Each year, more than 20 million mainland Chinese consumers buy overseas products through cross-border shopping sites with annual transactions reaching 140 billion yuan (US$21.6 billion).
At such volume of business, the market size is expected to expand to 1 trillion yuan a year by 2018.
As competition intensifies, many sites have flourished with the help of innovative ideas.
One noteworthy case is Shanghai-based Bolo.me. Although established just over a year ago, it was able to raise nearly 100 million yuan in round A financing from Chengwei Capital, Vickers Capital and LB Investment (founded by a LG family member) in 2014.
The same investors plus Baidu injected another US$30 million into the company in a second round of financing in September last year. It now has a valuation of US$200 million.
One reason why investors are willing to support the site is its ability to solve the problem of information asymmetry in cross-border shopping experience via mobile video technology.
Let’s say an online shopper clicks on a cosmetic product from Japan that she intends to buy. The product’s profile page will have a link to a video featuring a “buyer” purchasing the product in Japan.
The shopper can interact with the buyer on the video, thus giving her a virtual experience of shopping abroad.
Some sites has come up with other unique ideas. I once downloaded a music app that can tell you, after uploading a short excerpt of the music, the name of the song and where it can be downloaded.
IDG, meanwhile, invested in a Shenzhen-based cross-border fashion shopping site called SEE.
Users can upload pictures of clothes and the site would tell them where to buy the items within 10 minutes.
The site also has a social networking platform that allows consumers to interact with fashion stars and suppliers.
I think such a business model is promising.
This article appeared in the Hong Kong Economic Journal on April 7.
Translation by Myssie You
[Chinese version 中文版]
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