Online shoppers head into new waters for best deals

Businesses are cropping up to help mainlanders looking to overseas websites for quality products at a lower price

PUBLISHED : Tuesday, 07 May, 2013, 12:00am
UPDATED : Tuesday, 07 May, 2013, 4:22am

When Shenzhen mother Luo Qing wants to buy products for her one-year-old son her favoured option is haitao, or shopping directly from overseas websites.

The 27-year-old online media editor spends about 4,000 yuan (HK$4,995) to 5,000 yuan every month buying products such as baby formula, rice powder, bibs, and silicone teething beads from big shopping portals such as Amazon, Drugstore, and eBay in the United States and others in Europe.

"Their quality is really good and the prices are attractive," Luo said.

In December, she bought a Graco stroller for about US$110 on Amazon. Even after paying another 1,100 yuan for delivery, it worked out much cheaper than buying a stroller from a local shopping site or department store where the same type of product costs up to 4,000 yuan.

It took nearly a month for the stroller to be delivered but Luo said the wait was worth it.

Haitao, which translates as "sea shopping" in Putonghua, is an increasingly popular option for Luo and many other mainland consumers attracted by the low prices and guaranteed quality of offshore portals.

MasterCard estimates the cross-border online shopping market in China reached about 18 billion yuan last year and could hit 50 billion yuan by 2015.

Booming demand has created new business opportunities for big and small e-commerce companies offering haitao shoppers payment, delivery, and information services.

Among those companies looking for a piece of the action is e-commerce group Alibaba, which gives mainland consumers the option of using its Alipay service rather than credit cards to shop on iHerb.com a major US health care products shopping site. Alipay is the largest third-party payment platform in China, with more than 600 million registered users.

Taobao, the biggest Chinese shopping site and also part of the Alibaba Group, has web pages that inform haitao shoppers about the process as well as discounts around the world.

Another local internet titan, Tencent, has also joined the fray. Tenpay, the company's payment platform, has been working with global online payment service providers CyberSource and AsiaPay as well as Hong Kong cosmetics retailer Bonjour to support mainland consumers shopping overseas.

Despite better quality and lower prices, shopping overseas still requires some basic foreign language skills to search for information. Arranging delivery services and checking additional charges can also be time-consuming for users.

Twenty-eight-year-old Lin Fan, who used to work at a Shenzhen IT company, sees this as a business opportunity. In September, he and two friends founded haitaocheng.com a Chinese-language website that compiles the best deals from overseas shopping sites, ranks them and offers cheaper door-to-door delivery services.

More than half a year on, the site generates millions of yuan in monthly sales.

Every day around 300 new users register, most of them from Beijing, Shanghai, Zhejiang and Guangdong.

"We do the research and people save at least 30 per cent when they shop through haitao," Lin said. The site has more than 100 "haitao-ers", who send in information about the most attractive offers.

Lin said Haitaocheng passed on a 4.5 to 12 per cent rebate from offshore shopping sites to its haitao-ers for finding the deals.

Since most sites in the US and Europe do not offer delivery services to China, haitao-ers must find a transfer company to accept the goods overseas and send them to China.

Lin said his site had greater power than any individual to negotiate a cheaper rate from these service providers.

So far, mum-and-baby products, medicines, and cosmetics are the best sellers on the sites, but baby formula is rarely featured. Lin said this was because the discount on the product was very small.

The site also does not deal in expensive goods like big-brand handbags or electronic products because they might get damaged during delivery.

Lin said the site's purchasing power had attracted attention from a US shopping site concerned that Chinese consumers could snap up most of the best offers.

"They came to us, asking if we could show only some of their inventory when promoting their site to Chinese consumers so that shoppers in US could enjoy the discounts as well. We agreed," he said.

Lin said a number of venture capital companies were interested in the business. He was also considering raising revenue by taking a cut from transfer service companies.

Luo also likes the convenience of using Lin's site.

"Now more and more things at my home are from haitao, like toothpaste, toothbrushes, even my husband's electric shaver," she said.