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Customer Experience

What is Daigou shopping and how is it impacting your business?

luxury-retail

Written by Tony Loxton
Apr 18

The presence of the Chinese Daigou market has been a major concern in recent years for luxury retail brands who wish to gain control of their profits. A Daigou is a ‘personal shopper’ who purchases products from businesses overseas and ships them back to customers in mainland China, via courier or post. The term ‘Daigou’ literally translates to “purchase on behalf of” in Chinese.

It is an extremely lucrative practice. By avoiding import tariffs and the inflated pricing on luxury goods in China, the customer is saving money while the Daigou is making profit. Daigou shopping agents are typically Chinese immigrants or university students who are looking for an extra source of income. They use communication sites such as Weibo and WeChat to connect to their customers back in China.

Daigou shoppers have been operating a grey market in Australia for years.

The Daigou market in Australia is estimated to exceed $850 million annually, with a predicted 80,000 Daigou ‘personal shoppers’ established here. Australian luxury, health, medical and wellness goods are in high demand and the representative shopping industry has grown to become a major channel of commerce as a result of deep-rooted mistrust in Chinese products. Chinese consumers want to buy from highly respected and esteemed brands, and with a Daigou they are buying from a person they can trust.

Although there are short-term revenue benefits from Daigou sales, most Luxury brands see this activity as negative.

Lack of relationship management

Daigous impede on customer loyalty. With a Daigou as an intermediary, it is more difficult for a brand to develop a relationship with the final consumer. The relationship has deviated from business-to-consumer (B2C) to business-to-business (B2B) as the Daigou is essentially a wholesaler.

For a luxury brand, the luxury experience goes far beyond a quality product. Deep consumer loyalty is nurtured through service, craftsmanship, post-purchase care and the brand story. These key elements of luxury retail are hijacked by Daigou individual sellers.

Undercutting sales

Daigous undermine sales in China and inflate the Australian Market.

Market opacity

Technically, a Daigou acts as both a customer and a reseller. This means there is no transparency in sales data; a brand could be unconsciously dependant on Daigou shoppers boosting their sales numbers. As a result, it is difficult for manufacturers and management to anticipate demand, control stock and set prices in these misrepresented markets.

Transactional data alone cannot assist in detecting how prevalent Daigou activity is in your business.

Typically, Daigous use different payment methods and multiple transactions each time they shop. They may also visit multiple stores to avoid detection. Businesses cannot rely on their sales employees to recognise and flag Daigou shoppers. Ultimately, it is hard to identify a Daigou shopper from an actual customer.

This is where Blix steps in.

Blix Traffic is a customer experience and location analytics system that is used to measure customer behavioural trends. Wifi signals captured from smartphones illustrate how long customers spend in your store, the frequency with which they return and which of your other outlets they visit. We do not identify individuals, nor collect their personal information, but we are able to view trends from the aggregate anonymous data which allows us to determine time periods where Diagou activity is suspected. In practice, this has enabled Blix to assist customers to measure the potential impact of Daigou on their brand.

If you’re seeking to measure Daigou activity in your business and gain further insight into the behaviour of your customers, get in touch today.

Learn more about Blix Traffic for retail

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