An overview of China's ecommerce landscape with details on how the market works, who the key players are and case studies from brands who have been successful.
4. “Bricks-and-mortar retailing is a mature business in
the US, where consumers have been shopping in
malls for decades and continue to do so,
augmenting their purchases with occasional forays
on the web. Online shopping is dessert in the US,
but in China, it is the main course.”
Jack Ma, Group founder and Chairman, Alibaba
5. Scaling up China
Achieving national scale
in China is an imposing
effort if done via bricks-
and-mortar.
cities with POpulation
over 1.0 million
170
6. Singles Day Generated
US$5.75 billion in sales
(in just one day!)
201311 .11.
Ecommerce has already
proven itself to be
effective in China ...at
national scale.
Scaling up China
7. ONLINEOFFLINE
Offline vs Online
Physical retail is
costly to set up.
Far too many
locations are empty.
RMB230.00
Price at Retail
Low setup costs,
big consumer base.
But brand management
is critical.
RMB90.00Price at Retail
Product
pricing
comparison
based on
RMB36.00
base cost.
Retailer
challenges
13. Business Week, FT,
Forbes & Statista
Ecommerce Markets
2003 2007 2011 2015
100
200
300
400
500
339
541
china
usa
2015 - Revenue (Projected)
230
210
14. Ecommerce Market (2012)
Annual Spend Per Buyer
which is incredible when you consider that
us per capita GDP is almost ten times
higher than in china.
1,028$1,439$
chinausa
21. Bain & Company “China’s Ecommerce Prize 2013
B2C vs C2C Ecommerce
2008 2009
25%
50%
75%
100%
C2c
B2c
2010 2011 2012 2013e 2014e 2015e 2016e
0%
B2C is catching up quickly with C2C as more
brands move onto Tmall and other platforms.
But C2C is still incredibly important in cHina.
22. Online Sales Channels
ecommerce sales in china are highly
concentrated into a few B2C platforms.
(namely Taobao, Jd.com)
chinausa
independent
merchants
76% 90%
marketplaces
23. The Two Major Forces
China’s biggest ecommerce
platforms and payment
system.
second most important social
media (weibo)
alibaba + WeiboTencent + jd.com
China’s second biggest
ecommerce platforms and
payment system.
most important social media
(Wechat & QQ)
24. B2C Platforms
tmall and/or jd.com are almost essential to a
comprehensive ecommerce strategy.
but, costs of audiences are becoming very high
2013 - Market Share
Tmall
JD.com
Tencent
Suning
Amazon
VIPShop
Gome
DangDang
Yihaodian
Vancl
6.3%
5.7%
57.5%
tmall
19.3%
jd.com
iResearch & Alibaba Group 2013
26. B2C Platforms
Horizontal x Vertical Sites
electronics
& appliances
- Sunning
- Gome
- JD.com
$
luxury
- VIPshop
- Ihaveu
- Xiu
apparel,
fashion
- Vancl
- FClub
- OKBuy
beauty &
Cosmetics
- Jumei
- Lefeng
- Lafaso
it is important to evaluate b2c platforms based
on strength of categories.
and (possibly) use specialist shops + mall
tmall
Jd.com
amazon
malls
General (All Categories)
27. Repeat Purchase - Top3
Highest rates of repurchase
yihaodian
59%
Food, General
Okbuy
68%
Fashion, Clothing
82%
vipshop
Fashion, Clothing
tmall has the highest percent of
consumers using only their site
49% of tmall consumers only use tmall
30. Key Points on Path to Purchase
Social Media:
Creative, brand focused content to build
awareness & WOM ...and do promotions
Ecommerce:
Branded shops on platforms to take
advantage of traffic (and intent to purchase).
Search:
Key in converting
interest to sales
most
transactions
take place on
branded shops
in Tmall.com or
Jd.com
stand-alone
ecommerce
shops for brands
are much less
productive.
31. Sources of Traffic
search is the most trackable, measurable
channel (as last step to hitting a site)
but brand (social) contribute to the final click
chinausa
5% Other
Social Networks
Natural Search
Paid Search
Email
Referring Domains
Direct
100% 100%
2%
45%
7%
7%
6%
28%
4%
4%
14%
39%
16%
23%
Other
Social Networks
Natural Search
Paid Search
Referring Domains
Direct
53%52% Search
Based on data provided
by “Benefit Cosmetics”
Sample composition
32. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
First interest
Press Releases
Social product info
Viral videos (Ads)
Weibo
Info search
Search (SEO)
Wikis
Product reviews
Category infographic
Baidu Zhidao
Shortlist
Product infographics
Product features/photos
Promotions
Search (SEM)
Baidu/Taobao
Make Purchase
Customer support
Discounts/Promo
Tmall/JD.com
Show off
Customer support
CRM / Q&A
UGC Advocacy
WeChat
34. Estee Lauder Case Study
To promote the store opening they offered free shipping during
first three days and big discounts on star products.
Estee Lauder announced the launch
of its Tmall Flagship Store on May
2014
Its the only authorized E-commerce
platform except it’s official website in
China
Day One sales were RMB2.69m.
Within 5days, the sales volume
reached nearly RMB7.0m (a record
for new launch on Tmall)
Sales trend from 21~23 May from
it’s official flagship store
35. La Roche-Posay Case Study
European beauty brand La Roche-Posay held a campaign over six weeks in 2013 offering free samples to
new customers
After signing up and answering a few questions, customers were able to go to nearby shops to pick-up
50mL samples of La Roche-Posay products
There were 80,000 participants, and the brand saw a jump in sales of RMB1.0m
WeChat ID: larocheposay1975
36. WeChat ID: xiaomijiedatuan
Play games to win
further discounts
Products are available for
one day only at select
times (12:00 - 14:00 -
16:00...) with a quota at
each time
Authorized ebooks for
free download -
Between 10am - 10pm
Accessories
Xiaomi Case Study
Xiaomi (China’s Apple) have built a brand which is very price competitive AND fashionable by
employing a set of games, incentive and sales - while becoming a brand almost 100% built online
Instead of starting with higher prices and gradually lowering them (at end of sales cycle), they launch
with what would be a final sales price (utilizing flash sales and games to sellout in days, rather than
months)
37. Xiaomi Case Study
Xiaomi held a “snap-up” campaign inside of
QZone on March, 2014 for its new RedMi
Note (Table) & phone
With 600m MAU, QZone is a large social
medium, and also allows for precise targeting
Following a detailed (& entertaining) process,
15 million participants signed up to
participate
419,000 secured “reservations” for the “snap-
up” event
100,000 RedMi Notes were sold, 200,000
RedMi phones (a sellout)
Mar 15: Signup on QZone
Mar 19: Play for a “reservation”
Mar 26: Play to “snap-up”
38. SmartCar Case Study
Smart created a “snap-up” campaign in WeChat for it’s special edition “Smart BoConcept”
Between April 14 and April 21st at 8am, 6,677 customers paid a deposit of RMB999 for the car
388 cars were then sold in 3 minutes after 10am on April 21st
1. Fill in personal info, and pay for a deposit
of 999RMB from 14~21, April, 2014.
2. Participate in
Snap-up on 21, April
39. KPMG - China’s Connected Consumers, Feb 2014
Online Purchase Drivers
Better Deals, Less Expensive
Its Quicker Than Store
Access to Global Products
Easier to Compare
Better Range, Variety
Uniqueness
Popular, Famous Brands
Recommended By Others
High Quality, Long Durability
Comfort of Shopping at Home
10% 20% 30% 40% 60% 70% 80% 90% 100%50%
For Luxury Purchases
41. INVESTTRIAL SALES SYSTEMS PRODUCT
CONSUMER INSIGHTS BRAND ADAPTATION
Brand Entry Framework
Regular container
shipments to China.
Investment into online
awareness building.
Enrollment of early adopters
and online influencers.
Fulfillment & logistics
systems installed.
PROMOTIONS
test invest
42. Trial sales
Small scale, promotional sales
Sold from overseas (HK)
Thru Woyola.com, Tmall.hk
Drop shipped
Observe existing sales
Already being sold thru Taobao (C2C)
Being sold thru global, vertical sites
Are you selling in China already?
Are you a highly social brand?
Do you have great stories/content?
- Which precede the brand entry?
Enroll early adopters as advocates?
Brand Entry Framework
consumer insights
Focus Groups, Surveys
Thru social media (WeChat)
Data/feedback from trial sales
Direct response to products already sold
Competitor evaluation (field study)
Outline of existing marketing, pricing
Consumer/competitor mix
Who are your customers?
What are they buying now?
Judging from trial sales, whats the job to
be done with your product?
brand adaptation
Find the right positioning
Fashionable vs Functional
Differentiated vs Commoditized
Premium vs Price
Market Leader vs Challenger vs Marginal
Merchandising & marketing plan
Brand, product naming
Product selection/mix
Strategy x creatives x channels
What kind of brand can/should you be in
China? Positioning, pricing?
43. Brand Entry Framework
systems
Fulfillment model
Home market - China - Local distribution
Customs, regulatory process
Taxes, repatriation ...
Labeling
Integrate customer service
Online service & CRM systems
Returns management
Ecommerce
Brand “own” site?
Detailed capabilities
Payment systems
products
Moving operation to scale
Larger scale shipments
Additional distribution (offline?)
Partnerships & resellers
Wider product mix
Including customized products for China
Based on user feedback
promotions
Implement marketing efforts/tactics
Social - search - display
Brand & promotional (sales)
Digital marketing assets
Create full set of local assets...
Social presence, Baidu Zhidao, Blogs
Content creation
What level of investment will you make?
- Opportunity for big share in category?
- Speed essential?
- Success with trial sales?
44. Decision Tree for Brands
Build - Sell - Retain
Social
Focused
Search
Focused
Does your
product satisfy a
need or a want?
Is your product
fashionable or
functional?
More of a Need
- Functional
More of a Want
- Fashionable
Price
Brand
Do you
compete on
price or brand?
Are you a
market leader,
challenger or
outside
competitor?
Own
Ecom Site
Platform
Ecommerce
(Tmall...)
awareness acquisition loyalty
Loyalty: by price
or product/
brand quality?
Can you
generate
“organic” word
of mouth?
UGC
User-get
-user
Promos
Direct
Marketing
Discounting
Rewards
Is the quality
gap between
your product
and local
significant?
Do you have
compelling,
related stories,
images to
share?
No investment
in brand =
price/promo
competition.
45. Brand vs Sales
Growth strategy - balance
sales brand
Price/promotional focused
Need for short-term results
Strategic imperative to capture market share
Luxury/premium product
Can take a five-year perspective
Strategic imperative to maintain brand
Consistent with global approach?
Critical to have price, brand parity across markets
BUT
The middle can be challenging
place to be in China.
46. The problem to be solved.
China is a difficult market to summarize. Its a
massive market ...but only pockets of it are
developed and huge sections are a work in
progress.
its a two-speed market with some of the
most advanced outcomes in the world ...and
some very early stage issues.
Its middle class is much less affluent and,
much more price sensitive than EU/US.
A two-speed market
47. There are pockets of incredible
advancement (where premium/
quality is prized) but the vast
majority of consumers in China
are behind (very price sensitive).
Beijing
Hangzhou
Shanghai
Shenzhen
Chengdu
T3-4 City
T3-4 City
Advanced
Behind
Sources: BCG & CASS
Advanced vs Behind
Uneven consumer landscape
50. The problem to be solved.
Rules to Branding China
There are no fixed rules, not yet.
Digital (social) media rule.
An informational approach goes a long way.
Apply a universal logic to user motivations (especially youth).
The average consumer is very, very adaptable.
“Face” does matter.
Public goods are more important than private goods.
Play the long-game (don’t rush success).
65. Uniqlo
Homepage of Tmall Flagship Store
Location-based flagship
store, which supports city
shifting to find your location.
Weather Forecast
Categories Go to Fitting Room
Showcase
Pre &After -
sales service
66. Uniqlo
List by UT Themes
List by
Banners/Campaigns
Promotions
Hot Searching Keywords
Homepage of Tmall Flagship Store
List of products
67. A list of all categories, like “Cute”,
“ Lady”, “Mature”, “Leisure”, etc.
Uniqlo
Online Fitting Room
Float window where you can
change model. shoes, T-shirts,
colour…You can share it to other
social networks as well.
An online fitting room where you can match & mix from all kinds of
clothes, and share it to your social networks.
68. l’oREAL
Homepage of JD Flagship Store
All Products/Categories
QR code
Quick Navigation
Banner/Promotion
Campaign is On