With China continuing existing cross-border e-commerce (CBEC) policies, daigou activity is expected to flourish, and AuMake hopes to ride on the opportunity by attracting more daigou traders.
Keong Chan, the executive chairman of AuMake told NutraIngredients-Asia: “As illegitimate operators are phased out with increased regulation, it is anticipated that legitimate CBEC participants, including AuMake and the professional daigou traders, will increase their market share."
Moreover, with Chinese authorities rising the spending quota from RMB$2,000 to RMB$5,000 per transaction, daigou traders are able to buy and bring more products to China.
With more daigou activity expected, the firm plans to attract more traders by launching new brands.
“Daigou traders are not looking for the cheapest or the lower-priced items, and they do not want to see the same products again and again either.”
“There are currently only a handful of popular brands, and the margins (earned from these brands) are very low, (which is why) the daigou traders are always on the lookout for new product brands, since they provide higher margins.”
He revealed that over 50% of AuMake’s profit came from the sales of non-mainstream brands, including that of Aumake owned brands.
One reason why new brands are able to reap higher margin is because there are fewer daigou traders selling it. For new brands, the margins can go up to as high as 50%.
Both daigou traders and AuMake have gained from selling new product brands.
“Our margins for last year was 10%, but it grew to 20% as of now because of the new brands that we have introduced.”
He said that introducing new brands would not be a challenge, since the firm was working with as many as 700 brands suppliers.
The firm had also developed its own brand of products which went on to exceed sales expectations.
For instance, over 700 units of AuMake owned brand product – the AU8 Propolis Mouth Spray were sold within 30 minutes on China’s JiaJia TV, a 24 hour shopping channel.
Another AuMake owned brand – the Valerian Milk, had outperformed the anticipated average sales of other new milk products coming to market.
The firm expects the sales momentum in Australia to benefit the introduction of these products in China.
“There is so much scope for new brands and products, it is more about have the right marketing and targeting the right audience.”
“There are many different brands which try to promote their products on different channels, but the daigou traders may not necessarily buy their products. This is when we come in, to help them with the marketing and connecting with the right audience.”
AuMake currently operates physical stores to cater to the needs of daigou traders in Sydney. There are plans to bring the stores to Melbourne, Gold Coast, and New Zealand.
Shoppers listen to daigou traders
Daigou traders wield great influence over the purchasing decisions of end-consumers, Keong said, which made them an important sales channel.
“In China’s supermarkets, you can find so many different brands, including the Chinese, American, and European brands. Shoppers do not really know what they want. The market penetration of Australian brands is lower in China’s brick-and-mortar store, and there is the risk of buying counterfeit Australian products online, which is why shoppers are willing to listen to the advice of daigou traders,” Keong said.
“The customers’ mindset is, if I have the money, I will ask for recommendations.”
“Moreover, customers can go back to the daigou traders if there are issues with the products.”
On the profile of the daigou traders that AuMake works with, he revealed that half of them were Chinese tourists, while international students studying in Australia are also a substantial group.