It’s been a rough year for retailers and even powerhouses like The Warehouse are feeling the pinch (and their share price has tumbled in recent months). Is the growing popularity of online retailers – particularly aliexpress.com – going to make it difficult for other retailers – both online & bricks’n’mortar – to survive financially?
Let’s take a look at why Aliexpress is a very real threat, then consider ways other retailers will need to adapt to survive.
Why is Aliexpress a threat to retailers?
Aliexpress is essentially an easy, secure way to buy products direct from Chinese retailers. It’s made up of a lot of small retailers who source products direct from the factory (since so much is manufactured in China) or from wholesalers at low margins. Since the cost of doing business in China is a lot lower than many Western countries (such as NZ) the prices for products are often significantly cheaper than buying local (many Aliexpress retailers even offer free shipping, which is more than can be said for a lot of the ridiculous postage rates seen on TM auctions!).
The only downside is you might have to wait a few weeks for your product to arrive.
In my personal experience (about 100+ orders), the quality of the products and reliability of Aliexpress has never been a problem. The odd occasion where something hasn’t arrived, or a product breaks, Aliexpress or the retailer, have provided a refund.
So if the price is right, and the product is good then, as a consumer, why wouldn’t you choose Aliexpress? It’s a good question, and maybe the only reason some NZ retailers (or those sellers who basically buy from Aliexpress then put it on TM for triple plus postage!) aren’t already out of business is because people don’t know about Aliexpress.
But that time will come.
So if you’re selling stuff then you need to think seriously about how you will differentiate yourself when your current customers discover Aliexpress.
What can NZ retailers do to beat the Aliexpress effect?
One specific advantage that NZ retailers have over Aliexpress right now is obviously delivery timeframe. You can get a product to a customer tomorrow, instead of three weeks time (although Aliexpress shipping times are reducing, and you can pay for faster delivery). So like anything, use whatever advantages you have, while you have them.
Some other key differentiators include:
- Customer service – Give your customers better care and attention than a global sales engine and you can expect they’ll most likely be happy to pay a premium to feel special. Be helpful, be responsive and be attentive to what your customers are looking for.
- Local knowledge – You know your local market better than anyone. What’s trending? What holidays, seasons or festivals are coming up? What are the local customs? Anticipate and market to them.
- Customise – Can you take a mass-produced product, tweak it a little and come up with something unique? Mix and match products, or create unique combinations that no one else has thought of.
- Trust – There will always be customers that prefer to shop local, even if that means paying a little more. Can you market yourself as a trusted local supplier?
- Speed – Can you deliver quicker than anyone else? Customers are getting more impatient and if you can promise same day, or next day, delivery then you’ll have the advantage.
- Location – The closer you are to your customers, or where the buying is happening, the better off you’ll be. It’s why ice cream vendors on the beach do so well.
- Market needs – Some products need to meet the requirements of the NZ market. For example, household lights need an SDOC before being installed by an electrician here in NZ. NZ power plugs, or cellphones, need to meet local requirements. If you can overcome this hurdle then customers can buy from you with confidence.
Aliexpress isn’t the enemy – globalisation has been around for a long time and its impact will continue to make inroads into traditional business models. The key is adapting to change.
When is change happening?
Good question! Plan for it sooner rather than later. Not everyone is shopping on Aliexpress, and yes it could take some time for the impact of shoppers switching to global warehouse shopping sites to be felt by local retailers (both online and off) but if you don’t plan for it now, you’ll be left out in the cold when it hits (like the dinosaurs when the Ice Age hit!).
The bottom line is don’t panic, plan for it and look for ways you can use it to your advantage.