HONG KONG -- Lucy Wang used to reach out to her surrogate shopper whenever she wanted to buy baby products from overseas. The mother of two in Shanghai would receive the items within days, delivered by hand by her proxy agent, a flight attendant who runs a side business helping local customers purchase highly sought-after items abroad.
Personal shoppers, known as daigou -- Chinese for "buying on behalf of" -- have been one of the major channels for Chinese to get their hands on products unavailable at home, or are cheaper abroad.
But with the coronavirus pandemic having grounded most international flights, the multibillion-dollar daigou industry in China faces an unprecedented challenge. The disruption has encouraged shoppers like Wang to search for alternatives.
"I desperately need another way to buy reliable products overseas," she said. "But ordering directly from foreign e-commerce marketplaces is much harder than I thought. Many of them can only ship within their country, or charge an expensive shipping fee."
Even as major brands and retailers emphasize online sales to make up for sales lost to the pandemic, international shipping remains a barrier for many shoppers. This has bred peripheral services, including cross-border transshipment and middleman platforms that are able to plug the market gap.
Wilson Chan, CEO of Hong Kong-based transshipment service Buyandship, says his business grew threefold in the first quarter of 2020. (Photo by Michelle Chan) Hong Kong-based Buyandship has built its business by providing transshipment services to consumers in Asia. After a customer purchases an item from a foreign website, the parcel is first sent to an overseas storage facility before being reshipped to the buyer's home country. The shipping cost can be as low as 22 Hong Kong dollars ($2.85) a kilogram.
The company operates warehouses in the U.S., Italy, Japan, Australia and mainland China. It has more than 750,000 users across Asia, helping teenagers in Taiwan buy limited-edition sneakers in the U.S., say, or families in Malaysia acquire kitchenware from Europe.
Demand for transshipment services has soared as the pandemic prompts more people to shop online. Buyandship says its business, as measured by number of orders, grew threefold in the first quarter of 2020 compared with the previous quarter.
"The first quarter is usually our low season, as all the Christmas and year-end sales have ended," said Wilson Chan, CEO of Buyandship. "This is really unprecedented."
Although the spike in demand was initially driven by coronavirus-related purchases, Chan says more buyers are becoming long-term users of the service as the retail price difference between countries encourages shoppers to explore and compare products on various websites around the world.
"On average, our customers can save about 30% by buying from websites in the U.K. or the U.S.," Chan said, citing an internal survey. "It's a good deal, even [though] some products might be taxed by customs during shipment."
The growing number of customers taking advantage of this internet arbitrage has attracted bigger players. SF Express, one of the largest logistics companies in China, in recent years has expanded its transshipment platform, SF Buy.
Shota Naoi, CEO of Beenos. It collaborates with more than 2,200 websites in Japan, allowing foreign shoppers to purchase from websites through its third-party platform. (Photo courtesy of Beenos) But tapping new markets overseas can be difficult for businesses that have long relied on big domestic markets.
Many e-commerce sites in Japan, for instance, shun overseas customers, put off by the intricacies of international sales and customer support, according to Shota Naoi, CEO of Tokyo-based Beenos, which operates a "proxy purchasing" platform called Buyee.
Because many online retailers in Japan only serve local buyers, Buyee collaborates with more than 2,200 e-commerce websites in the country, including online marketplace Rakuten and secondhand trading site Mercari. This allows shoppers overseas to purchase from these websites through its third-party platform.
"There are a lot of high-quality brands in Japan that have attracted huge interest from overseas buyers, but many companies here don't know how to service overseas customers," Naoi said. "So our platform is here to connect them to the international market."
"Since people cannot come to Japan for shopping nowadays, our online sales have increased significantly," Naoi said, adding that items such as toys, video games, comic books and magazines are particularly popular with international customers.
While the coronavirus pandemic has brought about a behavioral shift among shoppers -- a Nielsen survey suggests 93% of consumers around the world will now consider buying online -- the global economic recession is clouding the outlook for cross-border e-commerce businesses.
Before COVID-19 began inflicting havoc on the world, market research specialist Euromonitor International estimated that cross-border e-commerce in the Asia-Pacific region would grow nearly 130% between 2019 and 2024.
"We are currently revising our numbers in light of the new situation, but we would expect a similar trend directionally, despite the pandemic," said Simon Haven, a senior analyst at Euromonitor.
Chan of Buyandship said he is "cautiously optimistic" about the business outlook, as prolonged travel restrictions are likely to drive the purchase of foreign products online, even though the dramatic growth of the first quarter has since slowed. "We are still seeing a gradual growth in long-term users," he said.
Meanwhile, Naoi of Beenos believes demand for cross-border e-commerce and related services is here to stay. "From the perspective of consumers, it is always good to have access to more products around the world and get the best deal."
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August 23, 2020 at 10:00AM
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