Setting up operations in China is no easy task, but creating online storefronts is one way some retailers are circumventing other costly—and potentially risky—ways to enter the Asian marketplace.
Forbes reports that Macy’s and Costco are the latest brands that may attempt to sidestep the trials and tribulations suffered by Best Buy and Home Depot by avoiding the complications of opening physical locations in China. However, the path isn’t as straightforward as it looks.
The two will need to fight for recognition in a crowded e-commerce space, and among brand-conscious consumers, reports the magazine.
Look at Neiman Marcus, a very well-known U.S. brand associated with luxury, which opened a Chinese online storefront, with very little fanfare. While the name has plenty of recognition in its home market, it has to fight for traction in China.
Costco will apparently not follow the strategy executed in Taiwan, which included brick-and-mortar locations and a well-executed marketing campaign tailored to that cultural norms that included special group visits to the stores. Macy’s tested the waters of the Chinese e-commerce by investing $15 million in VIPStore, an online luxury retailer, but has yet to announce any firm plans for how it will execute its own strategy in that country.
Given the challenges, Forbes predicts a 50 percent chance of success for these brands. However, strategic planning that takes into account all the diverse protocols of Chinese culture and government are still required, even if physical locations aren’t in the mix.
Bottom line: China’s e-commerce market is a huge opportunity. However, careful, measured execution is of the utmost importance.