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How Amcal built a direct market presence in China

Building an online brand presence in China is a top priority for many retailers today. But few companies are able to form personal relationships with Chinese consumers to gain a better understanding of their wants and needs.

That was the idea behind a recent meet-and-greet campaign organised by Azoya, an e-commerce solution provider that specialises in helping global retailers break into China.

The ‘Walk into Australia and New Zealand’ campaign brought 12 influential Chinese online shoppers and opinion leaders Down Under to tour the warehouses and stores of retail pharmacies that have recently launched e-commerce websites with Azoya in China.

Amcal, a retail pharmacy brand owned by Sigma Pharmaceuticals, was one of five retailers that met the Chinese delegation at the end of August.

“We brought in a lot of our key suppliers who presented their products to the group and we educated [the Chinese delegation] on the history of the Amcal and Sigma brands,” Claire Pallot, general manager of multi-channel at Sigma Pharmaceuticals, told Internet Retailing.

This heritage is a key differentiator for Amcal in the Chinese market. “A lot of pure-play start-ups [in China] aren’t providing genuine products from manufacturers, they’re accessing the grey market. It was important to show that we have a genuine relationship with our suppliers and are selling authentic products,” Pallot said.

Questions about product safety and use were especially common during the tour. “They wanted to understand the active ingredients in the products, who they were for and any side effects. For instance, there were a lot of questions about what’s suitable for women who are breastfeeding or pregnant, and what was safe for babies,” Pallot said.

Australia’s strict regulation of pharmaceutical products and its reputation for quality was another area of interest. “The quality of the product seemed much more important to [the Chinese influencers] than the price,” Pallot said. “So they could tell their audiences, ‘we’ve been to the [physical] site, this is a real company, we’ve seen the products being picked off the warehouse shelves’.”

Sigma Pharmaceuticals launched the Chinese version of Amcal’s e-commerce site in June and attributed a small part of its FY15 earnings to the online business. Sales for the first few months have been double the company’s expectations, according to Sigma Pharmaceuticals’ CEO Mark Hooper.

“We’ve found that a lot of the high sellers, like milk formula and Lucas’ Papaw Ointment, which have been popular with Chinese consumers through other channels, is also selling well for us,” Hooper said.

Ensuring Chinese consumers trust the Amcal brand will be a key factor in its cross-border success going forward, and getting influential Chinese shoppers on board is a crucial part of that. “The channel you need to use to communicate with consumers in China is very different from what we know in Australia,” Pallot said. “Google doesn’t factor at all, while social platforms are huge.”

Brand awareness is particularly important for Amcal, as it decided to establish a direct market presence in China rather than go through a marketplace like Tmall.com. “It’s really a longer term strategy. If we went into a marketplace, we would have been among all the other brands. And we wouldn’t have been able to offer our full range of 8000 products,” Pallot said.

Amcal’s Chinese e-commerce site not only carries the brand’s full Australian range of products, but it is also linked to the Australian e-commerce site, so people can flick back and forth between the two sites. This is intended to reassure Chinese customers wary of legitimate-looking brands that actually redirect customers to fake sites, a common e-commerce practice in China, Pallot said.

These choices are the result of Pallot’s research into Chinese customers’ concerns about buying products online, as well as Azoya’s deep understanding of the market. The importance of getting it right in China cannot be overstated, according to Pallot. “We see China as being really important to our future growth. The Chinese middle class makes up 50 per cent of the world’s middle class population.”

While Pallot said further expansion is not off the books, at this stage, Sigma Pharmaceuticals is not planning to enter other markets or set up bricks and mortar pharmacies in China.

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