How much do you want to sell the product online in China? This seems to be a stupid question.

However, this is the FIRST thing to consider before hiring a person to upload your products to Taobao, RED, and Douyin.

We will discuss this topic using Taobao as an example, as many foreign business owners like you are probably considering launching your e-commerce business in China using Taobao, which is the biggest e-commerce platform in China at the moment with 882 million active users in Q4 as of 2021*.

Case Study

You own a sports brand selling sports shoes, bags, etc., and your sports sling bag (picture 1 on the left) is selling at US$ 100 for one piece in UK and USA.

So, what price do you want to sell this bag on Taobao?

Some might laugh at this question and simply give an answer as “just convert the USD price into RMB and that is the price we will sell!“

It is all well to say so.

However, be cautious when applying a “universal price” when selling in China.

I will tell you why.

• First, let’s do a random search using Image Search with the green bag picture on the left, and among all the search results, we choose a similar bag as shown in picture 2 in the middle.

We find that similar bags are sold on Taobao at 80 ~ 200 RMB (approx. US$10 ~ US$ 30) for one piece.

• Second, let’s change another way of searching using Keywords. Type in the keyword “sports sling bag“ (休闲运动胸包) in the search bar, and it renders results as shown in picture 3 on the right. The blue circle indicates that 60% of the transactions for this keyword (sports sling bag）happened between the price range of 97-137 RMB (US$15~US$21).

  Based on the algorithm of Taobao, products belonging to the price range that has a higher chance to be transacted will be displayed to the customers first.

  In this case, the sports bag with the product tag #休闲运动胸包 falling within the price range of 97-137 RMB (US$15~US$21) will have a higher chance to be shown.

So, if we are going to sell a US$100 sling bag with the product tag “sports sling bag“, the chance is that customers will not see the product at all! Because the price is out of the favorable price range based on the platform’s algorithm.

In order for your product to be shown, a price range between 97-137 RMB is a better choice.

Some might say:

A. We have a good brand, and it is very popular in the USA and European markets, and we are selling one bag at US$100, we don’t want to lower the price. Is there a way to maintain this price and optimize the search result?

B. If we sell one piece at US$25, we will lose money. Is there a way to sell at a higher price?

C. Our quality is much better than those cheaper ones and we are targeting the higher income market such as Beijing, Shanghai, and Shenzhen, not 3rd tier cities or mass market. Can we only target these markets instead of the whole China market?

Before searching answers to the above, ask yourself these questions first:

1. 【Is your brand famous in China? Will consumers search for your brand directly on Taobao or Baidu? Have you done any marketing campaigns in China before? 】

   If the answer is “Yes“ and the brand is as famous as Nike or Lululemon, then it is very ok to maintain the price at US$100 per bag, as a consumer is looking to buy your brand, not just a product that bears the feature as a sling bag.

   If the answer is “No”, then, unfortunately, you are competing with the locally produced product, and your brand building in China need to start from scratch.

2. 【What is the budget you have for advertisement?】

   Statistics show that advertisement spending ranges between US$500 to US$ 8,000 per month on Taobao usually generates a steady traffic of 1,500 visitors to 40,000 visitors per day.

   In Picture 3, you might find that on the right corner of the page, the bag is sold at 138.6 RMB, which is higher than 137 RMB. This happens in the following scenarios

   1) the shop promotes this product with the paid advertisement;

   2) the shop has a higher rating based on past performance, and Taobao thinks that for this keyword, this shop can deliver a better result than other shops, thus Taobao pushes this shop forward.

Now, let’s get back to answering the questions from A to C.

A. Yes, if your brand is famous enough in China, then sticking to US$100 per bag does not hinder the consumer from buying. Since buying on Taobao, JD.com or RED makes no difference to the customer, they are buying your brand;

However, if you are not sure that the customer will search for your brand, then let’s be realistic.

B. If selling at US$25 per bag does not make sense to you, and suppose the break-even point is at US$30, there are 2 ways to solve this problem:

1) Change product category.

Under the category “sportswear“ with the product tag “#sports sling bag“, most bags are sold below 137 RMB. While it happens that product with the same picture but belong to another category, such as “#男包“（#bag for man), is sold within the price range of 49-328 RMB. (328RMB is much higher than 137RMB, oh yeah!!!)

2) Sell this bag together with some accessories as a combined offer. Be different.

Suppose your product is lucky enough to get exposure in the search result, while others are offering the sling bag at US$25, your package is “a sling bag + a designer belt” and is sold at US$48. With nice pictures, the customer might click in and compare the offer.

C. Promote the product to clients in selected regions.

Most eCommerce platforms in China provide ad allocation in selected regions with other customizable parameters. Discuss with your eCommerce manager and analyze the data before running an ad.

Running an ad is the last thing to consider.

Product price, pictures, product details/descriptions, and videos shall be prepared in advance properly according to the platform’s requirements.

Uploading products and pictures to eCommerce platforms is just the beginning of the journey.

Have questions for Koh’s Development team? Leave us a message.