10 key factors of success for E-Commerce in China
E-commerce in China is estimated to exceed 5000 billion RMB in 2015. With 243 million of e-shoppers and an annual increase of 30 million new users, China E-commerce is taking more and more share in the global e-commerce market.
What are the key factors for E-Commerce business in China ?
1 – Localization in China
Website hosted outside of mainland China takes a VERY long time to charge.
=> A good Ecommerce website in China requires host in China. And an ICP certificate is also very important in order to have less chance to be censured by the government. All the successful ecommerce website in China are host in China with ICP.
A website hosted in China is better as the Chinese search engines is Baidu . Nevertheless some negative feedbacks exist about Chinese hosts regarding instability problems or suspected to provide IPs to the governments or to sell IP to competitors.
2 – Logistic
One challenge is to be able to deliver products to the entire country. Delivery is not an easy work to do, all the companies in the field are fighting over prices, profits are low. With an average 3-4 yuans margin in this sector (according to the Association of Logistics China) it remains a challenge for many companies.
3 – The price
Internet in China today almost equals to a place where consumers can find the lowest prices. Chinese consumers will compare a large number of websites before making a choice price oriented.
Solutions: bring prices beating all competitors on a unique product in the whole country (exclusive offer).
4 – Gaining confidence of cyber-consumers
Chinese consumers remain very cautious due to the number of scandals in the country. Consumers take trust rating as the KPI on Taobao is the best example of it.
It is important for a website to work on its image, to gain the trust of users. Cross-media campaigns are often useful to gain notoriety.
For example VANCL used Hanhan as brand ambassador and have launched classic advertising campaigns (www.VANCL.com)
5 – Your website should respect Chinese standards
Chinese buyers do not use Paypal but Alipay or Tenpay. Concerning delivery for small amounts in China many websites make it possible to pay at the reception.
The design of the website also have some convention to follow. For instance a Chinese website will use a smaller typography, more informations on one page, with a larger variations in color codes.
Here is the website of Yoda a leader in the field of e-commerce for cosmetics:
It is preferable not to copy and paste a Western version of your website which will probably not appeal to people who already accustomed to the Chinese pattern of design.
6 – A streamlined purchase process
3 steps represents an average for most of Chinese e-commerce websites.
A website that takes more than 5 steps before buying is considered too complex by Chinese netizens. Display time of websites in China is much longer than what we know in the West, so the less pages are, the better for Chinese netizen. With the rapid development of China’s E-Commerce , streamlining the purchasing process remains an objective.
7 – How to increase your conversion rate ?
Professional photos can improve the conversion rate in B to C business (and even in B to B).
Videos are necessary to show the features of your products. Chinese are very pragmatics.
Descriptive texts are needed to foster consumers’ awareness. For example, in the field of wine, the best performing sites are those that explain the history of the wine with tasting guides.
Please check the follwoing example: a Tmall Shop designed for Afu Mythical:
8 – Promotion
Chinese people in real life have a habit of buying by negotiating price. Many Chinese the price without bargain is an unfavorable deal. We find this phenomenon even more popular online.
For example, “the single day” organized by Taobao proposed discounts that have attracted millions of orders per day.
9 – Visibility
The most difficult tasks for a website is to attract visitors. A good Baidu referencing is an important tool to attract visitors. This target can be achieved via a good SEO or SEM campaign.
What are the main processes to increase your traffic?
SEM, Search Engine Marketing campaigns ie Pay per click are effective in some areas and less in others. For Baidu, these campaigns have the advantage to make you appear in the 11 first natural results. But the price of the click can be very high for certain sectors. For instance you may have to pay 25Rmb (3 €) for keywords such as ” buy wine “or” cosmetic “.
SEO: the best way to gain visitors economically, and therefore to foster your sales. SEO in China is mainly on Baidu (80%) and a little on Google.com.hk .
Social Networks: community management is another tool to attract traffic for your website. It’s a good way to build a customer loyalty. Once a site is running and generate sales, a good integration of social networks will be very interesting.
10 – Instant messaging
Very few Chinese use email. Indeed they prefer instant messaging to communicate directly with the salesman. Generally, Chinese websites include QQ messaging or click to chat’ systems.
In China SMS or phone calls are frequently used to confirm an order, when in western countries the email remains the most widely used communication tool.
Chinese people often have various email addresses they do not consult. Mass emailing in China is rather inefficient. On the contrary promotional campaigns sent on mobile shows an extraordinary efficiency nowadays.
Conclusion: E-commerce in 2012 generated more than 1000 billion yuan of transactions (45% for B2C and 55% for B2B) (source: iResearch) and will remain a huge market for western brands.
If you are interested in this, don’t hesitate to contact me for more information.