E-commerce in China is a much talked-about topic when it comes to making your product or service available to the Chinese consumer, it could either make or break your opportunities in the early stages of your entrance to the market. China is a world leader in e-commerce and has world’s largest online population, over 600 million internet users. The social media platforms in China are much more developed and Chinese consumers are so mobile savvy even older generations are comfortable with mobile commerce and using these platforms on a daily basis. In this article we would like to explain the importance of one of the fastest developing industries in China and using it in your brand’s favor.
The typical day of a Chinese consumer
Almost every Chinese comes in contact with social media on a daily basis, the biggest part of them couldn’t live without it. For convenience reasons the Chinese consumer prefers shopping and ordering food online over the offline stores. This has created a big trend all over China where some of the biggest platforms such as WeChat plays an important role in every Chinese household.
In the morning, the typical Chinese consumer would wake up at around 7:15 am on a regular weekday. The first thing they do is checking WeChat, more specifically - WeChat moments.This is a section comparable to Facebook’s feed, where friends share posts, pictures and video content. This is also commonly used as an informal selling platform for s maller shops or individuals.
It’s very common for Chinese to use public transport, as commuting from and to work or school takes some time, this is the perfect opportunity to check social media, or even pre-order lunch for the lunch break at work on the app Eleme, comparable to Deliveroo. In the afternoon, during a form of relaxing would be scrolling through Taobao.com. On Taobao you encounter a great range of clothing, toys, household products, and much more. This is one of the most used platforms for online shopping.
The typical Chinese consumer will check social media the longest during the evening, right before bedtime. They will check Weibo, the Chinese twitter and surely WeChat moments one more time to see what their friends were up to during the day.
As it’s clear a Chinese consumer is spending a lot of time online, we can understand that social media gives business the opportunity to reach the average Chinese household by having a good online presence.
E-commerce ecosystem in China
The ecosystem consists of 4 big parts; platforms, payment, logistics and TP partners.
All of these parts are of vital importance for each other to keep an e-commerce ecosystem as user friendly as possible. The e-commerce platforms are where the system takes off, the customer will search the products needed on e-commerce giants such as JD.com, Taobao.com, and Tmall.com.
After choosing the items the Chinese consumer will pay with one of the biggest multi-purpose apps WeChat Pay or Ali Pay using the QR codes. The big platforms work together with Cainiao and SF Express for the delivery to the Chinese consumer.
The fourth part “TP Partners” applies the most to foreign companies who are entering the Chinese market and need guidance in other aspects such as shop design, setup, operations, management and customer services. These are mostly Chinese SME’s specialized in e-commerce, digital marketing or social media.
E-commerce Trends in 2019
1. Going rural
E-commerce in China helps you reach a lot of potential clients already, but now some leading Chinese e-commerce platforms are trying to reach an even greater public by going rural. This is partly due to the improvement in infrastructure in China but also to innovative ideas such as building drone airports in less reachable rural areas to support drone delivery. The main focus is to be able to deliver a product in the fastest delivery time possible to the rural areas, as it’s already the case in urban areas. For foreign companies offering products online this would mean they will be able to reach a much bigger crowd than expected.
Singles day is a trend we can’t forget when talking about how big e-commerce can be. It’s celebrated on 11.11, and during the 24-hour period Chinese online shopping platforms offer big discounts including e-commerce giant Alibaba who broke a record selling $ 30.8 billion in 24 hours last year. To give you an idea of how big Singles day is getting we could compare it to Black Friday know in the US who broke their own record as well selling $5 billion in 24 hours.
Another e-commerce trend worth mentioning is cross-border e-commerce. In China we have 2 common models, one of them being the informal so-called “Daigou”. Daigou are individuals who often travel out of China to buy high-demand or unique items to informally sell them in China afterwards. The sales often happen on platforms such as WeChat through their network of family and friends.
The second model are the Free Trade zones, where e-commerce suppliers ship their products to China bonded warehouses without the need of paying import taxes until the goods are delivered to the buyers. This can save foreign companies the hassle and remove barriers when selling online in China.
Social media influencers are very common among European social media platforms, and this is no difference for the Chinese social media. As Chinese consumers spend more time on social media as the average European consumer, social media influencers and platforms play an even bigger role in the decision-making process when purchasing online. We would like to share with you 3 of the biggest platforms for social media marketing for introduction.
If your main target group is mostly female, millennials or your product or service is “Instagrammable” Xiaohongshu could be the ideal platforms for you to broadcast your product on. It’s similar to Pinterest or Instagram, and counts up to 100 million users. You can imagine that with the help of paid influencers or a good social media marketing strategy you could collect a big number of shares, likes and even sales in no time.
As mentioned earlier in this article the most worth mentioning social media platform in China is probably WeChat. This is one of the biggest players in Chinese e-commerce and has more than one billion users worldwide, one million mini programs and is a multi-purpose app. The app is not only for chatting and sharing pictures through WeChat moments, but it’s very useful for businesses as well. Through mini programs you can create online platforms for your business with links to you e-shop to promote your product and generate sales. Payment and customer service could also be managed through WeChat Pay and chatbots in your mini program. If you’re selling in China, using WeChat is almost inevitable and the best results will be acquired when combining WeChat with your offline store.
If we take a look at Dyson we see it’s generating a lot of sales in China and the brand is well known in Chinese households as well. Their strategy is to get customers to their physique store by using WeChat so they can try out their products. Afterwards the customer will turn to WeChat and follow the link to the e-shop and order the product needed. By offering a physique store and promoting it on WeChat they give the customer the opportunity to try out before buying and remove barriers in the decision-making process.
If your main goal is to interact with customers and create brand awareness in China, Weibo will probably be the right platform for your business. Weibo can be compared with Twitter and has the capability to help your brand reach as many Chinese as possible.
Case European designer
This particular European designer had been looking for a design collaborating with a Chinese designer. She decided to make a Weibo account and post content on a regular basis, this acquired her 500 000 monthly views and over 10 000 followers in less than one year. Her sales not only improved but a design collaboration with a Chinese designer was initiated thanks to Weibo as well.
One of the most important trends in Chinese e-commerce at the moment may be the combination of online and offline stores, O2O e-commerce. The best strategy to interact with and gain customers will be combining your online and offline presence in the future.
JD.com has already set the example by opening an offline experiential grocery store where there are no real products, only pictures and QR codes. The customers are encouraged to leave the house and visit the store, scan the QR codes of the groceries they need and get them delivered at their home immediately.
The benefits of this strategy are not only drawing potential customers from your online platform to your physical stores, it will make interacting with your customers more personal and informative. Combining both online and offline stores will also make it more convenient to maintain a relationship with the customer after they leave the store and the customer will easier promote your product and share their experience.
1. Work with a Chinese partner.
The Chinese market can be more complex than you would expect, protect your brand by working with local trusted advisors to guide you into the market.
2. Localize your brand.
Be willing to adapt your product to the Chinese consumer, including brand name and product packaging as well as taste, colors,…
3. Be patient.
It’s known that the Chinese economy is slowing down, but this doesn’t mean your products won’t be able to generate a lot of sales. Invest smart but give the Chinese consumer time to trust and buy from your brand.
Those who have left China. Why?
If your brand is ready, you did the necessary research and you want to start selling in China, please consider our following tips.
Although the Chinese market offers a lot of opportunities for a lot of products and services, there is a great list of brands that didn’t make it. Let’s take The Home Depot for example, the brand is very successful in the West but when they tried to enter the Chinese market their research wasn’t throughout enough to know the Chinese consumer’s needs. Overall the Chinese consumer will take convenience over pricing and they are surely not that much of a DIY person. Due to the lack of knowledge of their market The Home Depot didn’t manage to generate enough sales to survive unlike in other countries.
The brand Groupon did inform themselves before selling in China, but they didn’t took in to notice that you need to localize your marketing strategies to the core. During a marketing campaign they used humor that was considered inappropriate in China, afterwards their sales took a dive until they decided to leave the Chinese market as well.
And even fashion brands have failed due to lack of understanding of the Chinese consumer. If we look at Marks & Spencers we see that one of the main reasons they left China after having 10 store locations across the country, is failing to adapt to the rapidly shifting taste. Beside not adapting fast enough they also failed to fit local body shapes, and their online presence wasn’t all too well either.