NetEase Kaola pledges €2.55 bn to US brands

As Chinese shoppers increasingly demand US brands, NetEase Kaola will capitalise on this by committing to purchase €2.55 bn worth of US-branded products. This is set to take place over the next three years.

Luxury goods and cosmetics are among the top product categories that NetEase Kaola proposes to bring from the US to Chinese consumers.

Tripling figures​

“This decision will vastly increase access to US brands for China's rapidly growing segment of middle-class consumers, which according to current industry estimates have exceeded 109 mn”, NetEase Kaola, which is owned by leading Chinese internet technology, NetEase, announced in a recent press release.

Currently, the second-largest source of products sold by NetEase Kaola, Lily Lei Zhang, CEO, of NetEase Kaola, visited the US in October. There, she announced the platform’s aim to bring the number of US brands on the e-commerce platform from almost 900 to 3,000 by 2020.

Focusing on the changing needs of consumers, Lily Lei Zhang, CEO, NetEase Kaola, commented: "As Chinese consumers become increasingly sophisticated, their focus has shifted from pricing concerns to a search for high-quality and reliable brands, as well as an enhanced and tailored user experience.” ​

“With our unique insights into the needs of our customers, who are largely well-educated young women living in China's major cities, we believe that we will be able to help them discover the exclusive American brands that speak to their individual style,”​ stated Lei Zhang.

Key partnerships​

Household names including Gerber, GNC, Herbal Essences, Huggies, Levi's and Revlon all feature on the e-commerce platform. In October 2017, NetEase Kaola also strengthened its beauty, health and nutrition portfolio by signing four additional partnership agreements with Aqua+, Garden of Life, Ocean Spray and Wei Beauty.

In light of this expansion and to ensure it can successfully meet its surging demand for US products, NetEase Kaola is upping the capacity of its US warehouses before the end of 2017, by adding one in New Jersey.

This New-Jersey based warehouse will complement the three existing warehouses situated in “the key transportation centres”​ of Los Angeles and New York.

Through the roof ​

Singles Day celebrated its ninth anniversary this year on 11th November. NetEase Kaola participated for the first time in 2016 and witnessed “sales in the first 23 minutes that managed to surpass the platform's total sales for all of 2015”.​ Building on this success, in 2017, there were more than more than 30,000 products from approximately 900 US brands available on NetEase Kaola.

As “millennial Chinese consumers are increasingly choosing well-recognised and trustworthy brands, even indicating their willingness to pay a premium for such products,”​ NetEase Kaola is turning its attention to the US for its next stage of growth.