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IMPORTED SNACK CHANNEL: ONLINE OR OFFLINE?
Post Time:2019-12-06Author:food2china-francie

With the rapid growth of imported food, imported snacks are rapidly penetrating the domestic market through online and offline channels. According to the statistical results in recent years, the development of online channels is faster, and its performance is ahead of that of the offline channel, which is undoubtedly an ideal choice. However, there are still a number of worrying problems with online channels. In contrast, although the development of offline channels is not as good as that of online channels, they also have incomparable advantages.

 

THE GROWTH OF IMPORT E-COMMERCE B2C SURPASSES THAT OF C2C

According to iResearch's White Paper on China's Imported Food Consumption Research, over 50% of Chinese consumers are used to buying imported food through online channels, while less than 20% of consumers buy them only from offline channels. Thus, online channels occupy an overwhelming superiority. Among the online imported food, snack domains the most essential part accounting for nearly 40% of the online imported food transactions.

 

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Imported snacks initially entered the domestic market through online channels, mainly in C2C of “daigo” (a private agent that provides procurement service) offered by Taobao shop owners. Some of the Taobao shop owners also set up private imported snack shops offline, selling both online and offline. However, the disadvantages of this form of imported snack shops are obvious: since the goods are brought by individuals, the goods are scattered and the categories are limited. Besides, the purchase channel is unstable which makes it easy to be out of stock.

 

With the rapid development of cross-border trade, China opened cross-border e-commerce services in eight pilot cities across the country in 2013. Instead of "daigo", bonded stock model and direct mail from abroad later were both adopted, which opens a new era of online sales of imported food.

 

Gaining benefits from favorable policies and logistics development, China's imported retail e-commerce B2C made rapid progress in 2014-2015 with market share soaring from less than 2% in the previous to 21.7% in 2014, and then continuing to double to 46% in 2015. Later, it surpassed C2C for the first time in 2016, accounting for 56.4%. By 2017 and 2018, B2C accounted for more than 60% of the market structure of China's import retail e-commerce. The proportion of B2C was almost twice the proportion of C2C in 2018. In terms of the amount of market transaction size, the growth of B2C was also very impressive: by the end of 2018, the amount of transaction size of B2C has soared from 12.15 billion yuan in 2014 to 346.14 billion yuan in 2018. The amount of transaction size has increased nearly 30 times in only four years.

 

Of course, this cannot be achieved without the significant contribution of cross-border e-commerce retail imports. The data showed that the penetration rate of China’s cross-border e-commerce retail imports has increased from 1.6% to more than 10%, a nearly tenfold increase in a few years. Tmall Global, a leading cross-border B2C platform, for example, has increased the number of consumers over 10 times since it was founded in 2014.

 

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Today, as cross-border e-commerce entered a period of steady development, the tax rate of imported goods has changed - the original VAT rate which is 16% has been adjusted to 13%, while the same tax rate which is 10% has been adjusted to 9% since April this year. This new move will help introduce a wider range of food and diversify the online channels beyond cross-border e-commerce.

 

ALL WAYS OF ONLINE MARKETING LEAD TO SUCCESS

In terms of imported snacks, the expansion of online sales is mainly embodied in two aspects -- channels and network marketing means. On one hand, channels have become more abundant, including comprehensive on-line platform, vertical e-commerce, and the current popular social media e-commerce. Most of the comprehensive on-line platforms have both platform proprietary projects and third-party entrants, while containing the original C2C mode, such as Tmall and Taobao. Vertical e-commerce only focuses on a single industry or market segment, such as Miss Fresh China mainly engaged in fresh food and snacks,while social media e-commerce is the most important C2C position after Taobao, such as the "Red" known as "Chinese INS" . Besides, Wechat merchants were earlier popular with the concept of “doing business with acquaintances”.

 

At present, large comprehensive platforms represented by Tmall still have incomparable advantages as it has a huge pool of imported resources by attracting international brands and partnering with retailers around the world. The international supermarkets like Costco, Countdown and South Korean Lotte settled in Tmall, as well as the flagship stores and direct-sale stores of major imported snack brands, and Tmall self-run supermarkets, Tmall Global official direct-sale stores, and so on, have all become a paradise for foodies.

 

On the other hand, the marketing strategies are also changing rapidly. Buying on-line advertising, using SEO for optimization and winning rank-based bidding are the means for companies to promote their products. In addition, building a fan group and then releasing special offer or discount information within the group to attract fans to buy, as well as inviting KOLs to share experience or to do live streaming in order to recommend purchases are also the means of promotion.

 

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It is worth mentioning that live streaming, as a new marketing tool, has an amazing potential. According to "2019 Taobao Live Streaming Ecological Development Trend Report," Taobao live streaming business has shown explosive growth in the last two years, with a year-on-year growth rate of nearly 400%. The sales contributed by KOLs has reached 100 billion yuan. Meanwhile, the report also pointed out that senior shopaholics occupy an important position in the core user group of live streaming, making a considerable contribution to the live streaming marketing. As the effect of live streaming is outstanding, all stars and KOLs gathered popularity through live streaming to attract more fans. Some of the stars, KOLs, and streamers also cooperate with brands to get more exposure for the purpose of boosting sales. For example, well-known esports streamers recommend imported snacks while live streaming their video game play. This can almost bring instant results – since the transaction of snacks per customer is relatively low, they can monetize from consumers quickly.

 

CHOICES FOR IMPORTED SNACKS PRESENTED A FASCINATING SCENE

In recent years, China Online Snack Consumption Trend Report jointly released by CBNData and Taobao University shows that the imports of puffed snacks like biscuits, chocolates, confectionery and jelly are increasing year by year. Among them, the sales growth of puffed snacks is the fastest with a large room for further improvement. Puffed snacks are the benchmark of imported snacks. The import of chocolate, confectionery and jelly is remarkable, but their sales growths are lower than the average, as the market is close to saturation. In addition, the imports of cakes, pastries as well as roasted seeds and nuts are below the average, while their sales growths are above the averag. Therefore, these categories of snack may be a good opportunity for importers.

 

From the perspective of producing areas of online imported snacks, the head producing areas have a solid position with the contribution of more than 80% of total sales amount while only account for about 10% of the total number of producing areas. Snacks from Hong Kong, Macao, Taiwan and Japan, South Korea, the United States, Italy, as well as Thailand, Vietnam, Malaysia and other countries and regions occupy the top 10 amount of imported snacks all year round.

 

There are plenty of options for online imported snacks in a single category. Take the imported puffed snacks sold by Tmall supermarket as example, there are biscuits, potato chips, corn chips, shrimp chips and crispy noodles, and so on, which are mainly from the Southeast Asian countries like Malaysia, Thailand and Indonesia. Also, there are many choices from Taiwan, Japan, South Korea, the United Kingdom and the United States. Some imported puffed snacks which are not easy to find in the supermarket offline, such as Japanese soymilk waffles, Morinaga cheese brulee, salted egg yolk biscuits and BURTS British hand-cooked potato chips, etc., are all available at Tmall.com.

 

As for online imported chocolates, most of them come from European countries. Godiva and Lindt are high-end chocolates in Chinese impression, but more options at the same price or even higher grade are available in online stores (especially the stores on cross-border e-commerce platform), such as Venchi from Italy, Lausenstein from Germany and Patchi from Lebanon, and so on. Compared with the previous two types of snack, the choices of online imported snack cakes are relatively limited. In Tmall supermarket, the most common ones are Japanese dorayaki, Taiwan's pineapple cake and mochi, as well as a variety of sandwich cakes from South Korea and Malaysia. As mentioned above, the importation of pastries still needs to be improved.

 

In addition, different from offline stores, online imported snacks are popular in the form of large gift packages for promotion, giving consumers a feeling of gaining more material benefits, while this kind of sales is rare in offline stores where imported snacks are sold separately.

 

PROBLEMS TO BE SOLVED

However, although online sales models and choices of goods are diversified and in line with mainstream consumer habits, there are still problems to be solved, such as food quality, shelf life and fake commodities, follow by the after-sales service issues. In view of the fact that most of the imported commodities which are procured in advance require a series of formalities before getting custom clearance and then reaching consumers, there are many uncontrollable factors in this process, such as custom clearance and logistics. These may take so much time that snacks with short-tern shelf life may face the problems like approaching shelf life or expiration. Beyond that, poor protection during storage can also lead to food spoilage and decay.

 

In addition to shelf life and quality issues, fake commodities are also reported by a few consumers. Because of the large profit by selling imported snacks as well as the difficulties of network supervision, some domestic versions of high imitation "imported snacks" aim at business opportunities and flow into the online market. These shoddy "imported snacks" not only harm the health of consumers, but also disrupt the market order of imported food and damage the interests of legitimate operators.

 

OFFLINE CHANNELS ARE "BASED ON QUALITY"

First of all, for consumers, options for imported snacks in the same store are very limited.

 

In a large supermarket in Guangzhou, imported snacks line up in a row on special shelves. Candies, potato chips, biscuits, jelly, chocolate as well as seasonings, coffee, instant noodles and other kinds of food are all placed on the same row of shelves. But there are only a handful of imported brands in each snack category to choose from. Some of the most popular imported snacks recommended by on-line shoppers are hard to find here.

 

Another hypermarket who has a rich variety of imported food has opened a zone for imported food. However, some special offers and the main imported snacks together with other domestic snacks as well as the snacks of foreign brands that are produced in China are all putting in the middle of the aisle shelves, which is particularly conspicuous.

 

In this hypermarket, snacks from Southeast Asian countries such as Vietnam, Thailand, the Philippines, Malaysia and Indonesia have the richest categories. Cookies, crisps, candies, nuts, dried fruit, and pastries, etc. are all available. The popular Julie’s sandwich biscuits, Tao Kae Noi grilled seaweed rolls, and Thailand KOH-KAE peanuts are easy to find. Among all the categories of imported snacks, the choices of biscuits are most abundant. The proportion of imported brands is 50%, equivalent to that of domestic brands.The candy category also has a lot of choices including fudge, hard candy, jelly, chocolate and so on.

 

Beyond the Southeast Asia brands, there are also candies imported from Germany, Switzerland, Japan and Taiwan. Chocolate, on the other hand, are most produced in European countries such as Belgium, Switzerland, Germany and France, etc.. For instance, the well-known Ferrero Rocher, Lindt and Guylian are all from Europe. But for other categories of imported snacks, the options are limited. In the case of potato chips, almost all imported brands come from Malaysia, accounting for only about 20% of the individual category. Some of the

most popular imported snacks, such as BURTS British hand cooked potato chips, Tokyo banana and Shiroi Koibito chocolate, etc., can not be found either while these snacks are all available on Taobao and Tmall.

 

The second bottleneck for offline channels is the limits of regional distribution. Although the customer source is fixed and the repeat purchase rate is high, it is not easy to develop new customers, thus it is in a relatively passive position. Though many supermarkets have long offered free delivery services within 3 km or 5 km for a certain amount of purchase, this service cannot meet the needs of customers outside the scope of distribution. Therefore, for these customers, it may be more convenient for them to buy directly from an online supermarket by paying some delivery fee and waiting for home delivery. Moreover, there are much more options for imported snacks, even imported niche snacks can also be found in online supermarkets.

 

Although online and offline channels have their own advantages and disadvantages, but from the perspective of mainstream consumer habits, online channels have more obvious advantages. For consumers, online shopping is not subject to business hours and geographical restrictions. All products are available only by using on-line search, which is very convenient. For merchants, they can sell to consumers through a variety of means in the purpose of enhancing product sales.

 

However, online channel merchants need to ensure the quality and the authenticity of imported source of snacks. Besides, they should also shorten the time of the intermediate links as far as possible, so as to avoid moisture spoilage, expiration and other issues caused by too much time-consuming. In addition, online merchants can also combine the advantages of offline channels by opening experimental stores, pop-up stores and so on in shopping malls to stimulate consumers’ desire to buy instantly and to guide the off-line consumers to online shopping.


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