Consumers are also your product ambassadors
How this Chinese e-commerce platform grows with a crowdsourcing strategy
XIANLIFE, a comprehensive cross-border e-commerce platform, has a two-pronged approach to its business: It wants to make its mark not only online but offline too.
The company’s comprehensive operations refer to how the platform’s entire supply chain is fully managed by XIANLIFE — from the sourcing of products, purchasing of items, and customs clearance, right down to the delivery of those items.
According to a report released by McKinsey in February, China’s cross-border consumer e-commerce market was estimated at RMB 259 billion (USD 40 billion) in 2015, and accounts for more than six percent of the country’s total consumer e-commerce market.
Founded in July 2014, the company first developed its cross-border e-commerce system in Beijing and subsequently set up its logistics centre in Hangzhou.
Founder and CEO, Xiao Xin, told AllChinaTech that the company was able to benefit from the expertise of one of their partners when it was developing its cross-border e-commerce system, and added that this system helped the company save costs, make operations efficient and give it an edge in terms of its logistics and transportation of goods.
Business approach
Instead of giving consumers a dizzying array of items on their platforms like some major e-commerce platforms, XIANLIFE streamlines its product offerings, and only provides selected goods that are specially chosen for its consumers.
To do so, the platform has a team of ten buyers who are tasked with sourcing specific items while maintaining connections with overseas suppliers in countries like Germany, Japan, and Australia, among others. According to Xiao, these buyers are chosen based on their lifestyles, personality and interests.
All ten are Chinese who have stayed overseas for more than a decade and still have connections with people in China, putting them in a position where they are able to understand the needs of Chinese consumers.
Online strategy
Xiao says that the company’s online business strategy has to change with time according to changes in people’s behavior.
“In a traditional e-commerce transaction, people usually go online to compare prices between different platforms before making their decision. However, the younger crowd do not have the patience and time to do that now,” he said.
Xiao finds that purchase decisions made by younger buyers might be skewed by what their friends share with them, either on social media or by word of mouth.
In order to tap these close relationships between people, the platform relies on crowdsourcing to push sales, just like companies such as Airbnb and Uber.
XIANLIFE encourages users to set up a “buyer store” on its platform where they can select items and recommend them to their friends. If the items recommended are purchased by their friends, users will then be able to gain a commission of 3 to 15 percent, depending on the price of the item sold.
Essentially, users play two roles — consumers as well as product ambassadors of the company.
At present, there are more than 100,000 buyers on the platform who are mostly females aged 25 to 40. Most of these consumers purchase items such as snacks, mother and baby products as well as cosmetics.
Offline strategy
Besides focusing on its online platform, the company also has offline stores in China as well as in places such as South Korea.
In March 2016, the company cooperated with the Hunan Xiaoxiang Film Group to establish three “Xiaoying XIANLIFE” experience chain stores in China’s Hunan Province where consumers can get a feel for some items that are sold on the company’s online platform.
According to Xiao, the company has a different portfolio for its offline retail stores, where it sells different products and uses a different pricing technique as compared to items on its online platform. He says that Chinese consumers still prefer a shopping experience where they can physically leave with the items that they’ve paid for.
“To meet these consumers’ needs, we sell snacks and drinks in our offline stores so that they can consume these products immediately after purchase, thereby giving them instant satisfaction,” he said.
Future plans
Besides the stores in Hunan, the company hopes to replicate this model in other non-first-tier Chinese cities in future.
In March 2016, the company landed USD 10 million (RMB 64.7 million) in a round of Series A financing led by Bertelsmann Asia Investment and CDH Investments. Funding the company says it will use to improve its global supply chain and logistics systems.
Since it prides itself on being a cross-border e-commerce platform, XIANLIFE has already expanded its business overseas — by providing China-made goods to foreign clientele.
From the look of things, XIANLIFE is building a platform that will touch the lives of people in China and across borders around the world — one product at a time.
Originally published at allchinatech.com on April 21, 2016.
