Newegg plans to launch an online marketplace in China
January 17, 2017 12:00 PM
Consumer electronics e-retailer Newegg Inc. will launch online marketplaces in more than 20 countries this year, including China.
The web-only merchant sells its own technology products and operates an online marketplace, allowing other merchants to sell directly on Newegg.com. The new marketplaces will allow U.S. and European manufacturers and retailers to sell products to consumers in other countries. Existing marketplace sellers will be able to list products on foreign marketplaces through Newegg’s Seller Portal system, which allows sellers to target listings and prices by region.
Newegg currently allows customers from eight English-speaking countries to shop from Newegg’s U.S. and European marketplace merchants online. The countries Newegg is expanding this year will either have access to purchasing goods from Newegg’s current marketplace or a separate site translated into local languages. It depends on the country, the company says.
Newegg, No. 17 in the Internet Retailer Top 1000 Guide, sees its biggest opportunity in China. The Chinese marketplace will incorporate local payment options, including mobile and social payment methods. Newegg also will have a mobile app just for Chinese consumers, as the majority of consumers in the country shop using smartphones, Sophia Tsao, vice president of Newegg Marketplace, says.
Newegg is entering China where online shopping is largely dominated by marketplaces Tmall and Taobao, which are operated by Alibaba Group Holding Ltd. Alibaba’s marketplaces account for about 80% of the e-retail market in China. Sales on Taobao and Tmall totaled $742 billion in the 12 months ended March 31, 2016, the end of Alibaba’s fiscal year.
Tsao says Newegg’s competitive advantages for sellers over dominant Chinese marketplaces is its relationship with its existing U.S. and European seller base and its ability to address the challenges of selling into China, such as cross-border fulfillment. Newegg plans to appeal to Chinese consumers with marketplace products its U.S. and European branded manufacturers sell.
“Chinese consumers are brand conscious and there’s demand for authentic U.S. and European goods,” Tsao says. Newegg may further be able to separate itself from other China-based marketplaces “that may have counterfeit items listed,” Tsao says.
Newegg has a Chinese website, Newegg.cn, where Newegg sells merchandise it owns. The new Chinese site will list products from marketplace sellers. When it launches it will sell goods from U.S. and European merchants, but it may allow Chinese retailers to sell on the marketplace if the interest is there, Tsao says. Newegg.cn is No. 21 in the Internet Retailer 2016 Asia 500 Guide.
Overall, the Newegg.com marketplace grew gross merchandise sales 40% in 2016, and the number of sellers grew 30% year over year.
In addition to Newegg’s e-commerce sites in the U.S., Canada and China as well as its business-to-business site NeweggBusiness.com, the retailer operates flash-sale site NeweggFlash, which offers discounted tech products. The site launched in 2015, and late last year NeweggFlash began selling inventory from Newegg’s marketplace merchants. “We saw significant growth with that,” Tsao says, so the plan for 2017 is to have more marketplace merchants sell products on the flash site.
The flash-sale model works for Newegg because electronics are continually updated with newer models and generations of products, Tsao says. Newegg’s customers are willing to purchase older generations or models of electronics such as laptops or iPads, and Newegg’s sellers will likely have inventory of older tech products as new generations are released, she adds.