Brands need to go beyond China’s dominant ecommerce platforms if they wish to connect and engage with Chinese consumers.
Tmall and JD.com have become so large and competitive that brands wishing to cut through the clutter need to consider other more targeted options if they wish to achieve success.
While, China’s ecommerce market is one of the biggest and most exciting in the world, it is also one of the most competitive.
The rivalry between Alibaba and JD.com has created a vibrant ecommerce market, which has bolstered sales to record levels for China’s two biggest shopping festivals, 11.11 and 6.18.
However, with these platforms brimming with vendors, it has also created an environment where price wars are unavoidable as brands are forced to slash prices or lose out to others.
There are more than 10 million sellers on Taobao alone, of these it’s predicted just 10% are breaking even, with around 30% believed to be close to breakdown and more than 50% running in deficit.
Getting share of voice is also increasingly expensive as brands are required to invest more and more money to ensure they are top of mind with consumers.
There’s also the hefty investment that is required to get involved and generate awareness of your brand and products.
A Tmall Global store, which is often viewed as a “must have” for brands, requires a RMB$150,000 deposit alone just to register.
After this companies will still need to invest to create and maintain the store, along with investing in marketing and branding activity, media planning and buying and social media channels to generate awareness, maintain connections with consumers and sales promotions. As well as paying service fees.
All up it is a timely and expensive exercise. While JD.com might be cheaper to register it is equally challenging for brands.
While there is no denying the extensive reach that these platforms offer through their vast user base, however these platforms should be options for users and not the only way to target customers in China.
Companies should consider how investing their budgets in other more targeted and cost effective ways could provide equally successful results.
One option to consider is to take the budget you would allocate to a Tmall, Taobao or JD.com store and to invest this money in building your own channel. Companies could create a Chinese language site with an embedded sales channel and back-end logistics to manage their own ecommerce sales.
This platform would be supported by media and advertising activity as well as a WeChat channel to build brand awareness and manage one-to-one customer relationships.
This would provide the brand with its own customer database and access to its customer data. It also provides flexibility and functionality which suits the company and its systems and ensures better management.
As the budget will go a lot further this way, you can look to target audiences in more targeted ways by utilising co-branding opportunities and creative partnerships with apps and KOLs.
Companies could also use embedded sales channels on apps such as Little Red Book, Kaola and VIP.com to further leverage sales and awareness.
All of which will provide the brand with a stronger point of difference, more control and ultimately a more cost effective way to target and engage with Chinese consumers.