Aussie Brands and Daigous Face Commercial Issues Due to COVID-19

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Aussie Brands and Daigous Face Commercial Issues Due to COVID-19

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Daigous refer to Chinese personal shoppers in Australia. Chinese students, tourists, and ex-pats commonly make up the daigous. Unlike any ordinary personal shoppers, Daigous shop for their relatives, friends, and customers located in China by helping them acquire Aussie products through exportation.

Daigous rose to prominence in Australia because of the fear brought by the “Baby formula scandal” that happened in 2008.

The “Baby formula scandal” killed 6 babies in total and sent around 54,000 babies to hospitals. It was due to the melamine found in Sanlu tin cans used for the baby formula. Melamine is one of the components of fertilizers and plastics.

Even after a decade, Chinese parents still could not get over their fear. They lost their confidence over the locally-made baby formulas, causing them to rely on daigous to provide Australian baby formulas for them. Many Chinese people were willing to pay around 100 AUD to acquire a baby formula from Australia.

For this reason, daigous were making a huge amount of money by doing such trade.

Because of the large demand, it brought shortage issues and outrage to local buyers. Even the government had to intervene. Despite the situation, daigous continued their business and were on-demand and even turned into a billion-dollar industry. A lot of Chinese workers living in Australia chose to quit their job to become daigous.

Chinese middle-class citizens grew, so as their appetite for Australian products. Aside from baby formulas, cosmetics, food, vitamins, toys, and other products also became popular.

To meet the huge demand, a lot of logistic companies and Chinese specialty stores emerged across Australia. The daigou channel used to send around 500,000 packages each week, and the number of daigous in Australia grew up to 150,000.

Also, many Australian companies had the daigous to thank for their ability to shrink the overnight share price.

However, the coronavirus changed all these in the blink of an eye. Before, it was the “baby formula scandal” that stirred the fear in Chinese citizens. Now, it is the pandemic.

Chinese are starting to rely more on locally-made products than the ones made from Australia. It is because of their fear of the parcels contracting the virus during the delivery.

According to Jerome Fu, Director of Honeyroo, it is due to the virus’s effect on Chinese clients’ personal finance. It causes a decrease in their ability to buy imported goods.

Fu added that it is also because of the logistics disruptions, and many people cannot wait long for their orders to arrive.

A daigou named Christine Liu admitted that the pandemic caused a huge loss on her personal finance. At the age of 28, Liu graduated from the Australian National University and worked as a restaurant waitress. For a side hustle, Liu worked as a daigou by sending Aussie branded baby formulas, cosmetics, luxury bags, and health supplements to her Chinese clients.

Before, she was making a lot by working as a daigou. She could sell 300 baby formula tins per month and had a turnover of more than 200,000 AUD last year before COVID-19 came into the picture.

When the pandemic hit, it created a huge loss on her personal finance. Last September, she could only sell 50 cans.

According to Liu, she used to feel overwhelmed by the huge volume of orders and was busy. Because of the pandemic, she has hardly received any messages already.

Because of the pandemic, the daigou industry is starting to decline. Aside from the daigous, even the Aussie brands that majorly rely on daigous are also suffering.

The issue before the pandemic was the typical empty shelves of baby formulas in various stores. However, the pandemic changed it. A2, one of the Aussie brands famous for Chinese clients, is now suffering from an oversupply.

A2 refused to provide its statement on the media. Still, Geoffrey Babidge, the CEO of A2 Milk Company, admitted the drop in its sales as of September and its possible continuous drop in 2021.

Aside from that, many of the 1000 specialty stores catering to these demands closed down. According to Fu, 30 per cent of the specialty stores permanently or temporarily close down. A few daigous now go to specialty stores and shops to buy products for their clients in China.

However, the blame is not entirely because of the pandemic. According to the former executive of Swisse, the emergence of the new online platforms catering to almost the same demands can affect the daigou industry. Because of the hefty price, daigous’ Chinese clients have to look for cheaper ways to acquire Aussie products, which was already happening even before COVID-19.

The emergence of new online platforms provides Chinese customers with additional options to compete with daigous prices and the channelling system.

Because only a few Chinese consumers rely on daigous nowadays, it also has a tremendous effect on the businesses that mainly rely on the daigous. One of them is the Blue Sky International Express that went bankrupt last May.

Even if it is the case, customers still try to retrieve the items they believe are still in the company. Clients in some areas are willing to pay extra fees to reclaim their items.

The lost parcels estimate is around 7,000, and the value is around 800,000 or even higher.

Blackmores, a vitamin and supplements manufacturer, also expressed loss in sales because of COVID-19. The company stated a 16 per cent decrease in its sales in the first half of the year.

Hunt stated that the positive part of the coronavirus brought to the industry is that it made companies realize the importance of daigous.

Aside from that, many daigous are trying to transform themselves into influencers to promote Aussie brands.

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