First, DermiClean should understand that for them, e-commerce is the dominant channel in the China market, with about 65% of skincare products sold online and growing year-on-year. In three years, this should exceed 70%. Retail and other channels still matter, especially from a strategic branding and product awareness standpoint, but are much less important than before. So e-commerce shops are the solution.
Furthermore, they know of a way to sell products in China called “cross-border e-stores.” The cross-border e-commerce channel is a clever model introduced by the Chinese government over 10 years ago. The channel allows foreign suppliers to sell products in China via approved and regulated e-commerce platforms without first registering their products. Prior to the cross-border channel, the vast array of approvals, registrations and restrictions formed a formidable entry barrier for many products. While not all products require such registration, most do, and some are restricted by other protectionist and regulatory barriers. Depending on the province, the process can take several months and 30,000 RMB per product, even at its most efficient.
So, a brand can start with a cross-border e-store and then move to domestic sales if warranted. The main platforms that offer cross-border sales, Tmall and JD, both provide complete logistics solutions. Tmall, for example, will have DermiClean’s products picked up at their Florida warehouse and shipped to a warehouse in China, including customs clearance, at competitive rates. And pay-out is in USD, direct to DermiClean’s foreign bank account.
A flagship store is usually the best option, as this shows customers that this store represents the brand in China, products are real and this is the definitive place to buy. The launch process for a flagship cross-border store takes 10-12 weeks once all materials are ready.
Concurrent or prior to the registration process, DermiClean needs to decide its branding, positioning and marketing strategies. An ecosystem of service providers, channels, other platforms and group- and content-oriented entities could form part of the mix.