Complete Guide to Selling on Kaola for China Cross-border E-Commerce

Kaola.com is China’s No.2 cross-border import retail e-commerce platform, after Tmall Global. It was launched in 2015 by Nasdaq-listed NetEase – one of China’s leading Internet and online game service providers. Kaola provides a platform for international brands to sell their products securely to Chinese consumers. Chinese consumers, on the other hand, can purchase safe, high-quality, international premium goods in a convenient way there.

Even though it is still recent compared to its major counterparts and other marketing channels like Tmall Global or JD, Kaola has been China’s leading cross-border e-commerce platform with a Chinese market share of around 17% in 2022.

In September 2019 Alibaba Group announced the acquisition of Netease’s Kaola e-commerce platform for US$2 billion. This happened after a previous deal with Amazon that didn’t end well.

What does the name KAOLA mean?

Kaola is a unique Chinese e-commerce platform that focuses on cross-border trade mostly of foreign products. The name “考拉” translates from Chinese as “koala” and was named so because initially, the target audience for this online shopping platform was Australian companies looking to sell their variety of products in Mainland China.

They wanted an easier way than going through traditional sales and marketing channels like export licensing or distribution networks which can be quite challenging at times when dealing with difficult countries such as China.

Kaola’s competitive advantages

The secret behind the success of Kaola is the high-quality overseas products offered at a competitive price. Kaola’s continuous success is generated from its high reputation for delivering cost-effective, 100% authentic, and trustworthy authentic products of foreign brands.

This competitive edge lies in its unique model. Kaola establishes strong relationships with international brands and directly purchases most of its inventory from brands overseas, bypassing intermediaries and local distribution solutions to lower costs, the benefit of which is passed down to the Chinese customers. 

On the other hand, Kaola provides a one-stop solution for foreign manufacturers to enter China’s complex market. By handling cross-border logistics, warehousing, online operations, finalization process and after-sales services, Kaola enables foreign manufacturers to reach Chinese consumers on a broader and faster scale.

Additionally, Kaola developed a QR code-based product tracing system with Chinese customs which was also its key to success. QR code-based system helps Kaola guarantee authenticity and quality, as well as quickly identify and eliminate counterfeit products.

Kaola has a large user base with high purchasing power

Kaola has over 30 million active users, and the target audience for international companies selling on the platform includes professionals and white-collar workers aged 20-45, with high buying power, looking for quality, authentic brands available on the Chinese market. 

The most popular product categories offered on Kaola are baby formula and baby products, mom products, packaged foods, and nutrition products, as well as health care products, cosmetics, beauty products, household and personal care products, apparel, accessories, and small consumer electronic products. 

Kaola also owns the largest bonded warehouse in China and has an extensive network of third-party logistics providers to make sure that products from foreign countries will arrive at Chinese consumers’ houses in the shortest time.

Kaola has a Strong buyer community

Besides selling, Kaola also contains a tab name “种草社区 “zhong cao she qu” which is more of a forum or community for sharing, just like other Chinese social media platforms and many online forums available on the Chinese market. Here you can get advice and feedback from former users about products.

This community writes many articles focused on different areas: fitness, tourism, foods, lifestyle, book, fashion, education, and so on. Like many online forums, Zhong Cao Shequ is a place, where customers can check product reviews and make their final purchasing decision.

As Chinese consumers rely a lot on peer-to-peer advice, it is important and beneficial for e-commerce platforms to maintain such community activities to increase conversion rate, as well as for brands to enhance their e-reputation and credibility by joining the conversations, dealing with bad feedback, or gaining insights about customers.

Kaola is an ideal platform for all those activities, that’s why it keeps its position on the Chinese market as one of the key marketplace platforms. 

The benefits for brands to be on Kaola

There are a lot of benefits for international businesses to sell their products on Kaola;

• Kaola will not only contribute to your online sales but also reinforce your brand credibility in Chinese consumers’ and Chinese sellers’ eyes.
• Kaola buys products directly from foreign companies, giving you the opportunity to save costs and reduce the hurdles of dealing with distributors and registering for business licenses in China. 
• The platform is also focused on selling food, especially packaged foods, a product category that will see increased imports in the coming years. This is an opportunity for foreign food producers to enter China’s e-commerce market. 
• It also offers quick payments, as NetEase has big cash reserves.
• Using the media resources of NetEase (its parent company) in combination with the platform’s marketing capabilities, KAOLA.COM can help enterprises to establish their brand credit and enlarge the brand influence, enhancing the cohesion and loyalty of consumers. 

Costs of selling on the Kaola Platform

There are three kinds of costs you need to be aware of before registering on Kaola:

• Initial deposit (refundable): the deposit is kept by all cross-border eCommerce platforms in China, to make sure that you can cover unforeseen costs, such as claims, and more. Deposit costs are fairly the same, when compared to other marketplaces, and stretch between USD 10,000 – 15,000.
• Commissions/revenue share: you need to pay parts of your revenues to the marketplace. Commission stretches between 2.0 – 10.0%, depending on the classification of products you want to sell.
• Yearly cost/product category fee: you need to pay a yearly membership fee of USD 1000.

Kaola Entry process

You have two options if you want to sell on Kaola:

1. Sourcing cooperation (Direct procurement from Kaola)

Since Kaola.com is a proprietary platform with a business focus on cross-border trade, their main method of cooperation will be to purchase directly from the brand.

You must first possess legitimate corporate entities, valid brand authorizations, a good brand reputation, and operation status.

Follow these 4 steps to apply:

1) Submit an application online

Your Kaola application process should include the following information:

• Product category
• Company name
• Introduction about company
• Company website
• Brand name
• Introduction of your brand
• Brand website
• Business model
• Major clients
• Online store website
• Annual sales (online & offline)
• Contact Details like telephone, email address, contact person name

2) Wait for Kaola to contact you

Kaola needs to make an evaluation, to see if your brand and the kinds of products you sell meet the criteria. Keep in mind that Kaola mainly wants high-end brands with business activities of at least a couple of years.

3) Receive an offer letter

Kaola sends you an offer, and you can continue to finalize the registration process.

4) Become a partner

Once approved, you’ll become a business partner. Then it’s time for you to contact a digital marketing agency to help you prepare an advertising plan and kick off your e-commerce sales in this booming market. 

2. 3rd party store (PoP store or Flagship store)

These two options are available only to well-known brands and/or heavy sellers. With this model, you set up an e-commerce store on Kaola’s website and sell directly to Chinese consumers.

We advise you to contact a local partner to help you handle the registration process at ease.

Kaola explores the huge potential growth in the high-end e-commerce market

In 2017-2018, Kaola made the choice to get rid of cheaper brands with low customer loyalty and to direct its efforts toward recruiting a select number of on-trend companies selling high-quality “Western” products. Kaola is targeting the entire high-quality e-commerce market.

The rising middle class and affluent young families in China are constantly seeking premium products to fulfill their aspiration of living a high-quality life just like their western counterparts.

According to research carried out by United Nations, China’s economy is expected to grow 4.5% by 2022, which is a good sign after the pandemic. It will be bolstered by the rising income level, the growing upper-middle-class, and affluent families.

Consumer Spending in China is expected to reach 455965.00 CNY HML by the end of 2022, according to Trading Economics global macro models and analysts, driven by the growth of the upper-middle-class’ consumption capacity.

The promising growth prospects for China’s high-quality e-commerce market present huge opportunities for Kaola, as the platform has been focusing (and continues to do so) on providing foreign high-quality products at affordable prices along with an excellent shopping experience to maintain its market-leading position.

Kaola extended its offline presence to improve the customers’ journey

Kaola opened its first offline flagship store in Hangzhou in Jan 2019. In April 2019, it also opened its first “Global Factory Shop” in Huangzhou.

The availability of online-offline shopping (the so-called Omni-channel strategy) is giving customers a united, convenient, and enhanced experience. All major Chinese tech giants including Alibaba, Tencent, JD, Xiaomi, and Meituan have taken on similar hybrid solutions in Asian countries.

Kaola’s stores will feature interactive screens that allow browsing products and viewing popular items, as well as testing areas for cosmetics. The company hopes the features will decrease Chinese consumers’ decision-making times.

The marketplace is adapting to the new trends of Chinese e-commerce

In 2019, Kaola launched its own on-platform live streaming services. This has provided a vital step to maintaining relevance as in China’s eCommerce and retail landscape live streaming is becoming increasingly important.

Live streaming helps the effectiveness of products’ sales and builds foundations for product demand, especially among female consumers and young internet users (people aged 25 and younger are the largest user segment of the Kaola platform). 

Kaola has also launched group buying, which became especially helpful during the pandemic. This allows customers to take advantage of price discounts by buying in groups of two or more shoppers from eCommerce stores on Kaola.

As a consumer, you can join existing groups under a given item, like popular products, mom products, and so on. Alternatively, you can start your own group and share it with your friends, on WeChat or Weibo.

How to increase your sales on Kaola with Digital Marketing?

To increase your sales on Kaola or any other marketplace in China, the most important thing to do first is to build e-reputation, as Chinese consumers are not trustful and don’t want to buy from brands they don’t know. Having a store on Kaola is not enough to make sales in China. To be successful, you need to build a name for your brand on the Chinese Internet.

Build brand awareness with Chinese social media

Social media are great to increase your visibility online and engage with consumers in China. There are many of them and each has its own amazing features that can be useful for building brand awareness and boosting sales. Let’s take a look at the most popular social media platforms at the moment and how you can use them to increase brand awareness:

Wechat: Keep in touch with your audience

Wechat, with its 1.26 billion active monthly users, is the best app to keep in touch with the audience and followers, that you need to acquire rather elsewhere. Wechat is very useful for sending information to your audience, spoiling them with exclusive offers and deals, sharing news about your brand and nurturing your followers base with everything related to your brand. It can be compared to email marketing, just packed with a lot of different features.

Weibo: the place for gaining visibility and buzz marketing

Weibo, with its 600 million users, is the place to go for gaining a name for your brand. This is the social media platform to choose if you’re aiming for increasing brand awareness and reaching new customers in China.

Weibo can be also used to direct traffic back to your website, where you can then convert those visitors into customers. It’s also a great place to gather insights about your customers and create a communication channel with them. You can activate them, by engaging with them in your posts or comments section.

Xiaohonghsu: Build trust through UGC

Little Red Book, or Xiaohongshu, is the app that can be compared to our Instagram mixed with Pinterest. There you can find a lot of beautiful pictures, product recommendations, funny stories, and educational content.

The core of Little Red Book is its community based on trust, that is build through user-generated content. There you can work with influencers or normal users to promote your brand and recommend products to their followers base, especially if you’re in the beauty or fashion industry.

Douyin: short video marketing at its peak

Douyin is the app to go if your products are short-videos friendly and you’d like to promote them to Generation Z in a funny way. Douyin is the Chinese equivalent of Tik-Tok and it’s the app that will gain you the biggest visibility in the shortest period of time, if you do it right.

Nowadays we are in the era of short videos, so if you have an idea of how to leverage this trend or would like to try, don’t think twice!

There are way more social media platforms that can be useful for your brand awareness and marketing campaigns, but we won’t be able to mention them all here. Every social media is different and will be good for different types of products or industries.

If you’re interested in getting to know more about how to build brand awareness and market your products on Chinese social media platforms, contact us for more information or check our in-depth social media article.

Remember about Baidu SEO and Baidu SEM for your brand’s credibility

Baidu is the most popular search engine in China, with more than 70% market share. That’s why it’s important to take care of Baidu SEO and prepare a well-tailored SEO strategy for your brand. Baidu SEO is incredibly important for brand credibility.

Not only does it help potential customers find your website more easily, but it also boost your website’s ranking in search engine results pages (SERPs), making you more visible and credible to potential customers. Investing in Baidu SEO can help you reach your target market more effectively and boost your bottom line.

Baidu SEM is another important element to add to your marketing strategy. Baidu SEM is a form of online advertising that uses the search engine giant Baidu to place ads. Businesses can bid on keywords and phrases related to their product or service, and then the ad will appear when someone searches for those terms on Baidu.com. SEM is a very effective way to reach potential customers in China.

If you’d like to learn more about Baidu SEO/SEM and how to prepare a good SEO/SEM strategy for your brand, contact us to get a private consultation about your project!

Manage your online reputation with public relations and user-generated content

Apart from all the above elements, you need to take public relations and user-generated content into consideration. Those are two major ways to manage your e-reputation in China, as Chinese customers are not trustful and they rely on recommendations and word-of-mouth marketing.

Public relations involves managing how you are portrayed in the media, while user-generated content is all about getting customers and fans to create positive content about your brand. Both of those methods are important for brand reputation control in China, but it’s important to understand how they work and which one will be most effective for your company. If you’re not sure how to manage them, contact us for advices!

To conclude on Kaola’s cross-border e-commerce

Since the takeover of Kaola, Tmall, the e-commerce key player in China, has reclaimed the first position in the market, although Kaola has also increased its market size. Combined, Alibaba owns 62.8% of the collective cross-border e-commerce market in China.

Taking advantage of a less rigorous entry process as well as its current and upcoming huge investments and obvious ambitions, brands should definitely consider selling on Kaola.com as a method to enter the China market, as it’s definitely one of the most accessible shopping platforms in China.