Written by China is the largest and most dynamic e-commerce market in the world, but to be successful it is necessary to understand and embrace the Chinese digital landscape in its uniqueness.
According to a market research done by eMarketer, China is surpassing the United States becoming the largest retail market in the world. Chinese retail growth is faster than expected and this is largely due to the continuing explosion of e-commerce.
According to eMarketer, e-commerce represents a staggering 35% of retail spending in China, equivalent to around 2 trillion euros – more than half of all global e-commerce sales. In contrast, e-commerce in the United States represents only 11% of retail sales.
This data makes sense with the 802 million Chinese web users who spend 2.000 Euro each year in online stores.
And as the Chinese economy grows in size and stature, companies are increasingly interested in how their brands can be part of it. However, the media landscape in China is different from that of the rest of the world, and it can be difficult for marketers to keep up.
Online purchases are becoming more and more popular in Europe, but with significantly lower growth and a consumer still anchored to the store experience. It is therefore difficult to understand what to do and what trends dominate the market. Whatever the platform on which you decide to sell, with this article we will try to understand what are the things to do in order to have good performances online.
1. Online, but not only online.
E-commerce in China is not only another distribution channel. E-commerce platforms, together with social media and mobile apps, combine to create a sophisticated and vibrant digital environment in which Chinese consumers live and constantly engage in their daily activities. So offline and online life meet and interact constantly.
In China, the positioning of offline stores is increasingly compromised due to the high use of mobile phones and therefore of online purchases.
PwC’s Total retail 2017 survey shows that 46% of Chinese consumers buy in offline stores on a weekly or daily basis, while the percentage of those who shop on mobile devices is 52%.
In response to these data, companies should consider investing in multi-channel models, meaning not only offline but also online. This would allow to keep pace with the growing trend of online shopping without losing the benefits that an in-store experience can guarantee the consumer.
Multi-channel models generally require large investments, as companies need to change their operating models, digitize, automate more, rely more on data collection and analysis. But it is now certain that digitalization and an improvement in the experience of buyers is the only possible way to grow on the Chinese market.
2. Collect and use consumer data.
Data collection is at the center of attention of all marketers. Both in-store and online activities collect customer data for many reasons. The collection of customer data allows a company to improve the customer’s shopping experience, making the customer more satisfied and increasing the company’s revenue. In short, it benefits both the company and the consumer.
With third-party platforms that dominated the Chinese digital ecosystem, it is a challenge for companies to acquire customer information and data.
But the situation has begun to move with more partnerships between brands and platforms to unlock the enormous potential of data analysis and give customers more precise and personalized purchasing solutions. In addition, various agencies provide collection and data analysis services on online platforms. In fact, the internal data collected by the companies provide only a small image of the overall journey of the customer or the market. Working with local e-commerce providers to jointly develop consumer insights helps develop more personalized and effective business strategies.
3. Purchase products is an experience – make it as fun as possible.
Brands should see eCommerce as a transitional environment in which to incorporate social commitment and storytelling at the center of their clients’ digital experience strategy.
The biggest eCommerce players like Alibaba or JD have shown their focus on enriching customers’ shopping experiences by incorporating trend-setting features such as live streaming, video, virtual reality, games and quizzes, online communities and KOLs into their sites.
It is essential that brands cooperate with specialized operators on these platforms and use their new features to create marketing and promotion campaigns that better involve customers and increase sales. Gamification and the use of funny videos have proved particularly effective in this regard.
4. Social commerce is in unstoppable rise
The rise of social commerce platforms like Xiaohongshu strengthens the trend of socialized e-commerce. Xiaohongshu (or Little Red Book) started as a community where users could show their passion for cosmetics and fashion by sharing with other product reviews, tips, suggestions, practical exercises … its quality and genuine content attracted a large audience looking for more objective information on brands and products before making purchases. From a simple sharing information platform, Xiaohongshu has now developed its eCommerce business, becoming one of the most popular places to buy cosmetics and international fashion brands in China.
The Chinese consumer tends to trust the suggestions of the users, much more than the commercials, this gives a huge power to the social media.
In most markets, companies have understood the importance of social media in e-commerce, but in China social media has crossed the end-to-end path of customers.
Chinese customers use social media to discover new brands and products (45% vs 35% globally), validate 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 on products or experiences (27% vs 20% globally). Therefore, it is important that brands build and participate in social communities or that they interact with customers on social media as they purchase.
79% of Chinese customers (compared to 46% worldwide) say that interactions with brands on social media have led them to buy more products; and 71% of customers (compared to 44% globally) spent more following this.
5. Own a WeChat account, and make it work.
PwC’s Total retail 2017 survey shows that 52% of Chinese consumers buy via mobile / smartphone on a weekly or daily basis compared to 14% of consumers globally.
In China, the Internet is mobile, so Wechat is the mobile platform on which brands must win and keep the attention of customers. With over 800 million monthly active users, Wechat is certainly the most powerful mobile platform in China.
Analysts estimate that products sold through social commerce leader WeChat will total 1 trillion yuan (US $ 150 billion) in 2019 in Gross Merchandise Volume (GMV). Furthermore, according to Newrank & Youzan, as reported by WalkTheChat, the number of e-commerce links in official WeChat accounts has grown by over 60% every year over the past two years.
Wechat has various features such as official accounts, mini-programs, HTML5 pages, Wechat stores, games … all available to companies to attract new followers, interact and convert them into paying customers. Moreover, thanks to the main function of Wechat as a daily messaging app, brands can stay in touch with customers in a very personal and direct way.
6. Your consumers love live streaming
In addition to content-based e-Commerce, live streaming is also emerging as one of the main growth paths for brands in China. Live streaming, interactive and human creates captivating contents that effectively show the quality of the product, the personality of the brand and push customers to make immediate purchases.
For example, Adidas streamed a graffiti artist who changed the design of the shoes and his fantasies based on the demands of the people watching live.
The quality of the product and its value are fundamental, but it is the experience you give your consumers that make the difference.
7. You can’t help using influencers (KOL)
In a country filled with information, overwhelmed by products, services and a with an history of customer scams / cheats, Chinese consumers trust the influencers – or as they are called in China the KOLs- with their purchases. KOLs are considered experts in their fields or have extensive experience and are passionate about sharing their opinion, advice, instructions to help others make better decisions.
KOLs interact directly with customers, increase awareness and help build brands
Social sales techniques such as live streaming allow brands to collect detailed information and customer feedback in real time.
KOLs can work with brands to create joint branded product lines and increase sales.
29% of Chinese customers, compared to 13% worldwide, use social media to see which brands or products are used or endorsed by KOLs and celebrities.
8. Your audience is young
A final thing to keep in mind is that Millennials and Gen Z represent 85.1% of online sales in China, which means that the majority of e-commerce users in China are between 16 and 35 years old. When we look at users at a generational level, we can clearly see that these two generations are incredibly important for companies that decide to invest in e-commerce.
Born in the era of Chinese economic reforms and under the one-child policy, the majority of this young people grew up flattered by their parents and grandparents. Since many of them are still studying or have recently graduated, they are not yet familiar with working life and are looking for ways to gain recognition from their peers, a sense of accomplishment. These generations have undergone enormous foreign influence, especially thanks to the many trips abroad, some of them have even studied outside China. This exposure makes them particularly attracted to foreign brands and luxury goods. At the same time, they are extremely demanding and sensitive to brand promises.