, packaging, and import tax.
- Refundable Deposit – The fee that JD charges for setup can cost 10-15k depending on the negotiated rates and represents the commitment to the platform.
- Platform Usage Fee- This cost is going to be at 1000 a year for participation on the platform.
- Third Party Partner Service Provider- This start up tier cost is typically around 40k per year or structured as two to ten percent of sales and would include: website language translation, measurements, customer service, inventory management, and marketing. These partners are vetted by JD by looking at targets for each category.
Here is a short clip from the podcast:
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To sort out some of these costs, Eric recommends asking the following questions to the third-party providers:
- How much in sales do you think my product(s) can generate?
- How much traffic could I generate with my product?
- How do you know that this much traffic will be generated?
- What’s your method for getting these projections?
- Do you pay for it?
- Do you know the Operations Manager?
While this may be a lengthy process, if you can convey your value proposition, it can be a home run that is carried on for generations. For more information, check out the full interview.
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