Alipay – How To Reach 520+ Million More Customers

If you want to reach Chinese consumers and potentially get a slice of the predicated $610 billion Chinese e-tailing market by 2020*, Alipay is the way to do logo

Over half of e-commerce payments in China are made with Alipay, the most widely used alternative payments method in the country. Alipay is three times the size of PayPal and almost all online Chinese consumers have an account.

If forecasts are correct, by 2020 the Chinese e-commerce market will be worth $610 billion; that’s equal to the e-commerce markets in USA, Japan, UK, Germany and France combined.

Find out more about Alipay and to offer this Alternative Payment Method through our payments gateway here.

Therefore if your business is looking to China for e-commerce opportunities, offering Alipay as an alternative payment method goes a long way to building trust with consumers, increasing conversion rates and establishing your brand in this market.

Alipay offers advantages domestically too. With 2+ million Chinese nationals living in Europe, there are opportunities to build brand loyalty with these consumers by providing them with a familiar and trusted payment method.

The Chinese tourist market is also growing with predications of over 234 million Chinese tourist arrivals globally by 2020 (source United Nations World Tourism Organisation 2015). There are opportunities for travel providers and retailers to reach these potential new customers as they plan trips abroad, during their stay, and post-trip as e-commerce customers.

Offering Alipay as an alternative payment method is an effective way to convert and retain new customers from China. The infographic below provides a snapshot of this opportunity:

alipay infographic

Demand For Western Goods

Demand for western consumer goods, particularly high-quality products and luxury brands, has increased significantly in recent years as incomes have risen and China has become a more consumer-driven economy.

Chinese consumers shop overseas for goods they cannot purchase in domestic markets, for authentic branded products, and for cheaper goods. Baby care, cosmetics and beauty products, and fashion are the dominant retail sectors for cross-border trade from China.

Buying goods from overseas e-commerce websites – or haitao as it is called in China – has also become more affordable with the Chinese government relaxing some import taxes on cross-border purchases last year. Chinese consumers now pay a flat rate of 11.9% on goods imported from overseas websites up to a value of 2000 yuan ($290). That’s lower than the 17% value-added tax consumers pay when purchasing goods in Chinese stores.

Currently 120 million Alipay account holders are using it for cross-border e-commerce. However, with 520 million active users (as of Q2 2017) there is huge opportunity in this market for western e-commerce businesses. As cross-border transactions originating in the China increase, offering Alipay could potentially open your business to 450 million new customers.

Alipay Differs From Other Alternative Payment Providers

For retailers wishing to offer Alipay as an alternative payment method, integrating it with your payment processes is straightforward. However, the platform does work slightly differently to other payment methods with Alipay holding funds in escrow until the customer has accepted the goods.

It works like this:

  • The customer selects goods and proceeds to the checkout.
  • The customer choosing Alipay has the payment method.
  • Funds are transferred to escrow.
  • The merchant is notified that the funds are in escrow and dispatches the goods.
  • The customer receives the goods and confirms they have been received through their Alipay account.
  • Alipay receives confirmation and transfers the funds to the merchant.

As the largest third party payment platform in the world, for retailers looking for global sales Alipay should sit alongside other popular alternative payment methods like PayPal. If you would like to explore in more detail how to offer Alipay to your customers and extend your customer reach, click here.

Call +44 (0)808 301 8549 or email [email protected]

*McKinsey Global Institute forecasts