Online platform aims to legitimise daigou trade

Heather McIlvaine

13th Sep 2017

By now, most retailers have heard of daigous (pronounced ‘die-goos’), the personal shoppers who buy Australian goods, especially natural and organic skincare, supplements and baby products, Down Under and resell them to customers in China.

Often Chinese international students or new immigrants, daigous have lifted demand for Australian goods in China, catapulting the profiles and profits of some brands to historic heights.

But many in the retail industry remain wary of the trend, citing risks like the potential for government regulation in China, consumer backlash at home and lack of control over branding, pricing and customer data.

You only have to look at the challenges infant formula company, Bellamy’s, has faced in recent years, to see that the daigou trade is a mixed bag.

“The huge sales that Bellamy’s, a2, Blackmores, Swisse and other Australian mum and baby products and nutrition supplement brands are experiencing in China demonstrates the power of daigous,” Don Zhao, co-founder and executive director of Azoya International, told Internet Retailing’s sister site, IRW, recently.

“But given it is such a grey area, there’s always a downside, such as the significant issues Bellamy had at the end of last year,” Zhao said.

“Daigous are a very grey area and the government is trying hard to regulate this market sector. It was widely reported earlier this year that a daigou was caught up in illegal sale. Therefore, retailers shouldn’t purely depend on daigous as a channel into Chinese consumers.”

The new channel: daigou to consumer

Enter Dr Matthew McDougall. He believes daigous are an affordable way for emerging Aussie brands to test the China market and has created a new platform aimed at professionalising the relationship between daigous and brands.

The platform, called DaigouSales.com, allows personal shoppers in Australia to create storefronts on WeChat, which they can share with their buyers in China, who can then purchase products.

Sellers select which products they want to stock and set their own prices. DaigouSales.com handles the sourcing, shipping and payments.

McDougall said this allows brands to benefit from daigous’ valuable word-of-mouth recommendations, while also getting access to sales data and maintaining some level of control over the customer experience.

Since the platform launched four months ago, select daigous have been invited to set up shop on the platform and over 50 Australian brands in categories like mother and baby, skincare, supplements and wine are already on board.

More sellers and brands are on a waiting list to join, according to McDougall.

Brands pay a monthly fee plus 2.5 per cent of every transaction to join the platform, while daigous don’t pay anything, unless they don’t make any sales in a month-long period.

McDougall said this is to incentivise daigous to drive sales.

“Our whole proposition is how do we help Australian brands get into the market? I’m looking at it from an Australian perspective. How do I help Australian brands get into China in a way that doesn’t cost a fortune?”

Ultimately, he wants daigous to be seen as a legitimate sales channel. Like B2B and B2C, he thinks brands should consider D2C, daigou to consumer.

“If we can create a channel that’s professionally recognised as a precursor to B2C…you can prove interest in the brand and a response to your marketing. It de-risks China,” he said.

A version of this story first appeared in issue 2157 of Inside Retail Weekly. To subscribe, click here.