2. Daigou Market
2.2. Product Types and Services
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November 2016 with the reference of the world’s trusted currency authority named XE [25].Its exchange rate is subjected to change and is used as reference only. The common currencies in the Daigou markets are shown in Table 1.
2.2. Product Types and Services
There is no actual limitation for the types of products and services offered within the Daigou business. These products and services, originally from the overseas countries, anything from US-made face creams to Australian baby formula or Italian luxury items, greatly depend on the mutual communication between sellers and buyers. However, luxury goods and consumer goods are the two major product types traded. By using the Baidu search engine, ten popular Daigou websites were found and the oversea products can be summed up according to their originating countries, popular product categories as well as brand names, which are also the most popular oversea products in the Daigou business. The ten well-known websites’ names and logos are shown in Figure 2:
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The websites smzdm.com(什麼值得買),ymatou.com(洋碼頭), and fengqu.com(豐趣海淘), 55haitao.com(55 海淘) and hitao.top(嗨淘全球) are ranked number 8, 9, 22, 26 and 47 in the 2015 Top 50 Cross-Border E-Commerce Sites in China [26]. They are also some of the examples of Model 5: Online Platform Model. Fenqu.com(豐趣海淘) will be presented in details as a case example in that model.
Originating Countries
Daigou products come from many countries. Australia and New Zealand generally are well-known for qualified food, milk powder, vitamins and nutritional supplements. France and Italy for fashion and beauty products. Switzerland for milk products, and the United States for fashion brands and beauty products [8]. By categorizing them into countries however, we found that the oversea products are principally from developed countries, such as the United States, Canada, Australia, New Zealand, France, Germany, Italy, Netherlands, Sweden, Switzerland, the United Kingdom, Japan as well as South Korea. This is because customers think that the
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products from these oversea countries are of relatively better quality and reputation.
Chinese customers are willing to pay more, if a product is made in those distinguished countries, such as entitling as “Made in Italy” or “Made in USA”. Interestingly, Hong Kong is also divided as one of the options for location selection by investigation. Despite of limited product selection, some Chinese people still choose to shop there and ship those products back to mainland China because of its lower selling price, better product quality and location convenience with no import tax. People can go from downtown Hong Kong (i.e. Central) to the border of mainland China in approximately a half hour [27].
Popular Product Categories
According to the data analysis by ymatou.com(洋碼頭), one of the most popular Daigou websites in China, the product categories are segmented by ages ranging between 25 and 40 years old and customers within each segment, they tend to look for certain products as shown on Table 2 [28].
The 2015 Chinese E-Commerce Trends Report indicates that clothing accounts for 43 percent of Daigou products followed by handbags, cosmetics, personal healthcare and baby products [29]. By analyzing the ten listed websites’ examples, the products can be simply divided into five categories (stated in Table 3) including a list of the five most popular items within each
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category.
Brand names
In the Daigou business, customers value product brand names, especially for luxury goods. A widely familiar, distinctive or qualified brand name helps to differentiate itself from others.
Mario Testino, a veteran fashion photographer, “said brands were like private clubs and desire had to be created so that everyone wanted to belong [30]”. Assuming all other attributes were equal, (i.e. same price, size, packaging, quality, location, etc.), customers prefer to buy a product with brand names. For the same product, (e.g. diapers), people choose to buy Pampers from the United States, instead of a generic brand from the same location because the former is a brand believed to provide unbeatable protection for newborn skin. Brand awareness and reputation plays a vital role for product selection.
Moreover, a survey conducted by Epsilon in 2016, showing that 3 out of 5 satisfied Chinese consumers tend to share their good shopping experience through word-of-mouth, which directly affect other customers about their brand name selection, explaining why some people prefer
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specific brands instead of others [31]. Though brands are an integral part of the Daigou business, branding falls outside the scope of this paper. A table of well-known brand names are listed respectively in ascending order according to their categories and countries are shown in Appendix 1.
The examples in Appendix 1 show that customers prefer brands from France, Germany, Japan, South Korea, the United Kingdom and the United States. Most of the brands desired by Daigou consumers are from the United States. As mentioned previously, many product types can be traded in the Daigou business when there is demand and supply. However, since the products with the same brand names are easily found in different countries, Daigou agents are able to shop for the same brand in different countries.
In the Daigou business, the intangible product, i.e. service, is also a key to make transaction happen because it drives the communication before, during and after a Daigou purchase.