What reasons decide how well and how far a brand will go in Daigou market

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With an abundance of Australian brands that succeed in Daigou market, more brands and marketers switch their attention to the market.

By observing the market for years, we find that these reasons decide how well and how far a brand will go in Daigou market.

Old fashion but still useful 4P marketing mix model:

1. Product – Strong features

2. Price – Good margin

3. Place – Good distribution control

4. Promotion – Sufficient budget, rich social media exposure

Product – Strong features

What features matter to Chinese consumers?

Australian made produce has established its strong image among Chinese consumers, described as clean, green, and following strict standards; but what happens when thousands of brands are being presented in the same way?

Features are not “features” anymore, so we have to figure out what is the real “selling point” to Chinese consumers?

A good product concept already gives the product a 50% higher chance of conquering the market. Although consumer’s demand is dynamic with the trend of the market, there are always a few certain concepts which remain popular among Chinese consumers for years.

One way to create features is by targeting the segment who has strong demand for specific types of product, for example, brighten skin, and lose weight etc. Here is an example: improve skin tone in a natural way – that’s what Chinese girls are always keen on. As the landscape for skin care products is full of competition, some brands come up with new ideas of making that through ingesting vitamins or drinking tea/beverages.

Another way to create a selling point is by the product’s appearance. As people have got used to the idea of storing serum in small bottles, marketers come up with new ideas of putting the essence into ampoules or needle tubes to excite Chinese consumers.

Generally speaking, product differentiation strategy works well in Daigou market.

Old Look

New Look

If you keep an eye on the dynamics of Daigou market, you’ll find that the popular products are usually given a unique Chinese name, e.g. “Goddess Cereal”, “Pandora’s box”, “Dragon Ball”, “Whitening pill” etc. They highlight the features through a familiar Chinese concept which makes it easier to be memorized and accepted.

Price – Good margin

A good margin is there for Daigou shoppers, when there are two similar products being promoted, they will prefer the one with a higher price. However, it’s not always the case. When customers are asking for a specific product, a Daigou seller is more likely to sell exactly that product in demand of the customer rather than trying to educate the customer to buy a similar one instead. Customer’s demand drives the supply in a certain way, therefore having a good margin is important but not essential.

Place – Good distribution control

This could be a critical strategy to win in the market.

When Daigou retailers are holding a whole batch of a certain product, they are essentially likely to promote the product in order to sell it. On the contrary, if they only have a few items on their hands, it is easier for them to simply wait until customers request the product. As a result, this poses a direct impact on the exposure of the product to the market.

When your brand is in its emerging stage, it would be tough to convince Daigou retailers to promote your products, because they are faced with tens to hundreds of options to promote. Basically, they would not be willing to hold a big batch of a new product until they find the product’s potential.

Educating customers takes time, and educating retailers takes even longer. Furthermore, there are hundreds of Daigou retailers across Australia, it’s not feasible to knock on each one’s door, as it would take forever to go through communication and negotiation. You need a smart way to manage and educate them. That’s where you can benefit from the Daigou Connection Program, which assists you dealing with hundreds of Daigou retailers.

Someone would say it was mentioned that “customer’s demand drives the supply in a certain way”, but it doesn’t mean you don’t need to build the Daigou distribution network. Distributing should be done alongside marketing campaigns, otherwise you would not be able to see a direct impact from the marketing inputs. This is what we call a “combined push and pull strategy” in Daigou Connection.

Promotion – Sufficient budget

Some people believe that they have got a good product and good margin so Daigou shoppers are already likely to buy their products. The reality is, Daigou only like to sell the products that have sufficient marketing content together with strong selling points, this reduces their required input on educating their end-customers.

Every Daigou is a great marketer to your brand, but you need to have built a decent marketing portfolio that your “marketers” can apply. Therefore, keep investing in both B (Daigou retailers) and C (customers) links of the chain: drive the demand of end-customers through advertising on Chinese social media: Xiaohongshu, Weibo and Wechat, and drive the Daigou retailers to promote your product which will enhance your products’ popularity in the market.

Want to reach the lucrative Chinese and local Daigou market? Drop an email to info@sydneyconnectx.com if you got some questions.

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