Costco, a US warehouse retailer, pushed its way into China in October of 2014. The company has had success. And part of the success of the company can be linked to the way in which Costco entered the market. Instead of opening up a brick and mortar store, Costco entered onto Tmall, owned by Alibaba, and the leading e-commerce platform in all of China.
The interest that Costco has in China is understandable, as research has shown that Chinese shoppers are looking to buy more of their products online, and are interested in products that come from elsewhere than China. The success that Costco has had though is not something that all foreign companies have had when they start looking into the Chinese e-commerce market.
Macy’s, a US department store, attempted to enter into the Chinese market a few years ago, and saw failure. They decided to enter into the market with Jiapin.com. In addition, Neiman Marcus tried to enter into the market with Mei.com. Both companies saw failure. So what makes Costco any different from these failed companies?
The fact that Costco entered into the market with online giants Tmall and JD.com, almost helps to ensure success. These platforms have numerous users, and this is going to allow Costco to reach a wider audience. So one lesson that potential investors into the Chinese market can learn is they do need to partner with the right company.
The second aspect that potential businesses can learn from Costco is that you must pay attention to the delivery of goods. Chinese consumers are interested in getting their product in a fast manner, rather than waiting weeks on this. This is something that many businesses have failed at doing in the past, and consumers have quickly lost interest in the company.