(This Dec. 20 story has been corrected to say 40% of Estee Lauder sales were to travelling Chinese consumers including daigou sellers, and not only to daigou sellers, in paragraph 13)
By Casey Hall and Stella Qiu
SHANGHAI/SYDNEY (Reuters) - The pandemic-era drop in overseas travel by Chinese tourists and students has been a boon for Gen-Z focused online shopping platform Dewu.
The platform where users once mainly bought and sold trendy sneakers to each other has morphed into a marketplace for retailers of all sorts of branded and luxury goods.
Dewu, also known by the English name Poizon, now has 150 million active users, and hosts what retail consultants Re-Hub estimate to be nearly three-quarters of China's luxury cross-border "daigou" trade that was once largely plied by individual shoppers.
"We're getting more formal in that we're allowing some of these larger retailers and developing the tools for the larger retailers to sell into our marketplaces," said Jeff Unze, general manager for the San Francisco office of Poizon Global.
Daigou translates as 'buying on behalf of'. Before the pandemic, millions of Chinese made a living by either travelling abroad and buying items that were cheaper overseas and then reselling them inside China, or shipping items into China.
Trade by daigou was a key sales driver for many global brands including Estee Lauder, a2 Milk and Kirin Holdings-owned supplements and vitamins brand Blackmores, until pandemic-related travel restrictions ground the industry to a halt.
But, unexpectedly, these restrictions actually worked to boost the overall cross-border grey market trade, with wholesalers and platforms like Dewu taking over from individuals. The trade has grown by 40% from 2019 levels to an estimated $81 billion this year, consultants Re-Hub say.
IT'S DAIGOU BUT NOT AS WE KNOW IT
Persistent price differences between markets like Europe and China mean consumers can expect discounts of around 40% for some products, said Thomas Piachaud, the Shanghai-based head of strategy at Re-Hub. This is an obvious draw for Chinese shoppers whose travel options are limited by cost, the slow resumption of flights and lengthy wait times for visas.
"I think we have to level up our idea of daigou," Re-Hub's Piachaud said. "Essentially there's this chain from global retail to Chinese consumers not directly from the brands. That's the professionalisation of daigou at work."
While this more formal form of daigou can help retailers and wholesalers move inventory from markets like Europe, where consumers are battling high inflation and a weak economy, it can also mean missed opportunities for brands to sell directly to consumers.