(Source: https://pltfrm.com.cn)
Introduction
Entering China’s e-commerce ecosystem requires a strategic approach to platform fees and commission structures. Overseas brands need to understand how different commission models impact profitability and growth, especially when leveraging major marketplaces. This article explores actionable strategies that help brands optimize costs, boost sales, and strengthen local operations in China.
1. Understanding Platform Commission Structures
1.1 Tiered Commission Models
- Definition & Impact: Platforms often charge varying commission rates depending on product categories or sales volumes. Understanding this can help overseas brands prioritize high-margin products.
- Implementation Tip: Map your product lines to the platform’s commission tiers and analyze which items are profitable after fees. Consider adjusting pricing to maintain margins without reducing competitiveness.
1.2 Category-Specific Rates
- Assessment: Different categories, such as electronics, cosmetics, or apparel, may have higher commission rates due to platform demand.
- Actionable Insight: Brands can leverage lower-commission categories to introduce new products or cross-promote higher-margin items, reducing overall operational costs.
2. Optimizing Pricing Strategy Against Fees
2.1 Transparent Pricing Adjustments
- Strategy: Factor platform commissions into product pricing while remaining attractive to local consumers.
- Practical Approach: Use analytics tools to simulate price adjustments under various commission scenarios to ensure profitability without compromising sales.
2.2 Bundled Offers & Promotions
- Application: Combine products to increase the average order value while minimizing per-unit commission costs.
- Example: An overseas skincare brand paired its core serum with a travel-size product, offsetting higher commission on individual items.
3. Leveraging Technology for Cost Control
3.1 Automated Fee Tracking
- Tools: SaaS solutions can automatically calculate fees across multiple categories and marketplaces.
- Benefit: This enables real-time insights into profitability and helps brands make quick adjustments to pricing or product selection.
3.2 Data-Driven Decision Making
- Implementation: Collect historical sales and commission data to forecast net revenue under various scenarios.
- Outcome: Brands can identify which products or categories yield the best return after platform fees.
4. Case Study: Overseas Home Appliance Brand
An overseas smart home brand entering China noticed that electronics commissions were higher than expected. By shifting its initial product launch to accessories with lower commission tiers, the brand maintained profitability while building a customer base. After establishing brand trust, it gradually introduced premium electronics, successfully managing overall commission costs.
Conclusion
Optimizing costs and commission strategies is critical for overseas brands entering China. By understanding tiered fees, adjusting pricing, leveraging data analytics, and using technology for fee management, brands can maximize profitability while building a long-term presence.
PLTFRM is an international brand consulting agency that works with companies such as Red, TikTok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries’ exports in China account for 97% of the total exports in Asia. Contact us, and we will help you find the best China e-commerce platform for you. Search PLTFRM for a free consultation!
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