A Forrester report points out challenges faced by some business-to-business firms working online.
FocalPrice.com offers translation into 18 languages, but none of them are Chinese, reflecting the e-retailer’s strategy of selling to online shoppers around the world. One of its tactics for gaining new customers: offering a cell phone cover for a penny, with free shipping worldwide.
Founded in 2008, FocalPrice has developed into a global e-retail site focused on selling technology gadgets, such as computer peripherals. The company says it sells 70,000 items in 100 categories and generates annual sales of more than $40 million.
FocalPrice ranks No. 492 in the Internet Retailer China 500 Guide.
“Our main markets are the U.S., Europe and Latin America,” Li Peiliang, founder and president of FocalPrice, said in a presentation at the recent China Cross Border E-commerce Summit in Zhengzhou, China.
Indeed, his e-commerce site, FocalPrice.com, offers translation into 18 languages—but none of them are Chinese. It also quotes prices in 10 currencies, but not the yuan, China’s currency, though it does display prices in Hong Kong dollars.
Li says he dropped out from university in his first year and soon began selling products on Taobao, the big online marketplace in China operated by Alibaba Group Holdings Ltd. His business is located in the southern China city of Shenzhen, which is adjacent to Hong Kong, in one of the Special Economic Zones China began establishing in the 1980s to encourage foreign investment by easing labor and tax laws that apply elsewhere in the country. Shenzhen is in the middle of a major industrial area of China where there are many suppliers competing to offer products at competitive prices.
Like many e-commerce entrepreneurs in China, Li is young, just 27 years old. But he already manages a company with more than 300 employees. Many employees are foreigners who help Li pursue his strategy of selling online directly to consumers outside of China. He notes that, while many Chinese factories supply foreign brands with components and finished products, few sell directly to consumers outside of China.
They’re missing a big opportunity, he says. Li says he can sell some products abroad for five times the price he would get in China. “For example, an iPhone cover’s cost is just 10 yuan ($1.60). The retail price on Taobao.com is 15 yuan ($2.40), but I can sell it on eBay for about 62 yuan ($10),” he says.
Before launching FocalPrice.com, Li in 2006 started selling products on eBay. After launching his site in 2008, to promote it to new consumers he began offering a cell phone cover for only 1 cent and free shipping globally.
As a result, Li collected the names of tens of thousands new customers in several days, with an acquisition cost of around $1.50 per shopper, he says. Some analysts say the typical acquisition cost for large Chinese e-commerce sites is about $30 per consumer.
Delivery to consumers around the world remains a challenge. “The logistics is always a big problem for us,” Li says. “Consumers from Russia and Brazil need to wait up to 35 days for shipping to get their products. But many consumers still like to buy from us since they can get a better price. ”
To speed up the delivery, FocalPrice now operates two warehouses outside of China, one in the United States and the other in the United Kingdom. For many products, U.S. consumers are able to receive orders in three days, the company says.
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