代購的經濟模式與其帶來之影響 – 以中國市場為例 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 政治大. Master’s Thesis. 學. ‧ 國. 立碩士論文. ‧. sit. y. Nat. 代購的經濟模式與其帶來之影響 er. io. – 以中國市場為例 a. n. v l C A Study on the Business Models and n i the Impacts of hengchi U. Daigou – Taking Chinese Market as an Example. Student: Kachi Sham Advisor: Prof. Y. David Chang. 中華民國一〇六年一月 January 2017.

(2) 代購的經濟模式與其帶來之影響 – 以中國市場為例 A Study on the Business Models and the Impacts of Daigou – Taking Chinese Market as an example 研究生：沈嘉慈. Student: Kachi Sham. 指導教授：張永明. 政治大國立政治大學. 學. ‧ 國. 立. Advisor: Prof. Y. David Chang. ‧. 商學院國際經營管理英語碩士學位學程. er. io. A Thesis. sit. y. Nat. 碩士論文. n. a l to International MBA Program Submitted iv n U i National Chengchi e n g c hUniversity. Ch. in partial fulfillment of the Requirements for the degree of Master in Business Administration. 中華民國一〇六年一月 January 2017.

(3) Acknowledgements I am very grateful to a number of people who have helped and guided me throughout the research process as well as provided assistance for my venture.. First of all, I would like to express my sincere thanks to Prof. David Chang, my advisor, for his valuable guidance throughout my entire research. I would not have been able to achieve learning in the same manner without his help and support. His instructions and. 政治大. recommendations have enabled me to sum up and finish the dissertation effectively.. 立. I would also like to thank my beloved friends: Annie Su, Jassie He, Ming Choi and Stephen. ‧ 國. 學. Swift for their invaluable helps and supports, making my paper to be more visible and. ‧. presentable. Special thanks to Miss Choi for her beautiful drawings. I would also like to thank all my instructors and teachers, who have supported and encouraged me to believe in myself. y. Nat. n. er. io. al. sit. and my abilities throughout my educational career.. i n U. v. Last but not least, I am thankful to have my wonderful family by giving me encouragement and. Ch. engchi. emotional support when I need to during my whole studies. Without any of you, I am not sure if I am able to reach this accomplishment or get my master degree. Thank you everyone who has helped me in my life and throughout my studies.. i.

(4) Abstract A Study on the Business Models and the Impacts of Daigou By Kachi Sham “Daigou” (代購), a term originally from mainland China, has become a robust industry and. 政治大. novel business model in China for a few years with the market expanding 19 times between. 立. 2008 and 2012. Due to government intervention and trust-related problems, Daigou market size. ‧ 國. 學. has been in decline since 2014 with sales volume of only about 40 billion CNY in 2015 (as compared to 57 billion CNY in 2014). In order to fully understand what Daigou is and how it. ‧. works, this paper focuses on the Chinese market. The Thesis not only investigates many aspects. Nat. sit. y. of the Daigou industry including its key elements, target products, customer groups, market. n. al. er. io. potentials, development trends, and influences, but also sums up all information about the. i n U. v. current Daigou market in China and to analyze how its future may be.. Ch. engchi. As Daigou business grows from startup to maturity, different problems and opportunities arise, demanding different business solutions. The change of business models is necessary to suit today’s market needs because what worked a year ago might no longer be the best approach nowadays. The evolution of Daigou is presented by making use of five major business models to show how each business model changed to keep up with the market. The impacts of diverse factors on different business models and to the individuals, community and other businesses, are also covered with the use of literature review, personal interviews and qualitative research.. Keywords: Daigou, Online Shopping, Business Model, Oversea Purchase, Surrogate Shopping. ii.

(5) TABLE OF CONTENTS 1. Introduction .......................................................................................................................... 1. 1.1. Research Background ...................................................................................................... 1 1.2. Research Approach and Thesis Organization .................................................................. 2. 政治大. 2. Daigou Market ...................................................................................................................... 4. 立. 2.1. Key Elements in the Daigou business ............................................................................... 4. ‧ 國. 學. 2.2. Product Types and Services .............................................................................................. 9. ‧. sit. y. Nat. 2.3. Business Driving Forces .................................................................................................. 13. n. al. er. io. 2.4. Development Phases of Daigou ..................................................................................... 21. Ch. engchi. i n U. v. 3. Business Models Analysis ................................................................................................... 26. 3.1. Model 1: Direct Buying / Direct Selling Model............................................................... 27 3.1.1.. Model 1: Case Examples ................................................................................................................ 28. 3.2. Model 2: Seller Offering Model ...................................................................................... 30 3.2.1.. Model 2: Case Examples ................................................................................................................ 31. 3.3. Model 3: Buyer Requesting Model................................................................................. 34. iii.

(6) 3.3.1.. Model 3: Case Examples ................................................................................................................ 35. 3.4. Model 4: Third Party Model ........................................................................................... 38 3.4.1.. Model 4: Business Model Canvas .................................................................................................. 40. 3.4.2.. Model 4: Case Examples ................................................................................................................ 43. 3.5. Model 5: Online Platform Model ................................................................................... 45. 政治大. 3.5.1.. Model 5: Business Model Canvas .................................................................................................. 47. 3.5.2.. Model 5: Case Examples ................................................................................................................ 50. 立. ‧ 國. 學. 3.6. Business Models Summary ............................................................................................ 52. ‧. Nat. er. io. sit. y. 4. Impact Review on Daigou Business .................................................................................. 54. 4.1. What-If Analysis............................................................................................................. 54. n. al. Ch. engchi. i n U. v. 4.1.1.. Reduction of Import Tariffs ............................................................................................................ 55. 4.1.2.. Tightening of Customs Control ...................................................................................................... 58. 4.1.3.. Issues of Trust ................................................................................................................................ 62. 4.1.4.. Other Factors ................................................................................................................................. 64. 4.2. Influences on Individuals and Communities .................................................................. 65. 5. Conclusion and Recommendation ..................................................................................... 67. iv.

(7) 5.1. Future Outlook ............................................................................................................... 67 5.2. Recommendations ......................................................................................................... 71 5.3. Research Signification .................................................................................................... 73 5.4. Future Research ............................................................................................................. 75. 政治大. Reference ................................................................................................................................. 76. 立. Appendix ................................................................................................................................. 84. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. v. i n U. v.

(8) List of Figures and Tables Figure 1: Daigou Annual Revenue in China……………………………………………….. 4 Figure 2: Ten Well-known Websites in Daigou Business…………………………….......... 10 Figure 3: Development Phases of Daigou…………………………………………………. 21 Figure 4: Evolution of Daigou Business Models…………………………………………... 26 Figure 5: Model 1 – Direct Buying / Direct Selling Model………………………………... 27 Figure 6: Model 2 – Seller Offering Model………………………………………………... 30. 治政 Figure 7: Model 2 – Daigou Example (Online Facebook大 Shop)…………………………... 32 立 Figure 8: Model 3 – Buyer Requesting Model…………………………………………….. 34 ‧ 國. 學. Figure 9: Model 4 – Third Party Model……………………………………………………. 38. ‧. Figure 10: Model 4 – Business Model Canvas…………………………………………….. 40 Figure 11: Model 5 – Online Platform Model……………………………………………... 45. y. Nat. er. io. sit. Figure 12: Model 5 – Business Model Canvas…………………………………………….. 47 Figure 13: Reduction of Import Tariffs…………………………………………………….. 55. n. al. Ch. i n U. v. Figure 14: Impacts of Reduction of Import Tariffs on Business Models…………………... 57. engchi. Figure 15: Tightening of Customs Control………………………………………………… 58 Figure 16: Impacts of Tightening of Customs Control on Business Models………………. 60 Figure 17: Issues of Trust…………………………………………………………………... 62 Figure 18: Impacts of Issues of Trust on Business Models…………………………………63 Figure 19: Relationship between Business Scale and Product Offering…………………… 68 Figure 20: Relationship between Transportation Time and Payment Fee…………………. 70 Figure 21: Online Platform Revolution Model…………………………………………….. 72. vi.

(9) Table 1: Common Currencies in the Daigou Market……………………………………..... 9 Table 2: Product Categories Segmented by Ages from Ymatou.com(洋碼頭)……………. 11 Table 3: Five Popular Product Categories in Daigou Market……………………………… 12 Table 4: Reduction of Import Tariffs – Examples………………………………………….. 56. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. vii. i n U. v.

(10) 1. Introduction “Daigou” (代購), a term simply meaning “buying on behalf of” [8], has become a robust industry and a novel business model in China for the past decade with the market expanding 19 times between 2008 and 2012 [1]. In 2015, Daigou market size is around 34 to 50 billion CNY [2]. It has become a new and conspicuous business model because of its market potentials. Its impacts to the individuals, community and other businesses can be positive or negative, depending on how people run the business [84] [87]. The aim of this study is to find out how. 治政 the business works and investigate what its future may be. 大立 ‧ 國. 學. 1.1. Research Background. My research interest in Daigou is triggered by three factors as follows:. ‧. Nat. sit. y. Personal Experience. n. al. er. io. Two months ago, before my trip to Germany, my friend suggested I buy something from Hong. i n U. v. Kong to resell into Germany in order to solve my travel budget concerns. Since my friend had. Ch. engchi. a sizeable social network in Germany, she immediately posted a message on her WeChat group offering Daigou to her friends. Within a few minutes, my friend an order purchase items from Hong Kong. I immediately went to a nearby retail shop, looked for the products, purchased them, took them with me to Germany and sold to my customers. For that transaction, I just shopped for 10 minutes but got around 16 percent of net profit, some free skincare samples and a free dinner in return. Since then, I realize that many similar Daigou stories happen every day within the Chinese community and it originally came from mainland China and its residents overwhelming demand for oversea products.. 1.

(11) “Hot Oversea Daigou: Profits up to 50 Percent” 2013 Article The Chongqing Daily News on 1 November, 2013 ran this article which included stores of local women’s experiences with Daigou [3]. Miss Yan Meng often travelled to other countries for business trips. During those trips, she did Daigou business for extra money which totaled approximately 20,000 CNY per month. Her gross profit was between 30 to 50 percent. Miss Li Yang, another Daigou agent, received 10,000 CNY per month through the Daigou transactions. The income of 10,000 to 20,000 CNY per month was very attractive because it is much higher. 政治大. than people who can earn in Chongqing. According to the Chongqing Statistical Yearbook 2013,. 立. the average income is 45,392 CNY per year only [4]. Many Daigou agents like Miss Meng and. ‧ 國. 學. Miss Yang doing this job part-time and shipping the products from oversea countries to China to earn extra money [5]. This article arouses my interest in understanding how people run the. ‧. Daigou business and what its business model is.. sit. y. Nat. n. al. er. io. Negative Impact on Existing Business. i n U. v. Daigou also have negative impacts on local stores. Miss Yiyi Li had run two stores in Beijing. Ch. engchi. that sold oversea luxury items, such as Gucci’s bags and Channel clothing. Her monthly revenue was around 300,000 CNY to 500,000 CNY between 2009 and 2013. But starting in 2014, her business began to decline due to the shift of customers from brick and mortar stores to online Daigou platforms. She was left with excess inventory. This story shows another side of the Daigou business because its development has caused destructive impact on local stores in China. This story triggers my interest in the topic of the impacts of Daigou business.. 1.2. Research Approach and Thesis Organization In order to fully understand what Daigou is and how it works, this research is conducted with 2.

(12) the following approach. a.. Perform literature review to better understand Daigou, including what Daigou provides, what its driving factors and its past, current and potential future development of Daigou are; see Chapter 2 for further information.. b.. Study Daigou cases to categorize them into five different business models with their differentiating factors respectively. Chapter 3 provides in depth information about these 5 models.. c.. 政治大. Analyze impact of varying factors on current Daigou development and these 5 models. 立. with qualitative what-if analysis. Chapter 4 presents findings from this analysis.. ‧ 國. 學. Draw recommendations, including outlook, for Daigou based on the qualitative research, as presented in Chapter 5.. ‧. io. sit. y. Nat. n. al. er. d.. Ch. engchi. 3. i n U. v.

(13) 2. Daigou Market Daigou is a fast-growing overseas purchasing industry in China. By analyzing the Daigou surveys from the China Electronic Commerce Research Center(CECRC) and U.S.-based consultancy Bain & Company, approximate Daigou annual revenue in China from 2007 to 2015 are summed up in Figure 1 [6] [7]. Daigou market started to grow rapidly in 2008 and its business doubled almost every year. By 2013, the market size had reached to 74.4 billion CNY but started to decline dropping to approximately 40 billion CNY in 2015.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. This chapter goes through the Daigou market by looking into its key elements, product types and services, business driving forces, as well as the development phases of Daigou.. 2.1. Key Elements in the Daigou business What is Daigou? It is the Pinyin spelling for two Chinese characters: “代購”, which are “Dai”. 4.

(14) and “Gou”. It simply means “buying on behalf of” [8]. Sometimes, people use the term “Haiwai Daigou”, meaning “Oversea Daigou” to describe an overseas person who purchases commodities (usually luxury goods) for a customer in mainland China [9]. Daigou is a business activity where a seller shops overseas on behalf of a buyer, a practice since long time ago. The products offered in this business are mainly from oversea countries and the purchase reasons can be either lower prices, desirable brands, or other qualities that cannot be found or are limited in the local market. Several terms related to the Daigou business will be further discussed in the following sections.. 立. 政治大. ‧ 國. 學. Daigou Agents/Daigous. ‧. Anyone can be a Daigou agent or Daigous. These Daigous shop for goods based on their. sit. y. Nat. Chinese customers’ shopping list and ship the commodities to China. Daigous are usually. io. er. Chinese students studying abroad, or Chinese people who live overseas, or travelers, who visit. al. foreign countries frequently [8]. The people involved in this business come in many forms,. n. v i n Corhagents. As reportedUby BBC News, a person who engages acting as direct sellers, middlemen engchi. in the Daigou business is also called a freelance retail consultant who shops for someone during his/her free time [10].. Overseas Personal Shopper Overseas personal shopper is also used to describe a person who does the Daigou business. According to the Oxford Dictionary, a personal shopper refers to “an individual who is paid to help another to purchase goods by shopping on their behalf [11]”. There are also several definitions to describe what a personal shopper is, which can simply indicate “a person, whose. 5.

(15) job is to assist other shoppers in selecting merchandises; a person, who is employed to choose items for his/her customers; a person, who is hired to buy goods and services for another; a person, who make competitive purchases based on the customers’ instructions, etc. [12]” In the Daigou business, an overseas personal shopper refers to a person who travels to other countries/cities to purchase the desired products on behalf of his/her Chinese customers.. Third Party. 政治大. Investopedia defines third party as, “an individual, an entity or a group who is involved in a. 立. transaction but he/she is not the principal party and has only a lesser interest [13]”. The third. ‧ 國. 學. party takes an important role in the transaction he/she is the major actor in both the purchasing and shipping of oversea products to mainland China. In this paper, third party means anyone. ‧. who is other than the direct seller or buyer for the Daigou business. It includes frequent traveler,. y. Nat. sit. oversea exchange candidate, delivery company, service provider, consignor as well as online. n. al. er. io. platform provider, who plays the role as a middleman supporting a product or service between seller and buyer in exchange for money or goods.. Ch. engchi. i n U. v. Frequent Traveler Frequent traveler refers to “a person who leaves his/her home city/country and travel to other places for short intervals for business, tourism, family visits, employment, study or exchange [14]”. Business travelers, such as an overseas key account executive, flight attendant or tourist guide, are “travelers whose expenses are covered and paid by the company or entity he/she works for [15]”. Travelling by plane is the usual way to go oversea, especially for people travelling from mainland China to other western countries. So in this case, frequent travelers are also referred to as frequent flyers. These frequent travelers are the key partners, playing the 6.

(16) third party role of middleman in the Daigou business. However, if a traveler buys an oversea product and sells to a buyer directly, then he/she is not regarded as a third party in the Daigou transaction but a direct seller instead.. Consignor Consignor is also one of the third parties in the Daigou business. He/she is a person who delivers a consignment in which goods are sent in the possession of another party to sell and receives a. 政治大. certain percentage of the revenue from the sale. Consignor refers to “a person consigns or. 立. purchases goods only when he/she receives the orders from a seller, who then sells the received. ‧ 國. 學. oversea products to his/her buyers [16].”. ‧. Haitao. Nat. sit. y. Baidu, one of the most popular engines in China, defines Haitao(海濤) as “the purchase of. n. al. er. io. cross-border products through contacting with oversea sellers [17]”. Advanced payment is. i n U. v. required for each transaction. This term is extensively used for the past few years and mainly. Ch. engchi. involves in the use of online platform for the whole buying procedure [18]. Haitao also refers to the phenomenon of scouring the global websites to buy the oversea products that the Chinse customers want [19]. Its online platform business model will be presented later in this paper. Currently, lots of websites have been using the term of “Haitao” to indicate their Daigou activities and “Haitao” shoppers are commonly used to describe those groups of people who run Daigou businesses.. Surrogate Shopper “Surrogate”, is popularly used to describe the Daigou business or shopping by many academic 7.

(17) papers, especially in Taiwan. “Surrogate means a person appointed to act for another in a specific role or office, or a surrogate mother from the explanation of Oxford Dictionary [20]”. Surrogate shopper can be used to describe a person who shop on behalf of someone rather than him/herself. However, since this paper focuses more on the Chinese community, we will then use the Chinese term “Daigou” in the entire paper.. Luxury Goods. 政治大. Luxury goods, the major products in the Daigou market, are “items that are unique, expensive. 立. or difficult to obtain [21]”. “It is products which are not necessary but which tend to make life. ‧ 國. 學. more pleasant for consumers. Due to its costly value, they are often bought by people who have a above average income [22]”.. ‧ sit. y. Nat. Consumer Goods. n. al. er. io. Consumer goods are another kind of products frequently traded in the Daigou business. It. i n U. v. “refers to items of common or daily use, that are bought and used by end-users for private. Ch. engchi. consumption, rather than by manufacturers for producing other goods [23]”.. Currency “Currency is a money system used in a particular country [24]”. Oversea products are purchased in foreign countries using that country’s currency but customers usually pay in Chinese currency. Their exchange rates from foreign currencies to Chinese currency should be considered because the depreciation of foreign currencies stimulate Daigou consumption and overseas travelling from the Chinese community, and vice versa. Chinese currency (CNY), i.e. Chinese Yuan Renminbi (RMB), is used in the whole paper. The data of exchange rate is clued on 17 8.

(18) 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.. 立. 政治大. ‧. ‧ 國. 學 sit. y. Nat. 2.2. Product Types and Services. io. er. There is no actual limitation for the types of products and services offered within the Daigou. al. v i n Ch US-made face creams to Australian baby formula or iItalian luxury items, greatly depend on the en gch U n. business. These products and services, originally from the overseas countries, anything from. 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:. 9.

(19) 立. 政治大. ‧ 國. 學. 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. sit. y. Nat. 2015 Top 50 Cross-Border E-Commerce Sites in China [26]. They are also some of the. io. al. er. examples of Model 5: Online Platform Model. Fenqu.com(豐趣海淘) will be presented in. n. details as a case example in that model.. Ch. engchi. i n U. v. Originating Countries Daigou products come from many countries. Australia and New Zealand generally are wellknown 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. 10.

(20) 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. 政治大. import tax. People can go from downtown Hong Kong (i.e. Central) to the border of mainland. 立. China in approximately a half hour [27].. ‧ 國. 學. Popular Product Categories. ‧. According to the data analysis by ymatou.com(洋碼頭), one of the most popular Daigou. y. Nat. sit. websites in China, the product categories are segmented by ages ranging between 25 and 40. al. n. on Table 2 [28].. er. io. years old and customers within each segment, they tend to look for certain products as shown. Ch. engchi. i n U. v. 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 11.

(21) category.. 立. ‧. ‧ 國. 學. Brand names. 政治大. In the Daigou business, customers value product brand names, especially for luxury goods. A. y. Nat. sit. widely familiar, distinctive or qualified brand name helps to differentiate itself from others.. n. al. er. io. Mario Testino, a veteran fashion photographer, “said brands were like private clubs and desire. i n U. v. had to be created so that everyone wanted to belong [30]”. Assuming all other attributes were. Ch. engchi. 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 12.

(22) 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. 政治大. consumers are from the United States. As mentioned previously, many product types can be. 立. traded in the Daigou business when there is demand and supply. However, since the products. ‧ 國. 學. with the same brand names are easily found in different countries, Daigou agents are able to shop for the same brand in different countries.. ‧ y. Nat. sit. In the Daigou business, the intangible product, i.e. service, is also a key to make transaction. n. al. er. io. happen because it drives the communication before, during and after a Daigou purchase.. Ch. 2.3. Business Driving Forces. engchi. i n U. v. According to the Business Dictionary, driving forces broadly mean “the internal forces (e.g. knowledge, core capabilities and technological innovation) and external forces (e.g. economy, competition, local and national politics and social trends) that shape the future of an organization and make the organization to stay competitive [32]”. By regarding Daigou business as an organization, driving forces mean something that has the power to make Daigou happen. In this section, six driving forces for Daigou will be presented:. 13.

(23) Price Difference The huge price difference of products between oversea countries and mainland China drives people into the Daigou business to make/save money. Taxes imposed by the Chinese government are the major reasons to drive price disparities. Other than certain products, goods imported into China are normally subject to three taxed levies: import tariffs, value-added tax (VAT) and consumption tax. Hence, imported products sold in China are much higher than any other foreign countries [33]. On average, the price difference for alcoholic beverage is between. 政治大. 64-85 percent, watches between 33-83 percent and consumer goods, such as clothing, perfumes,. 立. handbags, cosmetics and footwear are less than 30 percent [28]. For luxury goods, the import. ‧ 國. 學. tariffs can make up over 50 percent of its price tag [34].. ‧. During widespread sales seasons in countries outside of China, the price difference becomes. y. Nat. sit. evident. For example, a Dior’s handbag costs around 14,723.7 CNY (2000 EUR) in Italy but is. n. al. er. io. sold at 30,000 CNY in China so even the mainland customer has to pay premiums of about 15. i n U. v. percent above the retail price, excluding the mailing fee, the price is still much lower than what. Ch. engchi. he/she has to pay in a local shop assuming the same product is available. Some other examples include: a Swarovski’s crystals watch which is 40 percent more than in Europe, a “speedy 25” Louis Vuitton’s handbag which is 18.8 percent more than the United States and Lancôme’s eye mask which is 20.5 percent more than in France [33]. Therefore, it provides a great business potential for Daigou agents to generate revenues while customers save more money by ordering oversea.. In addition, Daigou agents also get extra income in a Daigou activity due to tax refund, which is available when a Daigou agent purchases a certain amount of oversea products during his/her 14.

(24) trip. After filling in a custom form before exiting the country, he/she gets tax refund in cash or via bank. The amount of tax refund varies by country and total amount spent on tax refundable products has to be above a certain amount in order to get any refund. For example, for every consumption of 7,358.5CNY (1,000 EUR) per order, the tax refund rate is about 12 percent, 11.4 percent, 12.9 percent and 12.85 percent in France, Germany, Italy and Spain respectively [35]. However, in Japan, the tax refund rate of consumer goods is 8 percent and consumption has to be over 313.9 CNY (5,001 JPY) per order [36].. 立. 政治大. Therefore, for agents who would like to make money through Daigou activity, they will tend to. ‧ 國. 學. consume over the certain amount of money to get the tax refund. In addition, as mentioned previously, the exchange rate is also a way for Daigou agents to make money. Therefore, price. ‧. difference, refundable VAT and gains from exchange rate are three things that drive the Daigou. n. al. er. io. sit. y. Nat. business.. Limitation of Supply in Home Country. Ch. engchi. i n U. v. In China, buying options and product supply in local markets are limited. Limited edition and new products are usually first launched in oversea markets and imported to China later. For those customers who want to follow the fashion trends and get access to the latest designs that are not available in China, there are Daigou agents who take advantage of time gap and distance. For example, Miss Hung Xi, a Daigou customer, said that when she saw the new clothes on foreign websites, she goes through Daigou agents in order to get them from oversea markets since these new designs took more time to arrive in China [5]. Additionally, China is a big market with over 1.3 billion people with a wide range of product preferences. The local supply is far from enough to fit their demands. Therefore, these external driving forces motivate the 15.

(25) Chinese people, to consume from oversea markets.. Rising Living Standards As the economy of China grows at a rapid speed, increasingly paying an influential role in the global economy, Chinese people want to have a higher living standard as well [5]. Despite being an emerging country with high income inequality, China has the world’s fastest growth in living standards [37]. People with higher income, longer life expectancy and more purchasing power. 政治大. are now willing to pay for better products. With the desires for a healthier life and superior. 立. quality, especially for the affluent and health-conscious middle classes, the merchandises. ‧ 國. 學. offered in the home country can no longer satisfy the local needs. The oversea products which customers look for are usually of higher standards and quality.. ‧ y. Nat. sit. Additionally, the 2004 toxic milk powder and 2008 Chinese milk scandal have risen quality. n. al. er. io. concerns for local food producers’ quality standards. Newborn babies developed serious mental. i n U. v. and health problems and at least half a dozen children died after consuming milk products. Ch. engchi. contaminated by melamine, a chemical used in plastics and adhesives. The local milk powder market thus dropped by 45percent [38]. Together with other incidents, many customers decided to buy from Daigou agents, rather than from a local Chinese shop [5]. For example, Miss Gong, has become a loyal customer for Daigou since her pregnancy and she has never bought any local baby products. Many similar cases drive customers to look for overseas products [3]. Consumers’ growing buying power and the increasing strength of Chinese currency have driven high demand for oversea products as well.. 16.

(26) Technology Innovation Technology innovation, such as smartphones, cloud computing and social networking, broadens the channel for Daigou. Information exchange, price checking, data collection, media promotion as well as global trading grow rapidly and effortlessly with the help of technology. It not only speeds up the growth of e-commerce, but also makes payment much easier that before, creating tons of business opportunities. At present, with a click of a button on the smartphone or computer, consumers can easily do anything online from searching fashion. 政治大. trends, getting current news, sharing information to making overseas orders. This speeds up the. 立. Daigou business as physical boundaries no longer exist to limit contact with overseas markets.. ‧ 國. 學. Lots of Daigou news, websites and apps are now available online, ten of which are already indicated in the previous section.. ‧ y. Nat. sit. In addition, social networking has had a great impact on the way people communicate. Other. n. al. er. io. than direct meeting or calling, people use social media and the internet often to communicate. i n U. v. with each other and to get information of Daigou news, such as information on oversea luxury. Ch. engchi. goods [39]. WeChat, a social media app popularly used in China, helps to speed up the Daigou business as Daigou agents can make use of this platform to post messages to their customers and/or friends asking what they need, who then repost them to their friends and so on [40]. In China, three-fourths of internet users take WeChat as the top social sharing platform, just behind QQ and QZone. About 9.6 percent of users use WeChat to share at least three posts a day; 23.1 percent shares 1-2 posts per day; 47.5 percent shares occasionally per week [41].. Hence, when a seller plans to go travelling, he/she simply shares this news on his/her online platform to look for potential buyers. On the other hand, buyers can do the same to look for 17.

(27) Daigou agents. More than that, new technology has helped to modify the logistic system, which now need less time and cost for delivery.. Since payment methods are important for the Daigou business, ease of payment with the help of technology speeds up the whole business process. For a small order, people may choose to pay by cash or bank transfer since it is relatively convenient and easy. Selection of credit card payment or PayPal is never a good option for small scale Daigou businesses because of the high. 政治大. service charges. With more payment options, the payment cost and time becomes lower and. 立. faster. In 2016, there are already 400 million registered users for Alipay, a well-known Chinese. ‧ 國. 學. third-party online payment platform launched by Alibaba Group in 2004, which has 175 million transactions per day [42]. To broaden the payment channel, WeChat Pay developed by Tencent’s. ‧. Tenpay was also launched in 2011 and was opened to all business platforms since 2014.. sit. y. Nat. n. al. er. io. These channels help users to transfer money from one account to another account immediately,. i n U. v. with no transaction fees and has become the major payment medias currently used. Depending. Ch. engchi. on the agreement between seller and buyer, payment can be transferred immediately before or after the seller completes the order.. Moreover, China’s e-commerce remains one of the most important sectors in the domestic and global economy with years of explosive growth, also helping to enlarge rooms for Daigou activity, which is also an indication of China’s growing cross-border online shopping as most of the Daigou activities are now conducted through the online platform, such as websites and apps [43]. According to the survey by the China Internet Watch (CIW), in the second quarter of 2016, China’s online shopping market transactions have reached 1,117.8billion CNY (167.51 18.

(28) billion USD) with a growth rate of 27.6 percent compared with the same period last year, indicating that consumers now shop more online than before [44].. However, the major differences between online shopping and Daigou are that buyers in the Daigou activity are known at the very beginning and they mainly look for overseas products. Daigou business grows promptly due to explosion of the cross-border e-commerce between China and the world.. 立. 政治大. Increased International Travels. ‧ 國. 學. With better economy and growing middle class, Chinese people are now more eager to go outside to explore other parts of the world, creating a tremendous market for foreign countries.. ‧. Most Chinese tourist like to travel to prominent countries, such as France, Germany, Italy, Japan,. y. Nat. sit. Maldives, Singapore, South Korea, Switzerland and the United States [46]. Daigou products. n. al. er. io. are also from most of these countries. The increase of oversea travelling does motivate the. i n U. v. Daigou business in some ways as a tourist can act like a seller or a third party to sell his/her. Ch. engchi. oversea products through Daigou activity.. With the increasing access to visa-free countries and the rising number of direct flights, it is now much easier for Chinese people to go travelling and purchase and/or ship oversea products back to their home country. For examples, more and more Chinese travelers, businessmen and exchange students can now freely enter the United States with the China-US visa extension signed in November 2014. Also in 2014, the number of non-stop routes jumped from 10 in 2006 to 35. Projections estimate that there will be up to 7.3 million Chinese visitors to the US by 2021 [46]. In addition, since the introduction of a fast-track 48-hour French visa in 2014, a 61 19.

(29) percent increase in visas were granted to Chinese visitors over the previous year, Daigou transactions from Paris have also been increasing. Similar things happen to other countries as well [30].. Though the growth of oversea travelling does not necessarily have a direct impact on Daigou business, it does create business opportunity. Noticeably, frequent travelers are the main thirdparty engaging in Daigou activity. Therefore, to a certain extent, intensive oversea travelling enhances Daigou business.. 立. 政治大. ‧ 國. 學. Pretentious Culture. In China, there is a growing desire for luxury items. Chinese men use luxury goods to show off. ‧. their social status, success and flaunt their wealth while women tend to buy them for their. y. Nat. sit. entertainment and pleasure [47]. The Bain & Company reported that China has the largest. n. al. er. io. number of buyers of luxury goods, making up 29 percent of the global market in 2013 [5].. i n U. v. According to the “China Luxury Market Research Report”, Daigou was the major channel for. Ch. engchi. luxury goods in 2014, accounting for 38 percent of the total luxury market [48]. This huge amount of transactions can be explained by consumers’ materialistic desires, gift-giving culture and individualism, motivating them to purchase for luxury products [49].. In addition, the rise of brand awareness increases their eagerness for oversea products as their desire for international brands has become stronger and more diverse than ever. With the power of words-of-mouth and networking effects, consumers are influenced to buy well-known foreign brands, such as Pampers’ diapers from the United States, Swisse’s vitamins & supplements from Australia, Chanel’s perfumes from France, Louis Vuitton’s handbags from 20.

(30) France and Rolex watches from Switzerland. To purchase these merchandises, consumers are willing to pay premium prices in order to get what they want, especially for limited edition products. For example, Miss Sasa used 380,000 CNY to buy a red crocodile Hermes Birkin handbag through a Daigou online platform. She was willing to pay 40,000 CNY more in order to get that product because she could not find the same model in China [50]. Consumers purchase these luxury goods because it gives them a sense of accomplishment, belonging, status, wealth, brand loyalty as well as exclusivity [47].. 立. 政治大. 2.4. Development Phases of Daigou. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. The development phases of Daigou was between 2007 to 2015 (presented in Figure 3) [6][7]. The scale and complexity of the Daigou business has changed over time according to different. 21.

(31) phases and business environments. Daigou activity started a decade ago and was generally regarded as a home business with a few sellers shopping on behalf of their families or friends and one transaction is usually between one seller and one buyer. Therefore, its business scale was relatively small. During that time, buying options were limited according to the destinations where the sellers traveled to. During the global recession in 2008, the prices of Western goods were slashed dramatically [51]. With the increase of in purchasing power and a taste for luxury goods, Chinese people were easily able to get oversea products for a lower price. In the same. 政治大. year, the poisonous milk powder scandal aroused the concerns of quality issues in the local. 立. markets, pushing the Chinese people to look for better products in foreign markets.. ‧ 國. 學. Hence, the industry became increasing popular. Every year, thousands of consumers looked for. ‧. oversea products through Daigou agents or platforms, especially ten days before Christmas and. y. Nat. sit. after holidays when Daigou agents usually got time to travel around and shop for their. n. al. er. io. customers [51]. Nowadays, cosmetics, milk powder and handbags ranked as the top three best. i n U. v. sellers in the Daigou market [6]. Due to its huge demand, even with the increase in customs. Ch. engchi. restrictions in 2010, the Daigou orders still increased extensively and its market nearly doubled every year. For instance, in Australia, the Daigou trade revolved around everyday items ranging from food, beauty products, wine, to clothing. On the other hand, Daigou first grew to prominence in Europe by shipping fashionable and luxury goods such as Louis Vuitton handbags to China.. As the market matured, some of the Daigou platforms established their own logistic systems as well as online shopping websites by taking advantages of third party and technology innovation, which scale was much larger and more diverse. By 2012, there were already hundreds of 22.

(32) “Haitao” and cross-broader e-commerce platforms, websites, apps as well as social media sites involved in the business.. However, the growth of the Daigou business, caused some undesirable problems such as smuggling, counterfeiting, tax avoidance and trust issues. The Daigou market started to change at the end of 2013 because of many factors working against the whole Daigou business. For example, the introduction of the Shanghai Free-Trade Zone allowed international companies to. 政治大. directly sell their products to local customers online at significantly reduced costs [52]. 立. Furthermore, the development of Alipay ePass, a combination of payment, logistics and market. ‧ 國. 學. support system, opened Chinese customers up to a whole new set of direct international shopping. They had much wider selection of products than before [53]. In 2015, the market had. ‧. dropped back significantly. Its decline was considered to be a turning point for Daigou business.. y. Nat. sit. Worse still, on April 2016, the government moved a step further to launch several stricter. n. al. er. io. customs regulations on consumer goods and increased the import taxes on foreign products [54].. i n U. v. Under these business challenges, the impacts on Daigou business are still full of uncertainty. Ch. engchi. and its future outlook will be covered in the last Chapter.. On the other hand, other than reviewing the development period of Daigou, a newly launched paper by the CECRC has precisely used four phases to describe the whole development of Daigou in a novel perspective [55]. These phases were as follows: Phase 1: Daigou 1.0 – “Retail Time” by exchange students(“散戶時代”歡樂的留學生？) Phase 2: Daigou 2.0 – Anxiety with the coming of cross-border e-commerce(跨境電商元年來了散戶急了？) Phase 3: Daigou 3.0 – The growth of professional Daigou agents(職業買手是“新代購”的. 23.

(33) 生財之道？) Phase 4: Daigou 4.0 – Broadcasting of Daigou process (“我美我直播”買手也能當網紅？). In the first phase, oversea exchange students were the major players in the Daigou business. They used their free time to shop on behalf of their buyers living in China and then shipped the desired oversea products back to China in order to make money to support their oversea studies and daily expenses. After gathering a certain amount of customers, they established online or. 政治大. WeChat shop to further promote their businesses. Though the he scale was still small. Later on,. 立. the second phase started in the second half of 2014, with “Haitao” and e-commerce groups. ‧ 國. 學. started to get into the Daigou business.. ‧. As time passed, large online companies, such as Tmall.com, JD.com and 163.com, few in. y. Nat. sit. popularity occupying large market shares in the Daigou business. With their better payment. n. al. er. io. systems, logistics as well as communication platforms, some Daigou shoppers were forced to. i n U. v. move out from the market or acted strategically to continue their Daigou businesses. During the. Ch. engchi. third phase since the market was maturing and the demand was rapidly increasing, sellers ran Daigou business more professionally and even took it as a full time job. Sellers worked as a group with ten to twelve people per group. Limited edition and luxury products were their main targets due to higher profit potential. To secure payment, they used pre-paid order method and received money before orders.. In the fourth phase, due to many quality and trust concerns, such as fake or damaged products, sellers amended their usual business models by using social media and marketing strategies to better promote themselves and alleviate buyer concerns. Detailed description of the whole 24.

(34) purchasing process through their websites and online platforms were then extensively used to show the authenticity of their oversea products. In order to be more systematic and be legitimate, some Daigou agents chose to go through the proper China’s custom procedures but not all agents could follow the instructions appropriately because of costs and complexities.. Therefore, similar to Daigou development between 2007 and 2015, this 4 phase analysis also indicates how the Daigou business has extensively changed over time according to different. 政治大. business environments. Its business scale has become more and more complex compared to a. 立. decade ago and the Daigou business is currently facing several business challenges. In order to. ‧ 國. 學. remain competitive, adjustments of the current business strategies are necessary.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. 25. i n U. v.

(35) 3. Business Models Analysis “Business model refers to the way in which an enterprise generates revenues through company operations according to the Investopedia [56]”. Daigou business model first emerged in China as a way for consumers to purchase overseas merchandises that are not available or too expensive in the local markets [57]. They make orders either through Daigou agents or online platforms, forming diverse business activities or models and involving different people, payment methods, communication channels, delivery time etc. This chapter divides Daigou. 治政 operations into five business models. These models represent 大 an evolution of five phases. These 立 five business models are: ‧ 國. 學. 1) Direct Buying / Direct Selling Model. ‧. 2) Seller Offering Model 3) Buyer Requesting Model. y. Nat. n. al. er. io. 5) Online Platform Model. sit. 4) Three Parties Model. Ch. engchi. 26. i n U. v.

(36) Figure 4 shows the evolution of these five phases. Each model will be presented with the help of pictorial illustrations and case examples so as to show how Daigou business works in each phase. As Model 4 and Model 5, more prevalent nowadays, are more systematic and welldeveloped, they will be further analyzed with Business Model Canvas, which is a strategic management template or a visual chart for developing new or documenting existing business models [58].. 政治大. 3.1. Model 1: Direct Buying / Direct Selling Model. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. The Direct Buying / Direct Selling Model indicates how Daigou business starts at the very beginning and is still applicable for today’s Daigou business. In this model, a business activity is mainly between one seller and one buyer per transaction. It happens very often when someone is travelling or will go for a trip, and he/she wants to shop on behalf of customers according to a buying lists in exchange of money, goods or financial instruments. Such list generally includes product information and target buying prices. Since there is no specific promotion for the. 27.

(37) Daigou offer and the order quantity is usually small, a buyer is more than likely a family member, relative and friend. Purchasing gifts or souvenirs for friends or relatives is not considered a Daigou business since there is no transaction involved.. Same as any other businesses, mutual communication is needed before a Daigou business starts and the ways people communicate are mainly by direct talking or messaging. Due to their close and trusted relationship, no advanced payment is requested. A seller normally gets money in. 政治大. cash when he/she gives the products to the buyer in person. It works also for a seller currently. 立. living oversea, who shops and ships the oversea products to his/her buyer, who will pay via. ‧ 國. 學. bank transfer or online banking and the buyer has to wait longer to get the products through this channel. Generally, the closer the relationships they have; the lesser the premium they will. ‧. charge/pay for. Therefore, it is the simplest and the most direct business model as compared to. y. Nat. sit. the other four models. This model is more suitable for small orders and business activity is. n. al. er. io. mainly conducted within a seller’s circle (i.e. his/her friends, family members, relatives, etc.).. 3.1.1.. Ch. engchi Model 1: Case Examples. i n U. v. My personal Daigou experience, stated in Chapter 1 is one of the examples for the Direct Selling/Direct Buying Model. In that example, the Daigou activity was conducted for customer outside China because I shopped in Hong Kong and shipped the products to my customer, who was Chinese and living in Germany. The customer paid in cash when he received the products. In return, other than money, I got a free meal and several free samples. Even though my friend helped look for other customers but she had no physical reward, neither money nor goods, so she was not a seller nor a middleman in this daigou activity. There are many similar examples happening every day in the Chinese Daigou market as well. 28.

(38) Another example is found through the personal interview with a Daigou agent named Chiwai Leung. Mr. Leung likes travelling so he is eager to run daigou activity in order to make money and to cover parts of his travelling expenses. He shops for his friends or family members when they request to. He mentioned about a recent Daigou experience he had. It happened on August 2016, when he travelled to Osaka Japan with his sister, his brother-in-law and his friend. It was a 5-day trip and also could be regarded as a Daigou trip because other than Miss Leung himself,. 政治大. his sister and friend also shopped for their relatives or friends to make some money. Japan was. 立. well-known for beauty products and medicines, which prices were much lower than Hong Kong. ‧ 國. 學. or mainland China, so their customers also looked for similar products from Japan. Since the customer relationship were close, none of them asked for advanced payments and they got. Nat. sit. y. ‧. money in cash when they delivered the products to their friends.. n. al. er. io. In that Daigou activity, Mr. Leung’s sister did not charge extra money but she was beneficial. i n U. v. from the tax refunds, which were 8 percent of the retail prices. However, for Mr. Leung, he. Ch. engchi. generated revenues differently. Since there were diverse selling prices in different stores for the same products, he always charged his friends for the highest selling prices and kept the tax refunds as his own income. He made more money than his sister. On the other hand, Mr. Leung’s friend, currently living in mainland China, chose to charge his friends 5 to 8 percent more than the selling price for each product he shopped because he thought that the prices were still much lower than what his customers had to pay in their local stores.. By looking at these examples, the Direct Selling / Direct Buying Model is really simple and straight forward. Sellers shop for their customers as requested and get paid after delivering the 29.

(39) products. The profits generated from this model are limited due to the close buyer-seller relationship and profits, if any, are from the tax refund or exchange rate only.. 3.2. Model 2: Seller Offering Model. 立. 政治大. ‧. ‧ 國. 學 er. io. sit. y. Nat. al. n. v i n C hmeans that sellersUtake the initiative in the whole Daigou Seller Offering Model, by its name, engchi business. Sellers, in this model, can be anyone but they are more of frequent travelers’ type, who travel oversea very often and intend to make money during their trips. People who are currently living oversea can also be sellers in this model but greatly depending on their networks, delivery costs or time if they want to serve several buyers each time. Since a seller can purchase oversea products regularly, in order to generate more revenues, she looks for as many potential buyers as possible with the use of his/her own communication channels, such as WeChat, QQ or Weibo, three typical social medias in mainland China; WhatsApp or Facebook, two common social medias in Hong Kong and Macau. He/she individually serves several customers per. 30.

(40) Daigou activity.. There is no limit for the product selection as long as seller and buyer make a deal through communication but buying options are relatively limited because, most of the time, a seller offers specific oversea products for customers to choose from, mainly depending on where a seller travels to or what he/she is able to offer. Customers have to pay a premium for products before making orders and payment methods are normally via bank, Alipay or WeChat Pay. Cash. 政治大. is not a common media for advanced payment due to inconvenience. Since a seller has to shop. 立. for several customers per time and he/she normally travels oversea by plane, with luggage limits,. ‧ 國. 學. weight and size, so he/she prefers to shop on behalf of his/her most valuable buyers, who look for expensive items or are willing to pay more.. ‧ y. Nat. sit. This business activity is similar to a traditional retailing activity, which is also about selling of. n. al. er. io. merchandise and services to the customers, who can be anyone, oversea or local. However, their. i n U. v. major difference is that, in a Daigou activity, a seller shops only when he/she knows who his/her. Ch. engchi. customers are and receives the money before purchase. Since what a seller can carry is limited and Daigou business is generally conducted within a seller’s social circle, Model 2 is more effective only when a seller knows a certain number of customers and he/she has his/her own well-connected communication platform to conduct the Daigou business.. 3.2.1.. Model 2: Case Examples. Flight attendant, for example, is one of the major sellers in this model because he/she frequently travels to different destinations where there must be something that buyers look for. Three examples are stated in this section. Two are found from the Facebook platform, a popular 31.

(41) Daigou channel in Hong Kong and Macau, and one is from the personal interview.. The first example is an online Facebook shop named Le Meow Meow run by a flight attendant [59]. The seller communicates with her customers by posting the product information, Daigou news, fashion trends, company links on her Facebook fans page regularly. She targets at selling fashionable products for well-known brands, such as handbags, accessories and clothing, to female customers. Basically, each Daigou activity is run through five steps, shown on Figure 7,. 政治大. which are also her daigou workflow.. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. First of all, the seller makes announcements and starts to look for potential buyers after knowing her own flight schedules. She posts the links of well-known brands for customers to choose from. Customers have to send the product photos with model numbers for pricing and they have to pay deposits ranging from 265.7 CNY (300 HKD) to 708.5 CNY (800 HKD) depending on. 32.

(42) product types in order to make orders. The seller will then shop for her several buyers simultaneously during her trips. She updates the product status to her customers individually after her return. She then arranges delivery after getting the rest of payments or refunds the deposits if the product is not purchased successfully. Delivery methods include face to face and through postal service. Customers can choose to leave comments after their orders or request for reorder. Then, one Daigou activity is completed. The shop currently has 145 reviews and ranks 4.8 of 5 stars because of his excellent customer service.. 立. 政治大. Another example is also an online shop named “Daigou by Mommy Flight Attendant” [60].. ‧ 國. 學. The owner is also a flight attendant. She targets at selling mommies’ and kids’ products and her product offerings are diverse, ranging from quilts, kids’ fun flossers, cartoon Band-Aid, natural. ‧. herbs, babies’ creams to kids’ clothing, which are the products mainly from the countries she. y. Nat. sit. travels to. She usually posts the product information (product information, price, delivery time). n. al. er. io. online and look for buyers. She shops for her customers only after she has received the full. i n U. v. payments via bank. Same as the previous example, her buyers will receive product updates for. Ch. engchi. delivery or refund after she is back from her business trip.. The third example is from a personal interview with a flight attendant named Clara Wu. Miss Wu contacts with her customers through What’s app or Facebook usually and she mainly sells skin and cosmetic products to her customers. She stated that she sold products of a Japanese brand named Cle De Peau the most due to its popularity and charged her customers 10 percent more than the retail prices.. From these flight attendants’ examples, each of whom shops for several buyers at one time and 33.

(43) they usually use social medias to promote their daigou offers and to communicate with customers. Partial deposits or full payment in advance are needed in order to make orders. Online payment is the usual payment method from these examples. Other than frequent travelers, tour guide are also another major seller in this business model as well.. 3.3. Model 3: Buyer Requesting Model. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Buyer Requesting Model, by its name, indicates that a buyer takes the initiative in the Daigou business to look for sellers. This model is the opposite of Model 2. Since no one specific seller can deliver all his/her desired oversea products. A buyer has to find ways to Daigou sellers. Posting the Daigou requests on his/her own communication channels is one option. Credible sellers are usually through word-of-mouth of a buyer’s circle and the deals between various sellers can be very different, depending on how a buyer communicates with his/her sellers.. 34.

(44) Three major factors for the selection of sellers are trust, price and product quality, common to all Daigou models. A buyer is willing to pay more for the same product if a seller is more reliable than others with better customer service. Especially when a buyer looks for expensive or luxurious items, mutual trust is one main factor to ensure product authenticity and it explains why the pricing for the same product offered by sellers in the Daigou business can be very different. Besides, a buyer also has to take payment method into consideration, especially for. 政治大. advanced payment. Payment is usually via bank, Alipay or WeChat Pay if products are shipped. 立. via carriers. Cash payment is expected if products are delivered in person.. ‧ 國. 學. Product selection in this model is more diverse because a customer is able to look for products. ‧. from different countries, where Daigou agents live or travel to as long as a customer is willing. y. Nat. sit. to pay and buyers have intentions to make money. This model is operated effectively only when. n. al. er. io. a buyer knows a certain number of sellers who can purchase on behalf of him/her and those. i n U. v. sellers are trustable and reliable. Mutual communication between buyer and seller is important. Ch. engchi. in order to complete the transaction. Although product selection is more diverse in this model, the limitation of Daigou channel (i.e. contacts with sellers) leads to the subsequent development of Models 4 and Model 5.. 3.3.1.. Model 3: Case Examples. The examples of Waiwai Wong and Kaling Wu fit into this model. Mr. Wong, currently living in Hong Kong, is a usual Daigou buyer purchasing oversea products once to twice per month. He stated that he purchased through Daigou activity very often because of price, convenience and quality. In his recent Daigou experience, he purchased milk powder, perfume and 35.

(45) headphone from Germany; watch from Japan; as well as t-shirt, boxers and handbag from the United States and he got these products through his own Daigou agents, who were his friends and a relative. He gave the product pictures with model numbers to them so that they could shop for him.. About the payment method, Mr. Wong transferred money (around 2,800 CNY) in advance to his friend via bank to order the newly launched Japanese Citizen’s watch. Mr. Wong paid. 政治大. approximately 5 percent more than the retail price to his friend and got the rest back in that. 立. transaction. However, for German products, he paid around 10 percent of the selling prices as. ‧ 國. 學. service charges to his friend, which were still lower than what he had to pay in any local stores. He paid to his friend in cash when he got the products.. ‧ y. Nat. sit. For the rest of the products, he simply talked to his cousin living in the United States through. n. al. er. io. Skype. His cousin then shopped for him and sent the products to him by post. Mr. Wong. i n U. v. transferred 3,500 CNY (509.4 USD) to his cousin in total through PayPal but the actual price. Ch. engchi. was 3,412 CNY (496.6 USD) only. The whole transaction took around three weeks. Other than that, Mr. Wong also looks for limited edition through Daigou activity. For instance, a year ago, he ordered a pair of limited edition NWD Adidas Shoes from his Daigou agent in Germany. The new shoes could not be found in any local retail stores in China at that time.. Another example is from Miss Wu’s personal experience. Miss Wu normally contacts with her friends (i.e. frequent travelers) to purchase oversea products first. If no one can help her to shop oversea, she will then post her needs to some specific Facebook pages to look for suitable sellers. She normally communicates with her Daigou agents about the selling prices before making 36.

(46) orders and she pays via bank most of the time. She has used Facebooks of “Euro Shopping HK(歐洲品牌專業代購)” and “USA Easy Search(美國品牌代購)” so far to look for oversea products because of their top online ranking and popularity. Recently, she ordered one pair of UGG shoes from Australia and one Kate Spade’s handbag from the United States respectively through these two Daigou platforms.. These examples show that a buyer, in this model, usually finds sellers him/herself if he/she has. 政治大. desires for oversea products, implying that a buyer has to have his/her own contacts with sellers. 立. in order to purchase foreign items. Daigou agents may be buyers’ friends, relatives or someone. ‧ 國. 學. recommended through word-of-mouth or online ranking. Besides, for trustable or credible agents, a buyer is willing to pay premiums or more in order to make orders.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. 37. i n U. v.

(47) 3.4. Model 4: Third Party Model. 立. 政治大. ‧. ‧ 國. 學 y. Nat. er. io. sit. Third Party Model, one of the most popular Daigou model, reflects how Daigou business typically runs nowadays. With bigger market size and more diverse product offering, other than. n. al. Ch. i n U. v. sellers and buyers, the use of third party has become necessary as it provides important supports. engchi. for a Daigou activity and its growing engagement speeds up the development of Daigou business. In this model, the extensive use of online platforms and social media are very common as sellers, engaging in this Daigou activity, may already have established their own channels, logistic system as well as online shopping websites, that buyer can directly contact with and make orders.. With the supports of third party, product offering is very diverse in this model. To start a Daigou activity, partial or full payment is needed from customers. After receiving the order lists and. 38.

(48) money, sellers contact with third party, who shops for sellers and ships or delivers the products to the sellers to get service charges in return. Sellers will then deliver the products to the customer as directed [57]. The use of logistic companies is also very common as most of oversea products are delivered though postal service.. In the whole Daigou process, sellers act as intermediate agents to contact between buyers (who are sellers’ customers) and third parties (who are Daigou shoppers and deliverers), meaning that. 政治大. they contact directly with their customers and rely on third party for the oversea purchase and. 立. delivery. It involves higher operation costs due to paying to third parties and logistic companies.. ‧ 國. 學. Despite paying more by the customers, they still have to wait longer (up to 7 to 15 days) to get the oversea products as this Daigou process takes more time than Model 1 to Model 3, which. ‧. are relatively direct and simple. However, because of its diverse product offering, various. y. Nat. sit. Daigou channels and extensive use of online platform or social media, this model has presently. n. al. er. io. dominated the major Daigou market and is mostly run by sellers who have connections with oversea third party and customers in China.. Ch. engchi. 39. i n U. v.

(49) 3.4.1.. Model 4: Business Model Canvas. 立. 政治大. ‧. ‧ 國. 學. In this section, nine building blocks from the business model canvas is used to present how. y. Nat. n. -. al. er. io Customer Segments:. sit. Third Party Model is operated in the Daigou business.. Ch. engchi. i n U. v. Any customers who have desires for different kinds of oversea products, are the customer segments that this model is trying to serve to in the Daigou business.. Value Propositions -. To suit different customers’ needs and create values to them, positioning is divided into seven aspects, including lower price, genuineness, prestige, uniqueness, quality, limited edition as well as convenience, which are also the driving forces for the Daigou activity mentioned in the previous chapter.. 40.