Suggestion: Watch the 10 minutes video tutorial before reading this article
Many things have changed since the cross border e-commerce industry started out in China some years ago.
With that said, companies like JD, Tmall, and Kaola were launched as late as 2014-2016 and the e-commerce market is still in an infant stage.
One of the most popular marketplaces is undoubtedly Kaola, which has seen a massive growth the past years.
With that said, it’s not that easy to find summarized information about Kaola, what options you have when selling on the website, how much you need to pay, and more.
Therefore, I’ve written this article where I explain the crucial details you need to know before you start selling on this rapidly growing marketplace.
Topics covered:
- What is Kaola?
- Advantages when selling on Kaola
- Kaola market share
- How much does it cost to sell on Kaola?
- What kinds of companies sell products on Kaola?
- Process when opening a store on Kaola
- FAQ
What is Kaola?
Kaola was established by NetEase in 2015, which is one of China’s biggest IT companies.
The name Kaola literally means Koala in Chinese (考拉), as the website’s first goal was to target Australian companies, who wished to sell their products in China. I assume the name and the logo of the company might give you some hints.
However, (fortunately) the company evolved into something bigger, the marketplace has developed much since.
Despite having just a couple of years on its neck, now you’ll see companies from 80 countries selling on Kaola, it’s become the biggest cross border e-commerce marketplace in China, beating both JD and Tmall.
Keep in mind that I talk about cross border e-commerce here and that Kaola is still fairly small in terms of regular e-commerce, where products are first transported in-country, and later sold online.
Free Webinar: How to Sell Online To China & Southeast Asia
- Selling on Tmall & Lazada
- Logistics & fulfillment options
- Payment gateways
- Incorporation & trademarks
Advantages when selling on Kaola
Kaola is a marketplace with several advantages. Below I’ve listed some of the most outspoken ones:
a. Kaola has been ranked as the number one E-Commerce platform,a 6 years in a row
b. Kaola has streamlined services and can even buy products directly from foreign companies, giving you the opportunity to save costs and reduce the hurdles dealing with distributors
c. Kaola focuses a lot on food products, a product category that will see increased imports in the coming years
d. Quick payments, as NetEase has big cash reserves (according to the CEO, Ms. Zhang Lei, payments should be done within 7 days)
The only disadvantage of selling on Kaola is that the number of users is comparably low to other major eCommerce platforms. In addition, Kaola primarily reach out to foreign companies themselves and source products from overseas.
Kaola market share
As you can see in the above chart, Kaola has the biggest market share with 21,4%, tightly followed by Tmall at 17,7%. Keep in mind that this is for cross border e-commerce, while for regular e-commerce, Tmall and JD are still bigger.
Other big websites, that don’t get as much recognition as Tmall and JD, are VIP and Xiaohongshu, for example.
I feel a bit regretful of not buying stocks in NetEase, as it’s increased tenfold since 2012.
How many users are registered on Kaola?
There are currently around 30 million Chinese consumers registered on the website. This number will most likely increase over the years as Kaola gains popularity.
How much does it cost to sell on Kaola?
Let’s review how the different marketplaces normally operate and charge foreign companies, before I present the details and costs. There are 3 costs you should beware about:
- Initial deposit (refundable)
- Commissions / revenue share
- Yearly cost / product category fee
Initial deposit (refundable)
The deposit is kept by marketplaces, to make sure that you can cover unforeseen costs, such as claims, and more.
Deposits are fairly the same, when comparing marketplaces, and stretches between USD 10,000 – 15,000. Tmall can be slightly more expensive and reach up to USD 25,000.
Commissions / revenue share
You’ll also need to pay parts of your revenues to the marketplace.
Commission stretches between 2.0 – 10.0%, depending on product type. Some examples are:
- Compression socks: 10%
- Shampoo: 7%
Yearly cost / product category fee
You need to pay a yearly membership fee of USD 1,000. This is comparably low to Tmall Global, for example, which generally charges higher fees.
What kind of companies sell products on Kaola?
Kaola focuses a lot on food and beverage products, but you’ll also see a number of medium and large-sized companies selling various types of products.
Below I’ve listed examples of foreign companies that sell on Kaola at the moment:
- E-Mart
- Nescafé
- Evian
- Heinz
- Swisse
- Philips
- Nescafe
- GNC
- Evian
- Heinz
- LG
- Costco
While the most common product types are:
- Health and wellness
- Food and snacks
- Fresh food
- Maternity and baby
- Beauty cosmetics and skincare
- Personal care and home
- Clothing and shoes
- Electronics and digital products
- Sports and outdoors
Process when opening a store on Kaola
You have two options if you want to sell on Kaola. Let’s have a look at each option:
1. Sourcing cooperation (Direct procurement from Kaola)
With this model, Kaola will buy products from you directly. As a first step, you need to send an application through their website, including the following information.
a. Submit application online
The application should include the following information:
- Product category
- Company name
- Introduction about company
- Company website
- Brand name
- Introduction about brand
- Brand website
- Business model
- Major clients
- Online store website
- Annual sales (online & offline)
- Contact person
- Telephone
b. Wait for Kaola contact
Kaola needs to make an evaluation, to see if your brand and products meet the criteria. Keep in mind that Kaola mainly wants high-end brands that have operated for a couple of years.
c. Receive offer letter
Kaola sends you an offer, and you can continue to finalize the registration process.
d. Become a partner
Once approved, you’ll become a business partner.
Kaola has one of the biggest fulfillment warehouses in China and can help you to get in touch with marketing agencies and other service providers.
2. 3rd party store (PoP store or Flagship store)
With this model, you set up a shop on Kaola’s website and sell directly to Chinese consumers.
Product requirements are the same as listed above, while you need to have the following documents and meet the following requirements:
- Have a legitimate corporate entity
- Valid brand authorization
- Good credit standing and operating status
Kaola is set to open bricks & mortar stores
During 2019, Kaola opened as many as 15 bricks & mortar stores to follow the retail boom in China.
Large companies have realized the benefits of operating both offline and online, attracting O2O sellers and move more and more to Omni-channels.
JD, Alibaba, Tencent, Xiaomi, and Meituan are all companies that have done the same thing as Kaola.
For example, Kaola has opened offline stores in both Hangzhou and Zhengzhou, where the latter one is the capital of Henan province in central China.
FAQ
Below I have included some commonly asked questions and our replies. If you have any other questions, feel free to write a comment below or send us an email.
Can I sell cross-border on Kaola?
In short, yes. Kaola is the biggest cross-border eCommerce platform in China, but this doesn’t necessarily mean that the sign-up process is straightforward nor easy.
Kaola primarily buys products from companies that they identify and select themselves. With that said, it can be difficult for foreign companies to start selling on the platform.
What are the payment terms?
If you sell on Kaola you can get paid in GBP or USD once a month.
How can I manage marketing?
It’s advised to set aside around 20% of the projected turnover for marketing. This is needed to enhance brand awareness among the Chinese.
However, the marketing costs depend highly on if you’re brand is already recognized in China, what your sales targets are, in what parts of China you sell, and more.
Besides, foreign sellers tend to work with third-parties that help them with translations, customer services, digital marketing, and returns, for example.
Summary
NetEase Kaola, as it’s sometimes referred to, started out as late as 2015 but grows at an impressive pace. Within a period of a couple of years, it’s managed to become the biggest cross-border e-commerce platform, outperforming giants like JD Worldwide and Tmall Global.
Selling on Kaola brings many benefits, a reason why more and more companies decide to sell their products there. The entry requirements are lower than Tmall, for example, you also have the option to let Kaola buy your products directly from you.
With one of the biggest e-commerce warehouses in China, and being famous for managing payments quickly, Kaola is the first choice for many.
Keep in mind that Kaola mainly focuses on food and high-end products, which is preferred among many foreign companies.
