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 and for Chinese consumers to purchase safe, high quality, international premium goods in a convenient way.
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Even though it is still recent compared to its major counterparts like Tmall or JD, Kaola has been China’s leading cross-border e-commerce platform with a market share of more than 27.1% in the last years.
At the beginning of 2020, it was still the leading cross-border e-commerce platform, until when it was overcome by Tmall Global.
The next part is dedicated to providing information regarding Kaola and how to start selling on the platform.
Kaola became part of Alibaba Group in 2019
Alibaba Group announced the acquisition of Netease’s Kaola e-commerce platform in September 2019, for US$2 billion. This after a previous deal with Amazon that didn’t end well.
1. 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 products.
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 distributors to lower costs, the benefit of which is passed down to consumers.
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, 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. This helps Kaola guarantee authenticity and quality, as well as quickly identify and eliminate fakes.
Kaola has a Large user base with high purchasing power
Kaola has 30 million active users, and the target audience includes professionals and white-collar workers aged 20-45, with high buying power, looking for quality, authentic brands.
The main products offered on Kaola are baby formula and baby products, packaged foods, and nutrition products, as well as cosmetics, 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 will arrive at consumers’ houses in the shortest time.
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. 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.
As Chinese people 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 feedbacks, or gaining insights about customers…
2. The benefits for brands to be on Kaola
Kaola will not only contribute to your online sales but also reinforce your brand credibility in Chinese consumers’ eyes.
Kaola buys products directly from foreign companies, giving you the opportunity to save costs and reduce the hurdles dealing with distributors.
It is also focused on selling food, a product category that will see increased imports in the coming years. This is an opportunity for foreign food producers.
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, enhance the cohesion and loyalty of consumers.
3. Costs of Kaola
There are three kinds of costs you should be aware of:
- Initial deposit (refundable): the deposit is kept by marketplaces, to make sure that you can cover unforeseen costs, such as claims, and more. Deposit costs are fairly the same, when comparing marketplaces, and stretches 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 product type.
- Yearly cost/product category fee: you need to pay a yearly membership fee of USD 1000.
4. 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 trading platform, their main method of cooperation will be to purchase directly from the brand.
You must first possess legitimate corporate entities, valid brand authorizations, good brand reputation, and operation status.
Follow these 4 steps to apply:
- Submit application online
The application should include the following information:
- 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
- Wait for Kaola to contact you
Kaola needs to make an evaluation, to see if your brand and products meet the criteria. Keep in mind that Kaola mainly wants high-end brands that have operated for a couple of years.
- Receive offer letter
Kaola sends you an offer, and you can continue to finalize the registration process.
- Become a partner
Once approved, you’ll become a business partner.
2. 3rd party store (PoP store or Flagship store)
These are only available to well-known brands and/or heavy sellers. With this model, you set up a shop 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.
5. 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 awareness and to direct its efforts towards recruiting a select number of ‘on-trend companies. 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 as their western counterparts.
According to a research report recently released by the Boston Consulting Group, about 27% of the world’s total consumption growth by 2021 will occur in major economies, bolstered by the rising income level, the growing upper-middle-class, and affluent families.
Among these economies, China’s consumption level will see an increase of nearly US$2 trillion by 2021, driven by the growth of upper-middle-class’ consumption capacity. The promising growth prospects for China’s high-quality e-commerce market presents huge opportunities for Kaola, as the platform has been focusing (and continue to do so) on providing foreign high-quality products at the right price along with an excellent shopping experience to maintain its market-leading position.
6. Kaola extended its offline presence to improve the customers’ journey
Kaola opened its first offline flagship store in Hangzhou in Jan 2019 and expects to open another 15 in the next years. 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 made similar moves.
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 customers’ decision-making times.
7. Kaola 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.
Kaola has also launched group buying. This allows customers to take advantage of price discounts by buying in groups of two or more shoppers. As a consumer, you can join existing groups under a given item. Alternatively, you can start your own group and share it with your friends, on WeChat or Weibo.
8. In conclusion, Kaola is the best option for cross-border e-commerce
Since the takeover of Kaola, Tmall 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.
Contact GMA, Top Agency for international brands in China, if you want to enter Kaola.
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