Understanding China’s Digital Customers

Introduction

The rise of the middle class in China is an important driver of global economic growth. With increased affluence and sophistication in knowledge of both social and mobile technologies, Chinese consumers is looking for a connected consumer experience by using social media to learn more about brands and products, making purchases on social media platforms and instant messaging services such as WeChat and also use social media platforms to share their opinions and post reviews that are highly visible to their respective communities.

They are increasingly demanding higher quality products that are tailor-made to their needs with price becoming less of a driver, but value remains important as customers are well informed about global prices since most of them travel physically or digitally. Therefore, both foreign and Chinese brands need to engage strong brand influencers in these communities, leverage social trends to build strong brand values and unleash the power of social commerce.

As a whole, the advances of the China’s technology infrastructure is exploding and robust enough to develop a high level of connectivity in the market, linking consumers, retailers and manufacturers to boost both domestic and international eCommerce growth.

Listed below are my insights of China’s connected customers:

1. Platforms Versus Branded Websites

From my observation, there is a higher inclination for Chinese consumers to purchase on platforms as they offer multiple choices, well-accepted product presentation and information, payment gateways, peer ratings and regular promotional activities. One important statistic is that Tmall by Alibaba controls over more than 40 percent of total B2C business in China.

Through my market research, small and medium sized enterprises typically generate very low conversion rates on their own branded website even though they provide reliable and accurate information as well as authentic products. This shows that Chinese consumers are increasingly looking at trust and reliability of the site with multitude of choices being available to them to gain assurance and more knowledge about the products and services offered.

However for luxury brands, they may do better building their own storefronts rather than being on one of China’s e-commerce platforms. Chinese consumers are catching up very quickly and learning so fast about luxury brands through social media and are capable of finding the brand sites directly. The upside of having a branded website is that they could have more ownership of content and client relationships than what platforms could provide typically. Therefore, I will highly recommend brands to establish both their branded websites and also manage their online presence on key platforms and search engines to ensure consistency when promoting these official brand assets to their market segments.

2. Mobile Shopping

The staggering amount of mobile commerce in China itself is an important phenomenon. Enterprises who are in China or expanding to the region will need to have a targeted focus on mobile marketing. This requires an innovative approach and also renewed adaptation to the fast changing China business and customer ecosystem in terms of user experience, design, payments as well as connections, with social media applications. While traditional PC digital marketing is all about traffic and conversions, mobile marketing is all about user engagement and therefore requires and allows advance personalisation and deeper social engagement at a time when customers are looking for more relevant content.

With such a degree of connectivity and sharing, I foresee that customers services will be an important differentiator for many digital businesses in China. With better access to information and the emergence of sharing economy, customers are paying attention to service (time to delivery, convenient to return, effective refund services, customer service via WeChat). China customers are not buying just domestically but buying more from global websites due to higher purchasing power and also better brand knowledge.

Therefore, buying overseas through Daigou (Group Buying) remains a hot trend due to price arbitrage. I observed that international websites are increasingly target China to build a direct channel to the Chinese consumer. In the face of this, local platforms have improved their customer service standards to further differentiate themselves from overseas competitors.

3. O2O in China

New technologies and infrastructure have paved the way to merge online and offline into one holistic shopping experience. One prominent example is instant messaging technologies such as WeChat whereby it enables them to ‘shake’ and receive exclusive offers and services in-store. Therefore, online to offline is an important and growing trend in China - online only is not going to create sustainable brands and at each point, each brand will need a face to face touch point. I strongly believe that China will see more online brands opening up pop-up stores and physical locations.

We are already seeing this as online brands aiming to improve customer engagement by delivering new and different experiences. This could be in the form of a different way of interacting with a brand through a pop up store or experience booths or through digital means such as video, music or live streaming events. This integrated experience will better allow China customers to gather more data and make more informed choices about their purchases. There is a trend among big brands like Apple, Starbucks and Burberry to work with influencers to generate relevant retailer and user generated content alongside key opinion leaders to focus on the digital channel as a means to enhance the customers’ offline store experience which would merge with online purchases for more effective omni-channel integration.

Innovation and Digital Retail in China

I boldly predict that Chinese Consumers are experiencing a digital paradigm shift whereby the trend is moving from an Information Age focusing on accumulation of data through social media mediums such as Weibo and WeChat to transition to the Experience Age focusing on experiential customer journey through live streaming or consuming physical product or services through on demand platforms such as Ele.Me or Didi Chuxing.

The growth of O2O will only meant that the brands have to maintain a consistent online and offline brand image to rapidly build something to scale and meet the evolving needs of the China consumer. Distribution and operational agility are key issues for enterprises to consider with digital being an enabler to drive and connect the in-store and online experience to better serve customers through these omni channel capabilities.

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