WOOLWORTHS has launched a new bid for China’s insatiable demand for Australian groceries, inking a deal to ship its homebrand products to feed the nation’s growing middle class.
And Chinese shoppers are willing to pay big bucks for the normally-cheap products, which are marked up by as much as 1000 per cent.
The supermarket giant has set up an online store at Kaola.com, one of China’s largest e-commerce platforms, selling its products direct to Chinese consumers.
Close to 100 products are listed for sale in Woolworths’ Kaola store, many of them drawn from its homebrand, the Macro Organics brand it owns, plus its Aldi-style “phantom brand” private label products such as the Balnea body and bath selection — with heavily inflated prices.
A 300g buttermilk pancake mix that sells on Australian shelves for $1.50 is listed on Kaola.com for a whopping $11.50 (59RMB), while a 750g summer fruits muesli packet that sells for $3.85 here is also priced at $11.50 (59RMB).
The prices are understood reflect both the cost of exporting to China, and the high demand for Australian products. Milk powders are being sold at similarly inflated prices on other eCommerce platforms.
“Chinese customers are willing to pay a lot in order to get high quality products,” Kaola’s chief executive Zhang Lei said. “They don’t mind paying a high price for quality.” Shoppers are able to access discounts if they buy in bulk.
Ms Zhang said the company had noted shift in its top selling products, citing shampoo as a category where Chinese consumers had lifted their aspirations.
A couple of years ago, Ms Zhang said, the best selling shampoo products were priced at between $2 and $4.
Today, it’s the $20 items that are flying out the door as Chinese shoppers embrace the trend for “high-end, silicon-free” hair products.
Just as Australia’s reputation for “clean and green” dairy products sparked the “white gold” baby formula boom, middle-class Chinese consumers are snapping up our cereals, pantry goods, skincare products and even washing up liquids, at a premium.
Other Australian products for sale on Kaola include Nutri-Brex, the Chinese version of Weetbix, which has been a big money spinner for Sanitarium since local reality television star Alyssa Chia put her face to the brand, prompting Chinese shoppers to fork out $50 for a box of the wheat biscuit cereal.
Honey, coffee beans, mayonnaise, Cancer Council sunscreen, organic tampons and tea are also featured in the Woolworths online store, alongside milk powder, mayonnaise, pasta and sauce.
The launch of Woolwoths’ new online store comes as Kaola seeks to expand its partnerships
with Australian producers, which are ranked as the fourth most popular on the platform.
Kaola — the Chinese word for “koala” — operates similarly to Amazon and is owned by Nasdaq-listed Chinese online giant NetEase, which was founded by Ding Lei, China’s 10th richest man.
Woolworths has been selling directly into China since 2015, when it launched an online store at Alibaba’s Tmall.com.
That store is focused on branded products, while the new Kaola store features mostly homebrands.
A spokesman for the supermarket giant said its Chinese online business was “progressing well since its introduction more than 12 months ago on Tmall”.
“We currently market a small range of well-known private label and branded products to consumers through the platform and feedback is positive,” the spokesman said.
“In addition, we have just agreed a small presence on Kaola.com predominantly offering a range of well-known private label products.
“In both instances our goal will always be to promote Australian and New Zealand made products wherever possible.”
Other local brands that sell on Kaola include Swisse, Blackmores, a2 Milk, Manuka, Bellamy’s, Freedom Foods, Jurlique, Sanitarium and Bubs.
At Kaola’s inaugural Australian partner day in Sydney on Wednesday, Ms Zhang said the company was much more than a marketplace.
“It’s more than selling goods. We want to forge brand awareness among Chinese customers,” Ms Zhang said, adding that with a population of 1.5 billion population, “the market potential is endless”.
She noted the case of a South Korean sunscreen brand that sold like hot cakes after a reality star was filmed packing 20 bottles of it in her suitcase.
“This brand quickly became one of our bestsellers,” Ms Zhang said. “In two years, we sold 1.5 million RMB of the product. Even the supplier was surprised by the figure.”
What made Kaola different from other Chinese e-commerce platforms, she said, was its focus on providing “high quality products” that were sought-after by the nation’s middle class of more than 100 million people.
“We’re work to figure out the real needs of our customers and producers,” she said,
Trend watching and social media marketing allow the company to tap into the notoriously fickle Chinese consumer base, which has traditionally relied upon word-of-mouth recommendations, leading to the rise of the personal shopper or daigou.
These grey market middlemen play a significant role in exports to China, and drew media attention in recent years by clearing Australian supermarket shelves of baby formula to sell at inflated prices to friends and family back home. Among them are Sydney students earning as much as $100,000 a year part-time.
Ms Zhang said shopping at Kaola.com had advantages for Chinese shoppers used to dealing with daigou, which took longer and carried a risk of the goods being confiscated by customers agents.
Some of the Woolworths products listed on Kaola.com include:
• Shine dishwashing liquid — marked up from $1.70 to $9.56 (49RMB)
• 1kg of full cream or skim milk powder — $5.70 to $13.46 (69RMB)
• 100g Macro Organic penne pasta — $1.75 to $9.56 (49RMB)
• 100g Macro Organic Passata sauce — $2.50 to $9.56 (49RMB)
• 100g Little Families cookies — $1.99 to $11.51 (59RMB)
• Woolworths Select Pink Himalayan salt grinder — $3 to $11.50 (59RMB)
• Macro Organic whole egg mayonnaise — $5.99 to $13.46 (69RMB)