Three Strategies To Win In China’s E-Commerce Market

Nov 02, 2016 By NetFin

Recently, American retailer Macy’s announced that it will launch an e-commerce site in China in 2017. Will Macy’s follow the footsteps of other American giants such as eBay, which failed miserably, or Amazon, which couldn’t gain much footing in China? For Macy’s, or any other retailer large or small, the Chinese consumer market is both enticing and intimidating. China’s e-commerce market is the largest in the world, and has been growing by double digits. However, Chinese shoppers behave differently than their Western counterparts, and market conditions are fundamentally different as well. In order to win in China’s e-commerce market, the following three strategies are essential. nfm-11-2 Mobile-first Strategy

E-commerce in China is fundamentally mobile. According to Bloomberg, the country has more than 1 billion smartphone users. Nearly 90% of Chinese shoppers have purchased items via a mobile phone. Many Chinese simply bypassed the PC era altogether and leapfrogged into mobile. Since e-commerce in the West started during the PC era, many functions on e-commerce sites are PC-centric. Mobile applications often have limited capabilities and serve as a complementary tool to the full website. This will not serve Chinese consumers well. Companies must have a mobile-first strategy, redesign their e-commerce sites with sophisticated mobile capabilities, and ensure a smooth shopping and checkout experience entirely on mobile applications. Unlike in the West, PC-based websites can be a complementary offering to mobile commerce. A recent McKinsey report indicates that people with multiple devices such as smartphone, tablet and laptop spend 17% more on e-commerce than their mobile-only peers. Social Media Integration E-commerce in China is pervasively social. Unlike in America where Amazon and Facebook are largely separated, Chinese e-commerce is closely linked to social media sites such as Weibo and WeChat. Consumerism is relatively new in China. Chinese consumers rely on reviews and word of mouth recommendations from trusted sources to make decisions on products. As I wrote here, Alibaba’s Tmall integrated social media as a consumer-powered review and recommendation system. Consumers can rate the accuracy of product descriptions, the speed of delivery, and their satisfaction with customer service. Another phenomena in China is the rise of “key opinion leaders,” or KOLs. They are highly influential individuals such as bloggers and celebrities with large numbers of followers ranging from thousands to millions. Some well-known brands, such as Gucci and Louis Vuitton, have experienced tremendous successes with KOLs. For brands to survive in a highly competitive market, companies need to learn to leverage the influence of KOLs to communicate to their customer base and build loyalty. Data & Analysis E-commerce in China is increasingly driven by big data. A recent survey by KPMG indicates that more companies are using data and analysis (D&A) to interpret consumer behaviors and predict future trends. Baidu, Alibaba and Tencent, so-called BAT, have the most valuable data sources. Multinationals are using BAT’s D&A to target customers. For example, last year Alibaba’s data management platform, Aliyun, helped Mercedes-Benz launch an online-to-offline campaign for its new compact car by driving more traffic to local dealers. In order to remain competitive, companies must employ advanced data collecting techniques such as real-time scenario modeling and micro-targeting to have deep insights about Chinese consumers. Good D&A can help companies communicate relevant messages and create personalized experiences for their targeted customers.

Virtually no foreign internet companies have succeeded in China. Will Macy’s have a chance? The American retailer opened a storefront on Tmall last year and has gained more than 300,000 fans. Hopefully, it has learned a great deal about its customers. If it gets these three strategies right, Macy’s will have a good start.

 

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