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Proxy Shopping

Taiwan's Borderless Buying Binge


Taiwan's Borderless Buying Binge

Source:Ming-Tang Huang

Buoyed by the strong NT dollar in recent months, Taiwanese are making more and more overseas purchases. Proxy shopping has become a viable platform for great savings and new opportunities.



Taiwan's Borderless Buying Binge

By Jerry Lai
From CommonWealth Magazine (vol. 472 )

How can you take advantage of the sizable appreciation of your new Taiwan dollars? Many prudent consumers are finding clever ways to get good deals, and some whizzes are organizing group purchases to squeeze out maximum benefit in exchange rate differences, handling fees, bonus gifts and credits.

A shutterbug nicknamed Cakes holds with relish a new lens he acquired from the United States via proxy shopping purchase a few days ago. In late April he spotted a post on Taiwan's biggest Pentax fans' forum volunteering to buy lenses from the US for other members. Cakes did some calculations and found he could save over NT$7000 over the lowest price for the same item in Taiwan.

The huge savings convinced Cakes to join in the group purchase, which totaled over NT$200,000 in credit card charges.

Statistics show that the overseas buying trend is gathering momentum. After the US dollar began weakening last year, overseas credit card receipts on purchases made from Taiwan set a new record, reaching NT$83.8 billion. Many of the charges came not from overseas travel but group purchases.

The NT dollar has come on surprisingly strong against the US dollar this year, lending greater impetus to overseas shopping. After the NT dollar broke the 29.5-to-one barrier against the greenback earlier this March, the value of overseas credit card charges jumped to NT$7.8 billion for the month, for a 15 percent on-year rise.

Taiwan's biggest proxy shopping network, My Day, has received a growing number of orders exceeding US$1000 lately, clearly demonstrating the rising purchasing power of Taiwan residents shopping abroad. The driving force behind this push, of course, is the relative appreciation of the NT dollar.

Keenly recognizing the business opportunities at hand, financial institutions like Cathay Bank, Fubon, and Citibank, and credit card companies like VISA and MasterCard have aggressively introduced special offers for foreign currency charges, facilitating borderless shopping.

Each night more and more people are like Cakes, checking Internet sites from the US, Japan, Hong Kong and China for deals on all sorts of items.

An analytical report by Access Rating Online (ARO) found that the number of discreet hits from Taiwan to rose by 40,000 visitors in March compared to February, while an average of 900,000 visits were made to the Chinese auction site Taobao. Meanwhile, the number of cyber bargain hunters browsing Yahoo! auction sites based in Hong Kong and Japan is rising significantly.

Proxy Shopping Is Good Business

My Day, which specializes in sourcing products from the US, Japan and Korea, receives thousands of orders each month. The company's orders have grown over 20 percent over the last couple of months.

Responding to its rapidly growing inventory demands, My Day is looking to expand its office spaces. Japanese merchandise has long had a special place in Taiwanese consumers' hearts, but because Japanese merchants often make little accommodation for overseas sales, many Taiwanese find it necessary to use shopping services.

Many small-scale auction sellers go to My Day for its Japanese-language services. The record single order sum currently stands at over four million yen for antique copper utensils.

Shopping services consist of two types:

First are items that are unavailable in Taiwan or whose Taiwanese launch date lags behind other regions. For instance, while people are lining up around the world for the new iPad 2, it remains unavailable in Taiwan. Yet over 20 buyers have gotten their hands on one via My Day. Some buyers have enlisted the site to source limited edition figurines for them, sometimes necessitating a waiting period of up to three months.

Taiwanese enthusiasts of other famous brands without local importers, like Victoria's Secret, Abercrombie & Fitch, and American Eagle Outfitters, are also forced to import their products through shopping agents.

Other incredible items, like rare antiques or customized auto parts, account for over 20 percent of the site's sales. Custom car enthusiasts favor imported items, of course, in an effort to be different.

Second are items that are available in Taiwan but are prohibitively expensive. For instance, for the price of one Uniqlo shirt sold in Taiwan for NT$1290, one can purchase two shirts from Japan through a shopping proxy site and still have some change left. Proxy shopping can be addictive, and the enthusiasm for smart sourcing and savings can be infectious, as satisfied buyers tell their friends and relatives about all the great deals available.

European boutique items, popular long before the advent of the Internet, are often 20 to 30 percent cheaper than Taiwanese department store prices after the VAT rebate.

Large price gaps for high-priced products have long existed, so why has the popularity of proxy shopping taken off recently?

Crystal Lee, marketing manager at market research firm Eastern Online, explains that today's shoppers have become experts at using the Internet and are getting more and more sophisticated at figuring out good deals. More importantly, today's technology puts the flow of funds, goods and information right at their fingertips.

The Internet takes care of pricing information, but money transfer and logistics remain issues. For instance, certain US- and Japan-based websites only take locally issued credit cards, posing a big hurdle for Taiwanese buyers. Plus, excessive international shipping costs are a deal breaker for people only interested in buying small quantities of merchandise.

Sites like My Day were born to resolve issues with transferring money and shipping goods, and can even help with information access, through translation functions. China-based Taobao was previously inaccessible due to restrictions on renminbi deals, but Taobao joined forces with a Taiwanese partner to set up Tao 1 Shop, allowing Taobao shoppers in Taiwan to make payments via a secure mechanism by buying credits at participating Taiwanese supermarkets. More recently the service partnered with credit card companies to remove remaining barriers to fund transfers for transactions made via the site.

Now, tasks formerly managed by agents can be handled on websites and via proxy shoppers, posing a challenge to conventional sales agents and importers.

Some people have even gone so far as to stumble their way into setting up proxy shopping sites while trying to work out their own needs.

Shopping for Others Becomes a Business

Yung Cheng-shu is the co-founder of Mamibuy, first-place winner of the Ideas Star award in the category of website writing from the Institute for Information Industry's Ideas magazine. Two years ago Yung was beset with the sudden panic of being a new father, and he became interested in purchasing non-toxic baby products, which he discovered through an on-line acquaintance's introduction. Learning that many parents sourced such items overseas, he got started on Facebook, helping himself and other new parents to scour the world for quality baby products.

The overwhelming response from colleagues and people on the Internet took him by surprise, pushing him step by step toward offering professional services. Following several revamping efforts, the site currently claims over 3000 members and an average proxy shopping volume of over NT$250,000. Although "actual net profits are only a little higher than electronic manufacturing services," Yung Cheng-shu is sanguine about the prospects for his next step.

Proxy shopping is a lot different from group purchasing. As practiced today group purchasing is more like on-line advertising than actual buying. Disputes over deals are frequent, and many consumers find their mailboxes clogged with junk mail each day.

According to the proxy shopping model, the buyer is active and the seller is passive. For instance, the top-selling items at Mamibuy – the six-layer comforter, premium baby bottle, and folding bassinette – "are all based on reports from mothers," explains Yung.

Jamie Lin, founder of appWorks Ventures, a company that provided information and assistance to get Mamibuy started, reckons that most proxy purchasing in Taiwan relies on proxy agents personally traveling abroad to buy the goods, which limits its scale. Lin says that proxy shopping agents are to licensed agents as street vendors are to retail stores.

While proxy shopping is notable for its low mark-ups, Lin also feels that the ability of proxy shopping services to gain detailed knowledge of "what consumers want" is what gives this business model a viable role to play in the annual NT$100 billion baby product market.

The zero inventory transaction method of proxy shopping continues to attract more and more people. The proxy shopping section of Taiwan's largest electronic bulletin board, PTT, has almost 100 daily posts about small purchases for a vast variety of items, from duty free to boutique goods, bidding services, and credit storage services from places as far away as Europe, the US, Japan, Korea, China and Australia.

Proxy shopping continues to wage a battle with brick-and-mortar shops and licensed distributors, a battle that rages daily on the computer screens of Taiwan.

Translated from the Chinese by David Toman