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Samarkand (SMK:AQSE) is a cross-border e-commerce technology and retail group focusing on connecting international brands with China, the world’s largest e-commerce market. The Chinese e-commerce market alone accounts for over 50% of global e-commerce sales, larger than the next top 10 markets combined. China is the clear global leader when it comes to e-commerce, in 2021 eMarketer forecasts that 52% of retail transaction in China will happen online.
Whilst a large and attractive market for many international brands, gaining access can be complex, expensive, and has a unique set of risks and challenges. The e-commerce landscape is completely different to the West.
There is no Amazon, Facebook, Google, Visa, Mastercard or many of the other familiar Western technologies and services that international brands rely on for international expansion. Instead, a completely different range of e-commerce platforms, social networks, payments and logistics companies dominate e-commerce in China.
Samarkand has developed a proprietary software platform, the Nomad platform, which is integrated across all necessary touchpoints required for e-commerce in China including e-commerce platforms, payments, logistics, social media and customs. The Nomad platform is the foundation on which the group’s technology and service solutions are built. The company has three core growth pillars, which together, provide a balanced platform for growth across the short, medium and long term. These are brand ownership, e-commerce acceleration and SaaS technology that makes cross-border e-commerce in China accessible to brands and merchants of all sizes.
BRAND OWNERSHIP
Complimenting the technology and managed services a ‘buy in the West, build in the East’ acquisition strategy has successfully been developed. Samarkand now owns a portfolio of three unique and complimentary consumer goods brands, all of UK provenance and with high growth potential in China and beyond. Brand ownership has served two important roles for the group during its development.
Firstly, high gross margin sales have funded the growth of other parts of the business allowing the group to grow organically during its formative years. Secondly, it has made it possible to develop new solutions, open new channels and platforms that can then be deployed for client brands.
E-COMMERCE ACCELERATION
Powered by the Nomad technology platform are two solutions built to accelerate sales for international brands in China. These work across the dominant e-commerce platforms and social media channels in China. The first is Nomad Storefront which facilitates sales across major platforms such as Tmall and RED. e-commerce stores are built and managed on behalf of third-party brand clients. Through the integrations with Nomad and supported by the operational teams in the UK and China brands can access the 900m shoppers using these platforms each month.
The second is Nomad Distribution which leverages the enormous selling power of social media in China, known as social commerce. Social commerce in China is highly fragmented with many KOLs working across a range of e-commerce channels and platforms, which makes it difficult for international brands to access this route to market in an efficient manner.
Nomad Distribution integrates with multiple social commerce channels and provides a way for brands to penetrate this market and promote their products in China. Through Nomad Distribution, a KOL’s followers can purchase and receive the Client’s products via drop-shipping from the group’s fulfilment centres in the UK and China.
CROSS-BORDER E-COMMERCE AS A SERVICE
Marketplaces such as Alibaba’s Tmall enjoy a large share of the consumer spend but are not suitable for all international brands, many of whom have excellent products with high potential in China but are unable or unwilling to operate on Chinese marketplaces. Merchants prefer to maintain the direct-to-consumer strategies they have in other international markets rather than rely on marketplaces.
The problem they face however is there are many obstacles for Chinese consumers buying products from foreign websites, including site speed, localisation, payments, shipping and customs. Nomad Checkout works with e-commerce software platforms such as Shopify as a plug-in technology that quickly and cost-effectively removes these obstacles and allow Clients to use their existing e-commerce infrastructure to reach and sell directly to these consumers.
CHINA - LEADING THE WORLD IN E-COMMERCE
Samarkand Group plc is one of the few Western companies at the forefront of the next generation of e-commerce that has evolved in China. Due to the size and rate of change, Chinese e-commerce is a far more developed market than the West, commentators suggest China is five or 10 years ahead in some cases. Innovative technologies, trends and business models have developed at incredible speed and scale, some of which are starting to appear outside of China and look set to revolutionise e-commerce globally.
One such area is live stream commerce which has grown from $3.6 billion in 2017 to an estimated $423 billion next year. If live stream e-commerce were a country, it would be the third largest market in the world. In the USA companies such as CommentSold have already reach Unicorn status as early movers in this e-commerce format and Chinese tech giant ByteDance has recently launched live stream commerce in the UK on its TikTok video platform.
The growth of global e-commerce has accelerated during the pandemic and more consumers than ever before are shopping across borders and online. Samarkand Group is laying the digital pipes and the plumbing that will help international brands transact more easily and profitably with the largest market of them all, China.
DISCLAIMER: This article was written by Samarkand and published by Shares under a commercial agreement. It is not a recommendation to buy or sell the shares. The article originally appeared in Shares’ Spotlight report on 25 November 2021.
