5. Conclusion and Recommendation
5.1. Future Outlook
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5. Conclusion and Recommendation
Taking Chinese market as an example, this Thesis investigated the many aspects of Daigou business including its key elements, target products, customer groups, market potentials, development trends, and influences. Its development phases and impacts are presented pictorially by use of five major business models, followed by their related case examples and what-if analysis. In the following sections, future outlook for each business model, including its comparisons and recommendations, for Daigou will be presented based on the research findings and analysis. The research significance and its limitation will also be covered in this chapter.
5.1. Future Outlook
All five Daigou business models are still operational under current circumstances and expected to remain so in the foreseeable future. However, only the ones with competitive advantages, such as extensive channels, well-developed transaction platform, a well-organized distribution system and lots of loyal customers, would be sustainable and dominate the market. In order to show how the future Daigou business may be and find out the best business model to suit future needs, the future outlook of different business models is investigated and presented as follows:
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In this case, business scale means the Daigou market size. When the market becomes more mature and bigger, more people will be attracted to the Daigou business. Figure 19 shows that there is a positive correlation between business scale and product offerings, with the development of business models as a function of the number of people and product offerings available in the Daigou market. The scale in Model 1 is the smallest in which only one seller and one buyer are involved while Model 5 is the largest due to its increasing popularity from technology innovation.
Compared to Model 1, the market size of Models 2 and 3 are larger with more diverse oversea products. Model 2 has one on the seller side while Model 3 has one on the buyer side. Product offering in Model 2 is limited since a seller is only able to shop for so many products in different countries while at the same time to serving several customers because of limited travelling destination per trip with limited purchasing volume. However, a buyer in Model 3 is able to look for many products from many countries assuming many sellers are available. The future
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development of these 3 models is limited since their channels are normally within a close circle of friends, relatives and their networks [90].
In contrast, the scales of Models 4 and 5 are big enough to serve many sellers and buyers at the same time due to their well-established channels. Model 4 mainly uses third parties to complete the whole Daigou activity while Model 5 acts like as agent to match sellers, third parties as well as buyers on one many-to-many.
Another positive side of having a larger market size is about flexibility as it is easier and quicker to respond to market needs or to make adjustments to react to current business situations. For example, other models may face difficult to deal with emergency orders or business challenges rapidly due to their smaller scales and limited resources. As mentioned previously, Daigou agents in Model 1 and 2 may choose to stop Daigou activity due to strict customs control while customers in Model 3 may choose to shop through other legitimate channels rather than through Daigou channels, showing that small business models may not be able to sustain or react properly when faced with serious business challenges or risks.
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In Figure 20, payment fee is the total amount of money that customers pay to the sellers while transaction time refers to the total time to complete one Daigou order By analyzing the relationships of transaction time and payment fee in different business models, their correlations are very diverse in different situations. Normally, the more money customers pay per transaction, the less time they wait for the oversea products, implying that there is negative correlation between transaction time and payment fee. Assuming the payment fee in different models is the same, transaction time increases from Model 1 to Model 5. More time is needed in a well-developed model (e.g. Model 4) than a straight forward model (e.g. Model 1) due to a more complex Daigou process. However, the relationship between transaction time and payment fee is relatively positive from Model 1 to Model 5 if travelling/shopping time per order is the same.
In Model 1, customers pay less and receive the products right away once a seller returns to their
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home country. In Model 2, a seller charges more in order to make more money and products are shipped depending on the seller’s available time. In Model 3, since a buyer is willing to pay more to find specific products, he/she is able to receive the product as fast as he/she wants. In Model 4, the whole transaction process takes more time than any other models because it has to go through ordering, payment, shopping & delivery by third parties, shipping from sellers to final customers. The operation costs in Model 4 is thus the highest. Meanwhile, time and operation costs in Model 5 is less since the major activity is to match a seller and a buyer with the exchange of service fee.
Since time and price are two significant factors in the Daigou activity, Models 1 to 3 can still be found when customers look for cheaper and faster products in small quantities. Models 4 and 5 are preferred by customers who look for a diverse product options and large quantities with the ability to reduce transaction time if they are willing to pay more. Nevertheless, the relationships between varying factors in every business model are subject to change according to the mutual agreement between buyers and sellers.