While Tmall, China’s most popular B2C website, is a great entry point into the Chinese market, customers are limited to just two bottles of wine per transaction and often bear the cost of any additional air freight charges.
In contrast, a B2B approach involves sending bulk amounts of wine, usually in pallets, to China via sea freight. The wine is sold in bulk to a wholesaler, who then sells to retail outlets such as restaurants and supermarkets in smaller quantities. For the Australian company, it is simpler and more cost effective to send the freight this way; for the Chinese consumer, it means avoiding air freight charges.
Australian wine accounts for 15% of Chinese import demand, second only to France, which accounts for 43%. In fact, China’s demand for Australian wine more than tripled between 2008-2013, from US$61.5 million to $221 million.4
The Margaret River Wine Association is already making use of the demand for high quality wine, recently inking a deal with a wholesale distributor and opening operations through Australia Post’s pavilion on the Chinese B2B website 1688.com. The Alibaba-owned 1688.com will allow Chinese retailers to buy Australian wine in bulk, saving on supply chain costs and making premium wine more attractive.
“This means our wine is more likely to be within reach of the Chinese consumer,” says Nick Power, CEO of the Margaret River Wine Association.
Power is excited about the prospects for this B2B channel into China.
“As far as Australian wine regions wines go, Margaret River is trailblazer, and we know other regions are keen to start selling via this platform as well.”
Over the past five years, Australia has been second-most searched country on Baidu, China’s most popular search engine, coming second only to the US.5 Clearly, Chinese consumers are interested in what Australia has to offer. And producers such as Margaret River Wine Association wineries are taking advantage.
Partners and platforms
So why choose to sell via an online B2B site such as 1688.com instead of finding a direct partner? One of the most attractive elements is Australia Post’s relationship with China Post, which allows participating Australian businesses to experience true end-to-end logistical services that connects Australian producers directly to Chinese wholesalers.
Because of this close connectivity, eCommerce is forging new paths to the market, and linking producers with wholesalers and consumers like never before.