This Article is for Advanced Marketer in China, for brands already do Business on Chinese e-Commerce.
An informative report for brands on China eCommerce, 2019. We will give an overview of the latest trends with case studies.
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- China will overtake the US to become the world’s largest retail market in 2019, according to a new report from the market research firm eMarketer. China’s faster-than-expected retail growth is partly due to the continued explosion of e-commerce.
- eMarketer expects e-commerce to account for a stunning 35 percent of retail spending in China, which is equivalent to about US$2 trillion – over half of all e-commerce sales globally. In contrast, e-commerce in the US is projected to account for just 11 percent of retail sales.
- Just two years after China’s online shoppers hit the US$1 trillion milestones, they’re on course to spend US$2 trillion in 2019, according to new data from eMarketer. It makes sense with China’s 802 million web users spending US$2,494 at online stores every year.
5 KEYS TO DIGITAL BUSINESS IN CHINA
E-commerce in China is not just another distribution channel. E-commerce platforms, together with social media and mobile apps combine to create a sophisticated and vibrant digital environment where Chinese consumers live and constantly engage in their daily activities.
To successfully reach Chinese consumers, build brands and generate profits in this lucrative market, companies need to understand its unique digital and e-commerce landscape. We have observed key trends for 2019 and recommend brands to take actions accordingly.
1. Invest more in Omni-channel capabilities- the current and future of retail
The role of physical stores is increasingly challenged by the Chinese’s high level of mobile usage and thus high adoption of online shopping.
PwC’s Total Retail 2017 survey shows that 46% of Chinese consumers shop in-store on a weekly or daily basis, which is lower than the frequency of mobile shopping at 52%.
In response, brands should consider investing more in omnichannel capabilities to embrace the growth of digital while keeping the unique benefits of physical stores. Omni-channel is not only about using digital marketing to drive consumers to stores, but it covers a broader spectrum of operational processes including marketing, merchandising, customer service and fulfillment.
- A major fashion apparel company is turning its physical stores into fulfillment hubs for their eCommerce sales. This way enables them to manage their inventory in a more integrated manner across online and offline channels.
- In another example, Uniqlo allows its customers to buy products online and collect them at stores.
- Luxury cosmetics brands such as La Mer, SK-II or Lancome integrate their offline loyalty programs with online stores to allow customers to gain benefits wherever they shop.
Omnichannel models can represent large investments since it requires brands to change their operational model including technology infrastructure, digitalizing their operations, strengthening data and analytics, identifying new partnerships; but in return, user shopping experience as a whole would be significantly enhanced, which in the end leads to more growth and sales.
Uniqlo is a favorite brand of Chinese consumers
2. Work closely with eCommerce platforms to understand Chinese consumers
With 3rd party platforms dominating China’s digital ecosystem, it used to be challenging for brands to acquire customer insights and data.
But the situation has begun to shift with more partnerships between brands and platforms to unlock the massive potential of data analytics, and co-bring customers more precise and personalized shopping solutions.
Nestle partnered with Alibaba to personalize the content on its Tmall store based on results collected from analyzing their historical and real-time transactions, browsing behaviors and social graphs. Different groups of customers are targeted with different greetings and product recommendations.
Similarly, a diaper player worked with business-to-consumer e-commerce player Dangdang to identify pregnant women entering their third trimester and issue relevant coupons.
Not only in marketing, but brands also utilize big data from e-retailers to improve product development and merchandising strategy. NIVEA has a partnership with JD.com in which JD evaluates consumer skincare product sales trends and NIVEA provides JD with exclusive excess to new products.
Brands’ own internal data only provides a small picture of the overall customer journey or the market. Working with China’s e-commerce providers to co-develop consumer insights can benefit brand owners to develop more personalized and effective business strategies.
31% of Chinese customers will click on an advertisement that is relevant to them (16% globally)
3. Harness the power of entertainment to drive eCommerce
Brands should shift from seeing eCommerce as a transactional environment to incorporating social engagement and storytelling at the core of their customers’ digital experience strategy.
Largest eCommerce players such as Alibaba or JD have shown their focus on enriching customer shopping experiences by incorporating into their sites trendy features such as live streaming, videos, virtual reality, games and quizzes, online communities and KOLs.
It’s crucial that brands cooperate with these platform operators and utilize their new functionalities to create marketing and promotion campaigns that engage better with customers and drive more sales.
This year, Macy’s created a virtual reality shopping environment that allowed Chinese consumers to stroll through the retailer’s New York flagship store and purchase products through Tmall Global’s cross- border eCommerce platform.
In another example, Tmall live streamed an 8-hours fashion show during Singles Day which featured different brands such as Zara, Ted Baker, and Gap.
Tmall’s “see now, buy now” runway show extravaganza on October 23, 2016, in Shanghai. (Courtesy Photo)
Little Red Book / XiaohongShu
The rise of social commerce platforms with Xiaohongshu being an example reinforces the trend of socialized e-commerce. Xiaohongshu (or Little Red Book) started as a forum where users could show their passion for cosmetics and fashion by sharing with other product reviews, advice, tips, how-to tutorials… This quality and genuine content attracted a huge audience who were looking for more objective information about brands and products before making purchases. From a pure information sharing platform, now Xiaohongshu has developed its eCommerce business and become one of the most popular places to shop for international cosmetics and fashion brands in China.
PS: send us an email to get a Full report about Little Red Book
Addition to content-driven eCommerce, live streaming is also emerging as a major growth avenue for brands in China. Live streaming with real-time, interactive and human nature creates engaging content which effectively showcases product quality, brand personality and pushes customers to make immediate purchases.
For example, to promote the ZX Flux shoes, Adidas live streamed a graffiti artist who changed his design and patterns according to the requests of people watching live.
Live streaming is gaining steam in China and across the world
While product and value are core fundamentals, brands are differentiating themselves through experiences. By blending rich editorial content, social commerce aspects such as user-generated content, KOLs, and live streaming into their eCommerce strategies, brands can create distinctive experiences for consumers.
Brands need to offer more than just low prices to draw consumers from third party platforms.
4. Innovate at the intersection of social media, mobile, and eCommerce
PwC’s Total Retail 2017 survey shows that 52% of Chinese consumers shop using their mobile/ smartphone on a weekly or daily basis as compared to 14% of consumers globally.
In China, the Internet is mobile, then Wechat is the de facto mobile platform where brands have to get on to capture and retain customers’ attention. With more than 800 million monthly active users, Wechat is definitely the most powerful mobile platform in China. This is a good guide to start if you have little idea of Wechat.
Wechat has various functionalities such as official accounts, mini-programs, HTML5 pages, Wechat shops, games… for brands to attract new followers, interact and convert them into paying customers. Additionally, thanks to Wechat’s main function as a daily messaging app, brands can keep in contact with customers quite personally and directly through this app. Coach, Estée Lauder, GAP have embedded their loyalty programs within Wechat and now run customer relationship management and engagement through the app itself.
In most markets, businesses have come to realize the importance of social media in eCommerce, but in China, social media has permeated throughout the end-to-end customer journey.
Chinese customers use social media to discover new brands and products (45% vs 35% globally), validate the product quality through reviews, comments and feedback (54% vs 47% globally), purchase directly through a social channel (25% vs 15% globally), and write a review about the products or experiences (27% vs 20% globally). Therefore, it is important for brands to build and participate in social communities, or engage with customers on social media across their buying journey.
Guerlain’s WeChat Game to celebrate its latest lipstick – the KissKiss Matte collection, attracted 18,582 page views and 10,000 players within 10 days of its launch.
Traditional and advertising is no longer enough to capture the attention of customers. With all the possible tools provided by Chinese social media platforms, brands can create more sophisticated, impressive campaigns that can generate distinctive moments of delight for customers throughout their social commerce journey.
79% Chinese customers (vs 46% globally) say that positive interactions with brands on social media have driven them to endorse the brands more; and 71% customers (vs 44% globally) have spent more as a result.
5. Influencer Marketing in China: No Longer an Option, Now a Necessity
It is undeniable that in a country bombarded with information, products, services and a history of customer scams/cheats, Chinese people trust KOLs with their purchases. KOLs are considered experts in their own fields who own profound knowledge or have extensive experiences and are passionate about sharing their voice, advice, instructions to help others make better decisions.
KOLs are expected to impact brands in 3 areas:
- KOLs interact directly with customers, raise awareness and help build brands
- Social selling techniques like live streaming and Q&A enable brands to gather rich insights and real-time customer feedback
- KOLs can collaborate with brands to create co-branded lines of products and boost sales
In 2018, cosmetics brand Nars launched their official Tmall store. After launching the store, Nars began hosting regular live streaming shows on Taobao Live with their professional makeup artists.
29% of Chinese customers, as compared to 13% globally, use social media to see what brands or products KOLs and celebrities are endorsing.
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