Blog Post - Sabine Bohmer, May 23 2017

Ecommerce in China – why trust is key to brand success

Ecommerce in China – why trust is key to brand success

China is the world’s largest ecommerce market, with consumers outspending those in the UK and USA combined. In 2016, the turnover of China’s online shopping market reached a staggering 20 trillion Yuan ($2896 billion). Forrester estimates that by 2020 the market will almost double in size to reach $5792 billion. It comes as no surprise then that many brands are considering expanding their ecommerce operations into China. Whilst the Chinese market can undeniably seem attractive, the opportunity also offers a unique set of challenges, which brands will need to conquer in order to be successful.

THE CHALLENGES

Company vs. Product

In Europe and America, brands are a way of differentiating the product from the competition through the associations the customer has with that particular brand. In China, however, the primary goal of a brand is to gain the trust of the customer. In the eyes of most Chinese buyers, a well-known high-end brand guarantees high quality and a decent customer service, meaning it becomes easier for the customer to trust the company selling that product. There are some key marketing strategies for achieving this, which are outlined in the measures below.

A history of mistrust

Why is company brand trust so important to the Chinese consumer? Many Chinese consumers and companies have fallen victim to scams or received substandard products not just from online shopping but in traditional brick-and-mortar stores too. There is certainly ‘buyer mistrust’ towards sellers in general, and consumers will only seek out those retailers that feel safe and that can reassure them over their purchases.

The rise of the marketplace

The overall lack of trust in individual retailers has led to the rise of the third party marketplace. Websites such as Alibaba are popular places for buyers as they offer customer security. Ecommerce marketplaces offer a more trustworthy customer experience with background checks of members, ratings and reviews and payment upon satisfactory delivery (a service offered with Alipay). Brands should consider how their website compares and competes with these secure one-stop ecommerce sites.

MEASURES AND ACTIONS

Guarantee authenticity

A good place to start is to take the learnings of the marketplace and adapt them to your own ecommerce site. Improvements have been made but some Chinese companies are still selling forgeries under assumed brand identities on the marketplace. An individual website is likely to have more success if it can guarantee the authenticity of the products it is selling. Offer the opportunity to rate and review your products. Create a secure environment for your customer.

Corporate responsibility

As we’ve already discussed, the key to success is trust and a good way for a company to outwardly express brand trust is through displays of corporate responsibility. Many companies will now actively seek out opportunities to fund local schools or make generous donations to charities.

Internet celebrity endorsement

The real influencers in China at the moment are the ‘Wang Hong’, a new breed of Internet celebrity who makes a living out of endorsing products via social media. Top ‘Wang Hong’ Zhang Dayi earned a massive 300 million Yuan ($46 million) just from promoting her own clothes online, and has 330,000 followers on Weibo. Alibaba has invested a great deal of money in social media platforms in order to entice the celebrity bloggers to its website, and many large companies are following Alibaba’s example.

Customer acquisition and brand awareness via the marketplace and social media

With the majority of consumers heading to the third party sites to make a purchase, it is becoming harder to attract visitors to a brand’s own website. Most Chinese companies are now taking advantage of consumers gathering in one large space by having online stores on the marketplace and on social media sites such as China’s WeChat. These smaller online stores are primarily there to raise brand awareness and gain consumer trust and then entice them into the main store by way of promises of better customer experience.

Marketing strategies making their mark

Below is a variety of marketing approaches that have proven successful in China. What they all have in common is deep interaction with the consumer, with the ability to find out more about the brand.

  • Customers take a test (e.g. personality test) and are then able to post results on WeChat Moments (comparable to a Facebook wall)
  • Customers go on a virtual treasure hunt and learn more about the brand on the way
  • Games where customers can learn about a company’s history, manufacturing process and the like with the possibility to send friends QR codes to invite them
  • Customers collect loyalty points and enter a prize draw when customers have accumulated enough loyalty points
  • An Internet celebrity (the aforementioned Wang Hong) presents the products and the companies during a live stream show where customers can ask questions or make requests

So how about you? For many, the appeal of a marketplace will be irresistible, offering a ready solution for retailers challenged to find ways of extending their reach, building their brand and increasing their range without incurring additional stock, supplier and warehousing overheads. For others, striking out on their own adopting best practice of marketplaces and inspiring a deep brand connection with customers will prove the more inspired and lucrative commercial route.

Salmon is a global ecommerce consultancy and the largest in the global WPP network of companies. Its China operations are spearheaded through a team of ecommerce experts in its Beijing office. Through this local expertise, we can leverage our knowledge of establishing market penetration and development within the unique, dynamic markets of China. Get in touch at info@salmon.com.

Download the full Salmon report Ecommerce in China – what you need to know.

Download the Salmon report How To Grow Your Business Via A Marketplace.

Sources: www.bbc.co.uk/news/world-asia-china-36802769; www.forbes.com/sites/ywang/2017/01/26/superstar-influencers-chinas-internet-celebrities-at-heart-of-alibabas-growth/#374618d92c98