The Cross-Border E-commerce Journey of Wig Merchant "goodseolink"

Release time:2023-08-12 10:30

The Cross-Border E-commerce Journey of Wig Merchant "goodseolink"

Among the most popular export commodities for foreigners on Chinese cross-border e-commerce platforms, wigs have emerged as a surprising dark horse, ranking third in sales volume only after clothing and mobile phones. This trend is somewhat unexpected. Due to the substantial demand for wig products among overseas consumers and the high profit margins associated with these products, selling wigs online to international markets could become a highlight for China's foreign trade e-commerce.

As reported by from the "Information Times," the wig merchant goodseolink from Guangzhou has embarked on the wig business on a well-known overseas e-commerce platform. For entrepreneurs, choosing the right product, target market, and customers is crucial. In the beginning, goodseolink did not start his business with wigs. After graduating from university in 2007, his initial venture was in online foreign trade wholesale of coir mattresses. However, after a year of development, he found that the market for coir mattresses was relatively small, and it was difficult to obtain supplies during peak seasons and slow business during off-peak seasons. He then began considering a transformation. At this point, a friend introduced him to the wig export business, which marked his entry into the wig market. He replaced all the products in his online store with wigs, shifting away from coir mattresses.

Wigs are often not highly visible, but their potential market is substantial. It is reported that producing a set of wigs in the United States costs around $500 to $600, while Chinese sellers offering wig products through online foreign trade platforms have an average price of around $100. Even with the cost of DIY maintenance added, Americans purchasing wigs from Chinese sellers online only need around $300, saving half the cost.

Goodseolink told reporters that his main target customers are the dark-skinned populations in high-income overseas markets, primarily focusing on the European and American markets. This preference for dark-skinned groups is due to the fact that people with darker skin tend to have slower hair growth due to physiological reasons. To maintain their appearance, they require a significant amount of wigs, often changing them every one to three months.

While participating in a wig expo in Atlanta, goodseolink further experienced the characteristics of African American culture. In the music-filled atmosphere of Atlanta, there is a significant demand for wigs among the African American community. Some even jokingly say, "Black people can go without clothes, but not without wigs," highlighting the magnitude of the demand.

Furthermore, he found that Chinese products remain highly competitive by selling directly from the factory to consumers through online foreign trade platforms. He observed that the wig business in Atlanta was mostly monopolized by Korean manufacturers, with many physical stores run by Koreans. However, Korean manufacturers primarily source their products from China. Therefore, Chinese manufacturers still have significant opportunities to enter this market through online foreign trade.

Goodseolink stated that apart from the relatively lower prices compared to the U.S. domestic market, the quality control of products and superior service are the main reasons his store stands out in terms of sales. Being the original producer provides an advantage over Korean manufacturers in the American market.

However, in the process of development, challenges are inevitable. On one hand, the wig foreign trade market has become increasingly competitive over the past year or two, which has exerted significant pressure on them. On the other hand, rising domestic prices and the declining exchange rate between the U.S. dollar and the Chinese yuan have created difficulties for many small and medium-sized export sellers, putting pressure on costs. Nonetheless, for this potentially huge market, goodseolink remains confident about the future, stating, "In the future, I believe our physical stores will also open in Atlanta."

Ren Rongwei, the Director of Teaching at the School of Entrepreneurship of Sun Yat-sen University, believes that there will be more and more small-scale cross-border e-commerce in the future, forming a trend. Investment trade through the internet will increase further, and export trade will become a new highlight in e-commerce. Once an online trading platform for "selling out" is established, it will provide more opportunities for many small and medium-sized sellers.

He believes that wigs are just one aspect of this trend. The popularity of wigs also relates to the foreign demand for wigs and the habit of using wigs for personal adornment, along with the price advantage of Chinese wig products. This has led to their popularity in markets in the Americas and Europe. He mentioned that not only wigs but also other small commodities, such as many Christmas-related products, can be exported through this avenue.

Currently, China's wig exports account for over 70% of the international market share in small-scale cross-border online transactions. U.S. wig imports make up 62% of the world's total wig imports. In addition, the global online foreign trade platform AliExpress has revealed that the trade volume of wig-related products on the platform has grown rapidly since 2011. From early 2012 to March of this year, the daily transaction volume of wigs on the AliExpress platform has grown tenfold, and by 2014, it may capture a quarter of the U.S. market. Wig exports might become a highlight for China's foreign trade e-commerce.

Since goodseolink deals with relatively high-end wig products, which often consist of genuine human hair that can be DIYed, their prices are higher compared to non-genuine hair wigs. The prices for a set of wigs range from tens to a couple of hundred U.S. dollars. This requirement for higher quality wigs sets a certain threshold for their target customers' income level. Consequently, their products are primarily aimed at the European and American markets. Although the African market has a large number of potential customers, it is not currently their main target due to limitations in consumer purchasing power.

In the initial stages of conducting online wig foreign trade wholesale, goodseolink managed all the processes by himself, including procurement, order follow-up, and shipping. This solo effort yielded good results, with his business reaching ¥30,000 (Chinese Yuan) in the first month and then ¥100,000 in the second month, indicating rapid sales growth. Consequently, in the third month, he began hiring staff, including business personnel, purchasers, and back-end operators. He also registered a company in Panyu, which eventually reached ¥150,000 in monthly business by the third month.

When the business reached a certain scale, goodseolink considered financing. He found that sellers engaged in this type of small-scale import-export trade were constantly shuttling between China and the United States to procure goods and find manufacturing partners. Due to the significant pressure on wig inventory, they often faced challenges during peak seasons when supplies ran out. In order to solve this capital issue, he began seeking partners. In 2011, he established a new company with two partners from his hometown, with a registered capital of around ¥3 million, where goodseolink held a 40% stake. Over a year after the establishment of the new company, the partners separated due to disagreements. During this time, the company's operations continued to thrive, growing from a few employees to over 40. Revenue also increased from ¥300,000 per month to ¥4 million per month.

Last year, goodseolink separated from this company and began focusing on the retail business on the online foreign trade platform. Initially, his monthly revenue gradually increased from around ¥300,000 to about ¥1.5 million ($150,000) in USD. In March of this year, with the development of the platform, his wig business reached its peak.