Ask a Retailer – Premium Australia Foods | Part 1: How an Australian E-Commerce Company Entered China’s Booming Online Market

September 8, 2014

Marketplaces Laura Lane By Laura Lane

With more consumers, competition and channels, e-commerce is only growing more complicated and overwhelming. Sometimes, all you want is a frank conversation with someone in a similar position to ask them for advice.

Welcome to that conversation.

Our Ask a Retailer blog series shares insights from e-commerce retailers across various verticals.

This first post features Christopher Morley from Premium Australia Foods, a successful export e-commerce company that helps Australian food retailers and manufacturers sell internationally. Armed with more than 10 years in the industry, Christopher brings a unique perspective to the intricacies of cross-border trade and the Chinese online market.

Chris Morley

Before we dive into the specifics of Premium Australia Foods’ e-commerce strategies, tell us a little bit about yourself and the company.

Premium Australia Foods was formed to help small and medium enterprise (SME) Australian food producers and manufacturers increase sales in China through e-commerce. Premium Australia Foods is passionate about Australian food. We believe our food is the best in the world: packed with amazing tastes from premium ingredients grown in our green, sunlit country, and meeting high food safety standards at all times.

At Premium Australia Foods, my role involves working with online marketplaces in China, designing the look and feel of the online store, digital marketing and developing the SMEs’ food stories online.

I’ve worked with several online businesses and digital agencies and for a number of years ran my own successful online business. I’m extremely passionate about Australian brands and using my 10+ years of retail and e-commerce experience to help them grow their overseas footprints.

What’s your goal for Premium Australia Foods as a brand?

We want the world to taste Australian food and love it as much as we do. We want every Australian food producer/manufacturer to have the chance to send their food to the world without outlaying a huge amount of resources.

Our long-term goal is to make Australian food available on four to five online marketplaces and websites in China, promoting  Australian food through healthy lifestyle and high food security. We currently focus on shelf-stable food and will soon begin exporting fresh food such as fruit, beef, dairy and seafood to Chinese consumers.

What made you want to enter the Chinese market and help Australian food makers sell on Tmall Global? Why have you focused exclusively on that marketplace?

About two years ago, when I was working with Melbourne-based digital media agency Online Market Experts, we had several food businesses as clients. All of these clients were struggling to increase sales outside of Australia, as a result of competition and the inability to go it alone. We developed a strategy for one of the bigger businesses to take a collaborative e-commerce approach, thus breaking down many of the barriers to entry.

When looking to expand your e-commerce anywhere in the world, marketplaces are, in my opinion, the best place to start. Typically, they offer lower initial start-up costs, they’re transparent – so you can see sales figures, average recommended retail price (RRP) and who the biggest sellers are — and they have an existing database of clients, which is perhaps the hardest thing to achieve when going into a new area for the first time.

Using the Alibaba Group when entering China was a no-brainer given its market share. Initially, we focused on the platform, but Tmall Global — which removes all barriers to foreign business — presented the quickest, least expensive way to access the Chinese online community.

Tmall Global is the first marketplace we’re selling on, and we expect to add three more before the end of 2014, including Amazon China.

Many retailers feel overwhelmed by China’s high barrier to entry for overseas sellers. What are some of the obstacles Premium Australia Foods has had to overcome? And what have you learned from the experience? 

We’re always learning – China changes so rapidly that complacency with business operations is impossible.

When doing business in China, businesses must remember that China will do what’s best for China. In recent times, when the world has woken to the potential of the opening Chinese market, the Chinese government have rightly placed scrutiny on practices of all businesses trying to get into China.

Food presents many unique challenges. It’s completely different from selling a T-shirt in China. There are food licenses, import licenses, distribution licenses – and then the added difficulty of maintaining food security with logistics providers.

We’ve had to overcome the scrutiny that goes with applying for a business license, a food import license and a food distribution license. To open a Chinese-hosted website, a media license is also needed – something we hadn’t foreseen.

Getting money in and out of China can be difficult and can be cost prohibitive depending on banks and exchange rates. We’ve learned that the Alipay international product is very useful in this regard.

Often, contracts change and you can find yourself with new parameters and costs not previously agreed to. For example, while we had made an initial monetary agreement with a warehouse in the free trade zone, our final mile logistics costs ended up totalling four times the amount that was originally stipulated.

My advice would be to visit as many options as you can in person, tour each facility you can and see a prospective business at least three times before signing up with them.  Premium Australia foods logo

You noted earlier that Premium Australia Foods is expecting to expand to additonal marketplaces within China. Could you speak to your plans within the region or the possibility of entering other international marketplaces?

Our current focus is on the Chinese e-commerce space. As I mentioned earlier, Amazon China is one of the next marketplaces we’ll be listing on. We have two definite other marketplaces, and, as well as our own e-commerce platform. From our research on China, there also appears to be good opportunities on club-style sites — these will be potentially added in early 2015.

We’ve also discussed moving into other countries in Southeast Asia. Each new country we research is different, and to be successful we need to appreciate differences and provide the most relevant approach.

Check back next week for part two of our interview with Christopher Morley, where he’ll offer insights on China’s e-commerce landscape, Chinese consumers and how Australian retailers can succeed on the international stage.

Blog post by Shani Flynn, ChannelAdvisor marketing copywriter, APAC

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