In its second-largest acquisition, Amazon buys the company for $970 million.
Logistics and customer service provider transcosmos launches a web site featuring Japanese products but designed to suit the preferences of Chinese shoppers.
Japan-based transcosmos Inc., a provider of contact center, marketing, logistics and other services, has launched a new web site in China to facilitate online sales by Japanese brands and retailers.
Chinese consumers can place orders at Yifanshop.com, which then transmits the orders to the Japanese companies selling on the site. They send it to a transcosmos warehouse in Japan, where Japanese courier service Yamato Holdings Co. will pick it up and handle delivery to the Chinese consumer.
Transcosmos, which also operates warehouses in China where Japanese companies can store goods for sale on Chinese online marketplaces, is moving to the cross-border model of shipping only when shoppers place orders in part because of recent changes in Chinese regulations that make it easier to move parcels through customs and reduce taxes on imported goods.
Japanese apparel retailer Uniqlo Co. Ltd. is among the clients of transcosmos in China, says Yongming Zhan, president of transcosmos information creative (China) Co., the Tianjin-based subsidiary of transcosmos.
Speaking last week at the 2014 Cross Border Conference China in Shanghai, Zhan said that transcosmos stores Uniqlo products in its warehouse in China and sells them through Chinese online marketplaces, such as Alibaba Group Holding Ltd.’s Tmall.com and JD.com as well as on Uniqlo’s Chinese ecommerce site, Uniqlo.cn. Transcosmos helped Uniqlo build the site and handle customers service, inventory tracking and order management. Uniqlo pays undisclosed service fee to transcosmos, but not a commission on sales.
JD.com is No. 1 in the Internet Retailer China 500 and Uniqlo is No. 107. Alibaba, operator of the huge Taobao and Tmall marketplaces, accounts for 80% of online retail sales in China but is not ranked in the China 500 because it, like eBay Inc., provides a shopping portal for other merchants and does not own inventory or sell goods itself.
Once its new China web site has been operating for a while and transcosmos knows what items sell well in China, the company may bring in large quantities of popular items from Japanese clients and store them in a warehouse in one of the free trade zones near major Chinese cities.
That would lower shipping costs when consumers place orders, Zhan says. To encourage more Japanese retailers to enter the Chinese market, Transcosmos has decided to change from charging fixed services fee to charging clients by a percentage of sales. Zhan said that could reduce the risk for Japanese retailers beginning to sell online in China.
Zhan says the new e-commerce site, Yifanshop.com, will be customized to the preferences of Chinese online shoppers.
“We will only provide selected best products and translate all their descriptions into Chinese,” he says. “We also designed the site according to the habits of Chinese consumers.” Chinese consumers and Japanese consumers are different. For example, many Japanese sites seem too crowded, and some blinking banners, which are normal in Japan, are dazzling to most Chinese.”
Yifanshop.com now sells hundreds of Japanese products in six categories, including electronics from Sony Corp. and food products from Meiji Co. Ltd.
Zhan estimates the gross profit margin of Yifanshop.com is about 25% and could increase to more than 30% if Transcosmos can accurately forecast sales and ships products in large volumes to tax-free warehouses in China.
China’s national government is currently allowing six Chinese cities to test cross-border e-commerce projects. Overseas retailers can speed up the customs clearance process and reduces customs duties by shipping items into China through those six cities: Shanghai, Chongqing, Hangzhou, Ningbo, Zhengzhou and Guangzhou.
Zhan said online shoppers in China are ordering more online each year from Japan and the United States. Chinese consumers bought 119.9 billion yen ($1.18 billion) worth of goods from Japanese e-retailers and 166.9 billion yen ($1.64 billion) from U.S. online merchants in 2012, Transcosmos says.
“As the yen has continued to depreciate since the second half of 2012 while the Chinese yuan appreciated, the orders received by Japanese e-retailers from Chinese consumers jumped by 100% in 2013,” said. He said the most popular product categories were maternal and kids, beauty, nutrition and consumer electronics.
Transcosmos has 20,000 employees and branches in more than 90 countries. The company last year paid nearly $15 million for a 20% stake in PFSweb, a U.S. company that provides contact centers and fulfillment services. The two companies said they would work together to help Japanese companies sell in North America and North American companies sell to Asia.
Zhan said that U.S.-based discount fashion e-retailer Bluefly Inc., No. 218 in the Internet Retailer Top 500 has agreed to use Transcosmos’ services to enter China.