Covid-19 has inexplicitly changed distribution channel behaviours in both retail, and wholesale. With it, we have seen the vast array of travel restrictions, closure of physical “bricks and mortar” stores, substantial reduction in tourism and correlated duty-free shopping in airports and travel destinations. Positively, COVID has revealed the continuous obstacles and challenges for designer brands on moving sales from offline to online to its high-end customers.
Luxury brands deploying Omni channels like live streaming and Influencer marketing have helped stretch and cover the multi-dimensional dynamic behaviour shift from offline to online dominated or “online only sales”. The key to success is having different forms of digital marketing to convert the original offline experience to a virtual online experience.
As an up-and-coming player in Online Luxury sales space in Europe, we at AtMall specialize in helping brands hit their target customers through Omni channels distribution campaigns. While 2020 was a challenging year for all, we saw first-hand how effective digital marketing can continue to attract and grow customers by shifting the focus online.
In this piece, I would like to share what we have seen in the past year and 3 actions to take, to stay ahead of the curve and continue to prosper in today’s highly digitalized age.
First things first, and in sales, that starts with Demand. Demand for luxury brands, is unrivalled in China and during Covid-19, China appetite grow further. This was partly due to the increasing affluent middle class not having the ability to travel overseas and fiscal stimulus by the government to prop up the economy. Money was abundant and people were looking to spend! Here are some interesting facts:
According to Bain & Company publication on Dec 2020, “The global luxury market shrank by 23 percent in 2020, however mainland China’s market share nearly doubled, growing from about 11 percent last year to 20 percent in 2020.” According to Financial Times, China is the least influenced and fastest recovered-from-Covid19 country in the world.
Due the Covid, the sales landscape has shifted, it is now online dominated, a multi-channel customer experience with increasing focus on the Chinese market.
To ensure you are not left behind here are 3 key actions you must act on today:
ACTION 1. Design and adapt to an innovative multi-dimensional strategy = Comprehensive marketing + Omni-channel sales.
ACTION 2. Engage with Cross-Border influencing marketing in European market.
ACTION 3. Partner with a company who has insight and capacity to deliver.
ACTION 1：DESIGN AND ADAPT TO AN INNOVATIVE MULTI-DIMENSIONAL STRATEGY = COMPREHENSIVE MARKETING + OMNI-CHANNEL SALES
A luxury consumer’s journey has always been multi-dimensional — the following chart from the courtesy of BCG and Tencent Insight, demonstrates the complexities faced by consumers on this journey.
Conversely, to service this journey for customers, one needs a comprehensive strategy to deal with the fragments. Developing this comprehensive strategy is like wearing makeup. For the male readers or those unaccustomed with applying make-up, it is like painting a familiar painting over and over, while the canvass does not change, and it is not so much the colors used but the artist and the brush stokes that separates the outcome. You must know where to brush, where to add shadow in order to make a contrast; and how to emphasis unique features, how to select tones and lines you want to make that “WOW” or “OHH”effect. You can end up with Johannes Vermeer’s “Girl with a Pearl Earring” or “Woman III” by Willem de Kooning. The same can be said of strategy and refining the brush strokes to paint a “game play” to generate growth.
Subsequentially, in the next part, we provide detailed insights on how such a strategy would work.
1 INFLUENCER MARKETING
In recent years, this has been the most powerful phenomenon, as the name suggests, to influence consumer behaviour, especially in China. While not exhaustive, two main reasons for this can be derived from consumer culture and psychology: Chinese consumers prefer to mirror popular styles and to follow celebrities/ influencers to be reassured their choices are safe, trendy, and recognized.
Out of this phenomenon, the most powerful adoption is Live Streaming. This is now the preferred choice of Chinese consumer: since they love to follow the influencers, it makes a big difference to see live how the products are used.
Yu Feng, Senior Director of ecommerce content at Taobao (marketplace of Alibaba group), described the epidemic phenomenon, Live Streaming as, “The wakeup call for retailers”; he said it has promoted many retailers to accelerate their digital makeovers so that their business has become more dynamic and resilient.
According to Jing Daily newspaper published in March 2020, it was claimed, there are 905 million live streaming users in China, including in it, ecommerce live streaming users account for 560 million. However, influencer marketing is not a highspeed elevator. It is more like a staircase, which must be climbed to get to one’s destination.
The most common steps are:
Selecting> Educating> KOL/KOC UGC > Live Streaming
Step1 – Selecting:
First step is selecting the best qualified influencers (from small KOCs to top influencers) based on brands’ portfolio and character to create content marketing campaigns for targeted audiences to recognize the brand and products.
You need to have built the database with the influencers; and then select the right ones by observing their fan base, their engagement factor, and conversion rates, before approaching for cooperation. It is a very tiresome process but necessary first step to build brand awareness in the market.
Step2 – Educating:
Influencers or Key Opinion Leader, KOL for short, are provided with clear and rich content brand media/promotion kits including a brief summary to help inform and educate them on the objection.
Influencers need to learn the provided documents, product insights, to be able to inspire readers not just how the product looks, but also the essence as brand history, background, patent, marketed channels, brand tones, as well as fringe knowledge like ingredients, medical theory, fabric tech etc. Additionally, Chinese audiences as well as these KOLs also love to know which celebrities used it.
That exactly reflects why KOL is viral in the country of China. It builds deep rooted trust, built on the base of knowledge, how other people also use it, by how many or by whom.
Step3 – KOL/KOC User Generated Content Marketing:
This is KEY. KOL/KOC content marketing is differentiated from traditional content marketing because of the way the content is directly interacted between KOL and their fans.
It is personal, recommending, less official, and more engaging.
The influencer group creates rich content; text advertorial, glossy images, users generated videos and reliable customers’ reviews. Those contents are spread cross various Chinese social media platforms including RED, Tiktok, WeChat, Weibo, Bilibili, Zhihu, etc.
After the KOL fully digests on these products and their own understanding, they would start the live streaming… Live streaming has one direct target: SALES.
Step4 – Live Streaming: Influencer Sales
This is the focal point. Live streaming is a booming business in China, it is a new and powerful sales channel, which is favoured by fashion/cosmetics/luxury retailing brands all over the world.
There are 9 popular Live Streaming channels in China (in no particular order): Data source: Jing Daily media outlet.
- Taobao Live: Launched in 2016 by parent company Alibaba with investment 5,8 billion Euro, it has 726 million annual active users across Alibaba retail platforms, as of March 2020.
- JD Live: Launched in late 2017 and partnered up with another famous Live Streaming platform Kuaishou in 2020, the giant retailer’s live channel has 387 million annual active users as of March 2020.
- Pinduoduo: Opened features to all social ecommerce merchants in Jan 2020, the promotional platform had already 628 million active annual users as of March 2020.Pinduoduo subsidized the sales of thousands of products, including a Mercedes-Benz vehicle and SK-II cosmetics, which helped turn its lower value products platform into a luxury goods compatible platform.
- Little Red Book (Xiaohongshu): As a dedicate influencer marketing platform, often compared with Instagram, there are more than 100 million monthly active users as of December 2019, with 80% female and 70% born after 1990. It is going from strength to strength in 2021.
- Douyin: evolved from Musically, also the original and authentic Chinese version of TikTok, there are 400 million daily active users as of January 2020.
- Kuaishou: Founded in 2011 as a gif-editing app, Kuaishou launched its short video feature in 2012; is a product promotional channel and not entirely recommended for luxury category, nevertheless it has 300 million daily active users as of January 2020.
- Bilibili: Founded in 2010, the video platform Bilibili is often compared to YouTube, it has 172 million monthly active users as of March 2020.
- Weibo: Weibo is one of China’s first major social media platforms founded by Sina in 2009; after a few up and down years, the Twitter like micro blog platform still possesses 780,000 major content creators, 28,000 celebrities, more than 3,000 MCN partners, and 500 TV and video series with IP. There are 550 million monthly active users as of March 2020.
- WeChat: Started by Tencent’s ubiquitous social ecosystem in 2011, WeChat is almost a must to reside social media place for all brands who have their existence in China, there are 1.2 billion monthly active users as of March 2020.
For top tier influencers and celebrities (followers<500k), the asking price of live streaming selling ranges from a few thousand RMB to several tens of thousand Euros. For live streaming sales, influencers also charge certain commission for each sale (varying from 5% to 20%). MCN is a popular word in China referring to the management company for KOL but the entry point is rather high for starters.
2 SOCIAL MEDIA MARKETING
Comparing with Influencer/KOL (Key Opinion Leader) marketing, Social Media Marketing is a broader definition; it is a world-wide recognizable marketing behaviour, where individuals promote products/services on platforms such as Instagram, Facebook, LinkedIn and Twitter. Based on our practice of official account management for brands’ official social media accounts, the secret sauce is (1) dynamically planning a social media strategy according to the target audience combined with (2) designing a content calendar according to each social media’s features and preferences, from start to finish.
Together with our own branding, distribution social, and Cross-Border KOL social account, we formed a 3-dimensional social media structure to add great value for the output.
Always keep in mind that Content, Occasion, and Multi-dimensional approaches are 3 principles you should control during the whole process:
CONTENT
Content creation is immensely important to make a brand stand out from its competitors. It is essential to understanding the brand’s unique position in the Chinese market, and mastering knowledge of the social media environment.
During our practice, a common approach from marketers and economists would be to use API(s) which monitors the source of the traffic globally; this allows one to analyze all data for a comprehensive global strategy. Knowhow on operations and investment with high ROI is a professional discipline; knowing how to interpret social media behaviour, audience reaction, as well as implementing brand global strategy, that are reflected in the specific content creation (rules differ by platforms) and launch scheduling are key attributes to success.
OCCASSION
In addition to content, awareness of the calendar is undoubtedly important in China. Take Chinese New Year, it is an occasion that everybody loves abstract. They love warm feeling and inspiring meanings. Olay made famous the tag line: “train of 28” in 2019, and Elevatione launched “Times Stops” in 2021. When one think of the Chinese market, indubitably, one recognizes the unique marketing phenomenon so different from the rest of the world. China has their own strategy on product names, what they call “nick name” to create hero/high-end products, it also has its own defined shopping festivals that you need to consideration strongly. “Making a point” or a bold statement is a common marketing campaign in China: 618, for example, translates from Mandarin to English as “getting future immediately”, using the understanding of character structure of Mandarin, so on the day, 18 June, the first fanatic shopping festival begins coinciding with moving forward. 1111 has become the self-indulgent single’s day, with astronomical sales figures or as Chinese like to refer to as cutting hands festival”. As you can see, planning your marketing and sales around these important dates can lead to effective outcomes.
MULTI-DIMENSIONAL APPROACH:
Getting into China is like a science, however the good news is: there are experts knowing how to operate on this sophisticated project just inside Europe, together with you. If you are interested in working with these experts, please write to info@atmall.com
3 DIGITAL MEDIA
Content creation and buying glossy digital media makes an important difference both online and offline for luxury brands. Video creation gains much more attention than other forms, while text content creation contributes enormously to SEO. Exposure is common ingredient, and the right timing and knowledge on where to launch the content can lead to overall cost-efficient results.
4 DIGITAL COMMERCE
A western brand can perfectly structure and function its in-house ecommerce in its home market; ecommerce behaviour can be easily extended to a Facebook store, or Instagram ecommerce via APIs. However, APIs might not be easily integrated in China just like the aforementioned social media platforms due to Chinese government regulations. Digital commerce is not simply buying and selling goods or services; and technology is fundamental during this process on overcoming the challenges on API integration: it includes a wide range of activities and facilities that powers content development, promotion, pricing, customer acquisition and retention, customer relationship management and consumer experience management throughout the customer buying lifecycle.
The new classification of digital commerce in China are unique: Ecommerce, Social Commerce, and Live Stream Commerce.
- E-commerce:
According to eMarketer, China’s $1.94 trillion e-commerce is the largest in the world, and more than three times that of the number two U.S. market; 80% of Chinese e-commerce dollars are being generated from mobile devices in 2019, compare to the global average of 64.4%.
There are mainly 2 kinds of ecommerce forms in China:
- Inhouse ecommerce site
- Flagship stores in top tier platforms like Tmall
— You need to have all in-system operation including internal SEO, as well as external connected redirection traffic contributors like Weibo.
- Social Commerce:
“Retail social commerce sales in China is reaching $242.41 billion (RMB1.675 trillion) in 2020, accounting for 11.6% of total retail ecommerce sales” — emarketer.com, 2020. There are 2 biggest market share players:
- Mini Program:
— You need an official WeChat account to build a membership database with permanent ID tracking method.
- RED store:
— You must be highly attentive to the tags and inspect very carefully in order to have an effective KOL campaign. RED Store and RED social account matter very much to your reputation and with RED being the strictest controlled social media platform in China, reputation and building a strong, trustworthy one is a must.
- Live-stream Commerce:
As we elaborated above on the main 9 KOL streaming platforms, according to Forbes, December 2020, “Live-streaming commerce is experience explosive growth in China. It is estimated to already be $60 billion annually. In 2019 there are over 430 million people, about 30% of China’s population, viewed livestreams, and in 2020, is reaching 560 million, or around 39%. In 2019 approximately 37% of China’s online shoppers made livestream purchases. The total sales from live streaming takes up 9% of total ecommerce sales. Live streaming commerce has been driven by Gen-Z and Millennials, middle-aged Chinese and seniors are jumping on the trend.”
“Live streaming hosts are known as KOL’s (key opinion leaders) and livestream e-commerce has made them huge, well-paid celebrities. In China, KOLs typically receive an appearance fee plus a hefty commission on products sold. One of the top tier live streamers is Jiaqi (Austin) Li, also known as the “Lipstick King.” He’s a former L’Oreal, physical retail salesman who is now worth a reported $5 million.” – Forbes.
On first appears, live streaming sale on each platform is highly lucrative, however, there are also plenty of hidden secret underneath, for example, to find the right host, to negotiate the best deal, to prevent too much returning goods etc; without assistant from experienced professionals, brands can easily fall into difficult pitfalls.
5 TP OPERATIONS
TP (originally abbreviation of Tmall Partner) is essential for brands who want to sell products through the top tier Chinese platforms especially as a B2C retail store. Nowadays, TP extended the meaning to store operators for ecommerce platforms in China. That refers to all other platforms like JD, Kaola, VIP, RED, and so on. The service scope for a TP covers whole store operation including store setup, visual design, consumer purchase process, customer service, in-site campaign, daily logistic and other versatile operation.
6 B2B B2B2C SALES
The goal of marketing is sales. B2B and B2B2C channels are the direct result of good marketing. There are no shortcuts. You need knowledge, network, and experience.
We have summarised 10 different channels for any brands to utilize.
- Top tier platforms
- Top sellers in top tier platforms
- Second tier platforms (more focus on dropship)
- Big online retailers
- KOL stores (including live streaming focused stores)
- Multi-brand stores (beauty and fashion channels are often cross operated too)
- Outlets and shopping malls
- Supply chain companies
- Brand home market retailers
- Brand home market wholesalers
Talking about B2B(2C) sales, if you consider versatile models, you must consider import tax or Cross-Border tax.
There are 3 different trade tax models fully integrated with the logistics.
1). Traditional trading — goods go through border with normal clearance — fully B2B model. Import duty goes with traditional trading import rules. Normal fashion is around 6% to 8%; cosmetics is not allowed without manufacturer CFDA (National Medical Products Administration). Cosmetics mostly go with ecommerce model (B2C) trading. For brands who get CFDA will have a big advantage to ship the goods inside the country to benefit KOL sales and other direct campaigns for quick reaction and advanced customer experience to support sales channels.
2). Bonded warehouse — goods physically in China but outside the national tax administrative territory. Goods will only be charged import duty when they are across the border. There are B2B and B2C ecommerce bonded models. Mature brands of Cosmetics for trading can only bond B2C but import duty is higher than the “direct cross border” model detailed below.
3). Direct Cross-Border — pure B2C from overseas. “Overseas” includes Hong Kong. Hong Kong warehouses provide good customer experience as the direct shipping brings trust over authenticity.
For high end cosmetics, without brand direct consent along with CFDA, 95% trading goes through Hong Kong and utilise direct Cross-Border model. For fashion and luxury, most trading goes with traditional trading coz import duty is lowest.
7 INTERACTIVE CREATIVITY
Content is the key to catch and retain the target consumers. Traditional TV commercials can no longer fulfil the consumer needs thanks to the overwhelming social media content. Creative contents can help you stand out from massive information overload consumers received every day.
Video content is becoming a daily marketing essential for brands. Are you looking to create localized but still authentic marketing contents catered to the Chinese market? AtMall provides solutions with unique creativity, where our industry experts understand consumer psychology to deliver accurate message with stunning effect.
8 BRAND OPERATIONAL BASE
This is about all the foundation to building a presence in China, from: IP registration, domain application, nick names in Chinese, logistics and warehouse deployment, and Cross-Border strategy deployment. If you need a team to help you manage all of this for you, give us a call!
ACTION 2：ENGAGE WITH CROSS-BORDER INFLUENCING MARKETING IN EUROPEAN MARKET.
This ecosystem requires innovation and a sharp business mind to deal with the commercial challenges, as influencing is perception-based approach, i.e., what people like or do not, it requires thought leadership skills to be able to replicate success time and again.
AtMall has gathered many Cross-Border KOLs in Europe by providing them collaborative opportunities, content creation subjects, events, and even technical support. Those European resided influencers are active in various Chinese social media, such as RED, TikTok, Weibo, WeChat, Bilibili, Zhihu, etc.
ACTION 3：PARTNER WITH A COMPANY WHO HAS INSIGHT AND CAPACITY TO DELIVER.
To the question that is lingering: who can help manage point 1 and/or point 2 for you?
Us. AtMall.
WHO IS ATMALL…?
Our AtMall marketing and distribution professionals have extraordinary in-depth expertise in project management, strategic planning, operations, and financial planning. We are a multi-cultural organization and have many dual nationalities, with a sizeable portion of them being Dutch/Chinese and native speakers in both languages as well as being high proficient in English. Their unique experiences, of having either been born, education and worked in China and now Netherlands helps them understand the markets and customers of Europe and China.
How can AtMall HELP?
AtMall has a Cross-Border KOL (Key Opinion Leader) business line in Europe that is highly active on the western social media platforms, such as, Instagram, YouTube, Facebook, etc. Our objective is to help European premium brands establish or strengthen their influence base in China. Our European Cross-Border KOL operations help brands throw the first stone in China and support established brands to strengthen their branding campaign to stretch product lines. Our Cross-Border influencers have generated significant results not only on B2C market, but also on B2B market.
We manage store operations, and support brands on building hero products, establishing a consumer data centre, build integral CRM data integration, and oversee full channel multimedia interactive campaigns.
If you would like to know more about who we are, what we do and how we can help you achieve the results you are looking forward, contact us at info@atmall.com and Ken or Candice will arrange an appointment.
