November 3, 2016

Aldi goes online in the Middle Kingdom

Young Asian child with piggy bank (photo: DONOT6_STUDIO/Shutterstock)
Saving in Asia: Aldi wants to make a cultural contribution (photo: DONOT6_STUDIO/Shutterstock)
Nín hǎo, Aldi, a nation of savers awaits you! Germany's most profitable discounter is opening an online shop in the People's Republic of China.

The privately-run company is using Australian subsidiary, Aldi Stores, as a springboard for entry. A number of Australian suppliers have apparently already been briefed on the packaging and labelling requirements for

The domain name was secured by the Mülheim-based retail giant a number of years ago and now bears the strapline "Handpicked for you".

So when can more than 415 million Chinese online customers ignite their firecrackers and perform the dragon dance?

Usually it doesn't take much longer than a year for Aldi to begin operations once this stage has been reached. We are therefore looking for a start date somewhere in autumn 2017. Our newspaper understands that the e-commerce stall will put up for business in a free trade zone.

Experts close to the company are convinced that the discounter plans to offer more than just a few interesting specialities from Europe, which more prosperous Chinese consumers will be familiar with from their travels. They believe that Aldi intends to create a truly local assortment with products "made in Germany" as a topping.

Busy street scene in the People's Republic of China (photo: Claudio Zaccherini/Shutterstock)
Confucius say: Aldi cometh soon (photo: Claudio Zaccherini/Shutterstock)
This is surely a very savvy move by Aldi Süd (Aldi South). Chinese customers have a voracious appetite for fast-moving consumer goods from Europe, especially in product areas such as cosmetics, baby food and baby care, where consumer trust is at a premium. According to the consultancy OC&C, fmcg online sales are growing at an annual rate of more than 78 per cent in the Middle Kingdon – seven times quicker than in the US.

Meanwhile, Goldman Sachs estimates that the average annual income of China's aspirational millennials is set to double by 2024. Research group China Internet Watch therefore computes that total retail e-commerce sales will grow from $911bn this year to a whopping $1.6tn in 2018.

Aldi's no-frills proposition in online form is likely to go down very well with local consumers because the Chinese love to save as passionately as they love to gamble and have an almost elective affinity with online.

Crossing the great cyber wall

China will be the first international market Aldi Süd (Aldi South) has ever entered via cyberspace without having first established a physical store base. Currently the iconic retailer only runs an online shop in the UK after having pulled the plugs recently on a test project in Australia.

Aldi China (caricature: Oliver Sebel)
Aldi in adventurous mood: Whose afraid of Alibaba? (caricature: Oliver Sebel)
The People's Republic will provide an excellent opportunity for the discounter to hone its online skills without cannibalising existing bricks & mortar operations. Insiders believe, however, that Aldi doesn't exclude the establishment of a store network at a later date.

Surprisingly, given its legendary caution, Aldi's decision to use Australia as a launchpad for the the world's second-largest economy is said not to have been primarily motivated by legal qualms or fears as to security of tenure. Apparently, the company blanched at the tour de force required to recruit enough local personnel. "Australia is an ideal place to train staff for China," says one retail manager, and therefore a real alternative.

Watch out, there's a Lidl about

Man with Chinese money (source: Jeonhae_Shutterstock)
Money speaks all languages: Aldi does too (source: Jeonhae_Shutterstock)
There are also many hard-working and entrepreneurially-minded Chinese immigrants Down Under whom Aldi could recruit as managers. Despite its undisputed success in Oz, however, Aldi would be well advised not to tarry. German archrival Schwarz Group has recently confirmed that its Kaufland hypermarket arm is sounding the Australian market, and insiders also believe that discount subsidiary Lidl has added China to its international watch list.

Meanwhile, all those who love the fine music of words can only regret that Aldi doesn't seem inclined to team up with Alibaba, for then we could have had a joint-venture with the name of Aldibaba.

Podcast microphone (photo: Gerhard Seybert-Fotolia)
(photo: Gerhard Seybert-Fotolia)

Podcast. Click arrow to listen to an audio version of the text:

Lebensmittel Zeitung with digital sister (photo: LZ)
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: 'Aldi Süd plant Online-Handel in China' by retail news editor Hans-Jürgen Schulz on page 4 of
Lebensmittel Zeitung, no. 44, 04.11.2016. Additional reporting by fmcg desk editor Iris Tietze

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