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Daigou darlings: the boom of Chinese personal shoppers

livia wang daigou daigous chinese personal shopper shoppers baby formula

Chinese personal shoppers, known as daigous, hit the front pages two years ago by cleaning out stocks of infant formula from Australian stores for sale in China.

Some newspapers slammed the practice for being “shonky” and a “black market”. Locals fretted that their babies would go hungry.

But daigous now are a legitimate and powerful way for Australian businesses to sell anything from Ugg boots to health supplements, skincare products and processed foods directly to shoppers in the world’s largest market.

They have upended the traditional Western sales model where slick marketing by consumer goods companies is used to entice consumers. TV ads, social media and billboard campaigns are their tools of trade.

But daigous use word of mouth, personal networks and social media to generate bulk orders from shoppers. Product makers are at the tail of the chain, not the head.

There are many daigous, a number being one-time students, and their daily exports are blossoming.

There is now even an ASX-listed company, AuMake International, servicing daigous via warehouses in Sydney and Perth and five stores, including one in Sydney’s George Street shopping mecca. There are hundreds of such outlets around Australia but they don’t need street-level shopfronts. Mostly they are out of sight.

The queen of the daigous in Australia is Livia Wang. She, however, is not a personal shopper.

Wang migrated to Australia a decade ago from Taiwan after working in public relations. There, many of her clients exported goods to China.

Years before daigous existed anywhere in the world, she learnt valuable skills that helped her establish a thriving trade consultancy in Sydney’s Milsons Point.

Her clients are a web of Australian and New Zealand brands selling into China and daigous.

“In Australia, there are around 60,000 daigous who make a living out of selling products,” says Wang.

“That is a lot. Every year from 2016 that number has grown by 30%. Each day we send to China around 40,000 to 60,000 parcels.

There are another 20,000 parcels being sent per day from New Zealand. That is one box being sent to one purchaser in China.

Why don’t Australian businesses see the opportunity? Ecommerce has become mature. Daigous are there for a reason – because their family and friends trust them as a sourcing channel.”

Wang says each shipment is worth about $50 to $60, meaning that total daily exports by daigous could now top $1 million.

Wang migrated to Australia in 2008 to study for a degree in public relations from the University of Sydney.

“I never thought I would have a business of my own. I wanted to work for someone else.”

She took a job waitressing at a nearby coffee shop and eventually married her boss.

“When I met Sean, we opened hospitality businesses, first one then another and then another one. It was all very successful until the third one.

It had 100 people, and we thought we could make money but it was such hard work. We didn’t know that a liquor licence was required but it took a year to be approved.

“We had to pay the staff and keep the business running. It looked like a wine bar but we couldn’t sell wine. I got down to $3000 in my bank account. I either had to sell the house, go bankrupt or find a way to use those dollars. I chose the third. I spent the money on a business coach to help me start again.

“That took a year, and I rebuilt the business to where it should have been. I worked very hard to get that back and when it got towards break-even I sold it. I learnt that I had to be very, very humble.”

Four years ago Wang switched towards what she does now. Initially she believed that public relations would be difficult in a country where she didn’t know the language well.

But she spotted an opening in the local Chinese market, in particular copywriting and correcting spelling mistakes she noticed in Chinese newspaper ads.

“I judged that they were not using professional agencies, so I sold my restaurant and hospitality business and set up my agency to help them.”

AccessCN was born. Initially it helped small local companies like restaurants and event promoters sell to Chinese tourists by revamping their websites and translating promotional material. But this market was too small. She switched focus to persuading Australian companies that China was an important market.

“The first year a lot of people refused the opportunity,” says Wang. “They did not think China was their thing. They thought that New Zealand was next and then Europe and America. They thought that China was not a developed country – too difficult and too hard. They didn’t know the scope of the market. There was no ecommerce platform so they could not gauge the potential. It took a lot of time to educate them.

“We trialled a number of small cases on social media to see how much traction they could get and had some amazing trial results. I used those cases as evidence to win larger companies like David Jones and Westfield. They came on board. That was only in the very early stage, and since then the business has developed on a much broader scale.”

Wang used social media to access the local daigou community, and was well placed when the demand for infant formula soared.

“The strategy was to leverage the daigous to endorse the brands when their family and friends asked them, ‘What should I buy?’

“We used social media to influence the daigous. We tried a lot of strategies, like introducing them to products so they could influence other buyers. They used ecommerce platforms to sell to Chinese buyers. This journey was clear from day one. We knew it would work. But Australian brands did not understand daigous. How could there be an industry that is not retailing – it is not commerce? It is social commerce! That is the phrase we use.”

Her clients did not understand the potential of the daigou sales channel. They did not know who their customers were, seeing them as people raiding supermarket shelves.

“I sensed a risk. If the daigous didn’t have enough support, they would be out of business. Then, how could manufacturers sell directly to China? No way. The market is too big for them.”

Wang’s solution was to host a daigou conference in Sydney, an event that shot her to fame because of its coverage in the media. Her focus was to showcase Australian brands to daigous.

“That event in Darling Harbour saw 5000 daigous register in the first two hours to attend the brand expo. The media was shocked at the number of people.”

The numbers have continued to grow since but Wang now says the market is flooded. Her approach has changed again, and she has no plans to stage another expo.

“There are too many daigous. If they all talk about different products, they don’t have enough influence. The message doesn’t get through. For example, when they were all talking about infant formula, they were talking about three brands – Aptamil, Bellamy’s and A2. None of the daigous were talking about any other brands. It was a very concentrated message.”

Part of the solution is for daigous to form alliances to regain their sales influence. Some now share offices and clients.

Even so, Wang says there are still too many. She also doubts that the emergence of daigou stores and warehouses will provide a solution. They showcase products in retail-style formats, then package and ship the goods they sell to daigou clients in China. But Wang warns that these stores are not influencers themselves. If daigous don’t like their products, they don’t buy.

Wang’s answer is to capitalise on the relationships she has established to sell daigous product via a mobile app. Her brands are small or medium sized, and a core sales strategy is to be China focused. The products often are not commonly known in Australia.

Wang’s office in Milsons Point must be one of the only ones without a harbour view. There she employs 24 people and has another 60 in China.

She describes the growth of her company as being “very large” but is reluctant to mention figures. More than half of net profits are ploughed back into the business.

“I like the model to be very agile and flexible because I have to keep up with the pace [of change]. I have to be very paranoid.”

Written by Alan Deans

Alan Deans

Alan Deans is senior partner at Last Word Corporate Communications, and is a former journalist and editor.

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  1. Hello, My name is Geoff and I am an investor and barrister. Great article. I have noticed that recently all the Infant Formula ASX companies have fallen from their Feb/Mar highs; Wattle fell from $2.68 on 27 February 2018 to now $1.10. Bellamys has fallen from $22.52 on 27 March to now $12.18, and A2M was $13.17 on 21 March and is now $9.70. Also, Coles and Woolies are increasing the availability of infant formula on their shelves. Any idea what is happening? Thanks. Regards, Geoff Dennman

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