L2 produce a variety of great videos on ecommerce and brand strategy. Check out their latest offering on how paid advertising optimization is crucial to ecommerce marketplace success
Recode has a great report into Amazon’s latest third party seller numbers. Third party sellers, if you arent familiar, are the small businesses who use Amazon to sell their products in a marketplace environment.
My favorite quote:
These merchants also play another important role: They supply Amazon with an almost limitless assortment of goods that make it the everything store — more than 100 million items in the U.S. are now eligible for two-day shipping under Amazon Prime. And more than half of all items sold on Amazon last quarter came from third-party businesses.
The two key numbers here; over 100m goods available with Prime, and half of all goods sold are now from third party sellers. These numbers are astounding, true scale that no other merchant including Walmart can touch.
This is a guest post by Orla Forrest of Neon SMS, an SMS Marketing company (http://www.neonsms.ie/).
Marketing campaigns are measured not by how cool or flashy they seem, but by how much money they recoup for the company and whether the investment in the campaign is made back through customer engagement. Therefore, any decisions regarding the execution of the campaign need to be made carefully. For instance, the success or the failure campaign could boil down to the selection of medium through which it is executed.
That will depend on the specifics of the campaign and its target market, but by and large, SMS proves to be the most successful channel by a distance. Its average peak redemption rate is a staggering 85%, which is more than four times greater than any alternative channel, so SMS is a proven winner.
What makes it such an attractive medium for ecommerce? Its convenience is a major plus point, as customers will get the message on their phone and know exactly how to redeem the coupon. The timeframe from the sending of the coupon to its redemption is far shorter than with other channels, as people will have their phones on them the whole time and redemption is usually as quick as sending a short code or keyword. Email, by contrast, tends to go over people’s heads and be ignored, while paper coupons just seem old-fashioned and can easily be left at home by mistake. Your phone, on the other hand, always makes it out the door with you.
For ecommerce providers devising an SMS coupon campaign, the key is in its simplicity. Make it as easy and quick as possible for customers to redeem the coupon, or else they probably won’t bother. Be sensible about the timing and frequency of delivery, too. Send it during evening downtimes rather than first thing in the morning when people are at their busiest at work. Messaging customers once a week is usually the best balance between consistent engagement and not flooding them with messages to the point of nuisance.
The Chinese market place is, in my humble opinion, the most fascinating in the world. I have had the pleasure of working in and studying this digital eco-system in China for a number of years. For western businesses looking to expand into the most lucrative [in terms of sustained return on investment and lead generation] yet different marketplace in the world it is important to understand what makes it so unique and why..
China is contradictory in many ways, the country has opened up to foreign investment and business opportunity like never before yet still remains a very separate and distinct proposition for business.
In China digital is king
In China EVERYTHING is now digital. The digital revolution has been unprecedented in the last decade and now become the absolute norm. The country boasts a 58% internet penetration rate which is expected to grow to 65% by the end of 2017. This is relatively low compared to many countries in the world but consider China’s population of 1.4 billion, this therefore equates to 800 million netziens.
Consumer culture is increasingly orientated around digital engagement, online to offline, and e-payment. The growth of Alibaba, WeChat and Baidu as the key online giants has helped facilitate such consumer trends.
You don’t need to spend long in China to realize the prevalence of digital. Chinese citizens are glued to their smartphones, in-fact, latest figures show there are approximately 550 million smartphones in China. Even physical adverts [without exception] embed QR codes into the images whilst e-payment in stores via Alipay or WeChat has become common practice.
The digital advertising and marketing industry is worth $320 billion in China, the future is digital. But so is the present. You have to understand that whilst offline methods still exist they are old news, you have to be where your target market is, and that is online on search engines, e-forums, social networks.
The key fact to digest is the scale of China’s internet penetration, typically it was the east coast of the country with the largest 1st tier cities that had the largest online communities but of course most of the population of China live in tier 2 and 3 cities, the growth of internet access here is increasing at the fastest pace, in part because of the success of Alibaba’s e-commerce infrastructure.. but more on this later.
The market is different, Chinese platforms dominate.
The market developed under a unique and different set of conditions. What you have in China is effectively a closed intranet, rather than the open source web we are used to. The online sphere has been shaped by state regulation, policy and Chinese cultural trends. This has produced a market place where Chinese, home-grown platforms dominate. State regulation shut western competitors such as Facebook, Google, Youtube etc out of the largest market in the world, in this vacuum Chinese specific adaptions evolved to cater more specifically for the Chinese user. Instead therefore we have WeChat, Baidu and Youku.
Western brands, products and services need to utilize this Chinese infrastructure for growth in order to succeed.
Chinese platforms are world leading
Chinese platforms are not just unique but also world leading, innovative businesses in their own right. They may have started out as western ‘copycats’ but have now evolved into very different, multi-faceted creatures.
Baidu is the largest search engine in China with 70% of all online research conducted here. For any business a strong presence on Baidu is vital but takes time as you need to appear in the natural results based on Chinese keyword searches. Baidu’s intelligent system named ‘the spider’ prioritizes websites hosted on a local server which are optimized for Mandarin character searches. Like Google, the engine rewards fresh content and backlinks from other sites to increase visibility in the search results.
Baidu are investing heavily in virtual and augmented reality with aim of incorporating this into their searching services as well as facilitating their wider uptake and commercialization in Chinese society.
WeChat is arguably the most integrated platform in the world with 750 million active user accounts. It is designed as a ‘one stop shop’ for everyday life with a host of their own and third party apps on offer within the network. WeChat functions as a browser, app store, instant messenger, is used for sharing video’s and pictures, a taxi ordering application, voice messaging, an e-payment system as well as providing services in dating, financial investment and geo-mapping location.
Weibo (akin to Twitter) is a micro-blogging platform with 250 million users. Users can see posts from anyone, they do not have to be connected first. This makes it an ideal place to work on branding or for spreading a message with articles often the subject of posts. User interactions remains high on Weibo with posts up-ranked based on the number of likes and comments from the community. If content is going to go ‘viral’, it will most likely be on Weibo. Many online influencers and celebrities also use Weibo as their main network for posting and interacting with followers.
In China you have to start over again.
Regardless of your status outside of China, because the internet has been ring-fenced, you need to build a reputation and visibility from scratch to generate leads. Baidu, the largest search engine presiding over 70% of all online research, is based on Mandarin Character keyword searches, English optimized keywords are redundant.
This does present a great opportunity too, the barriers for entry also result in fewer international competitors, and this is what sets you apart. Being first to market in China is vital, I have seen time and time again that, if you brand yourself and grow your online presence ahead of the competition you are far more likely to succeed.
Everything moves fast
In China everything moves quickly, part of the frantic pace of modern life as the country hurtles into the future. This results in large scale investments and innovations being made quickly and decisively. You need to move fast to get ahead of competitors. Take the ‘mobile biking revolution’ as an example. The leading player is ‘Mobike’ who launched an app where you scan their branded bike to start riding and scan to finish, leaving it wherever you want. Using mapping services users can locate the nearest bike. Mobike launched and within two weeks had placed over 30 000 bikes in the first tier city centres. The app launched and within a single month boasted over 200 000 registered users. Digital growth is fast paced, decisive and exciting..
The behaviour of Chinese online
Chinese ‘netziens’ are arguably the most engaged online users in the world. They spend on average a whopping 2.5 hours per day online. 1.5 hours of this is spent on social networks. The Chinese user see’s the internet as their greatest resource for researching, and this is their key trait, the Chinese research online like no other nation.
This is due to a number of factors. Many Chinese have been cheated or let down by poor quality products and services. This makes them more discerning in their purchasing habits and sceptical of new brands without a reputation.
The other factor is that Forums remain wildly popular, in search engine results forums will often appear above an official website. The ‘forum’ is unfashionable now in the west but remains vital to any marketing strategy in China. I would suggest this is due to the Chinese reliance on peer based reviews and shared opinions, perhaps because of their more collectivist nature.
The importance of mobile
There are now 550 million smartphones in China. This is because of mass market, affordable models from brands such as Vivo and Xiaomei. It has led to a mobile-centric digital market place and underscores the importance of mobile optimized content, app development and mini-sites.
Mobile has produced a type of ‘on the go’ engagement. WeChat was built as a mobile app with users spending an average of 1.5 hours a day on the platform. This is because of this culture of instant gratification, frequent usage and mobile interactions.
With the dominance of smartphones comes the proliferation of apps. The largest app store is Tencent’s ‘My App’ with a 24% market share, in second is ‘360 mobile assistant’ with a 16% coverage. WeChat are also launching their own internal app store which will tap into their 750 million active user accounts.
E-payments are the norm in China now. The largest third party payment app is ‘Alipay’, part of the Alibaba group. Users can simply scan a QR code to make instant payment from their e-wallet, this is linked to their banking. E-finance services have developed with users able to transfer funds to each others accounts, make investments and manage accounts. WeChat also launched an e-wallet service to compete with Alipay.
‘Hongbaos’, the traditional red envelope given at important Chinese festivals and life events, has now been updated in our digital era. E-wallet services allow users to send and receive hongbaos with either a fixed or random allocation of money inside. Alipay spent millions in offering ‘lucky dips’ on red envelopes to incentivize users to give digitally. The search for envelopes has even been integrated into the physical environment with new Augmented Reality based games, users through geo-location services and their camera on a smart phone can find and open envelopes. Think ‘Pokemon Go’ but there is a financial inventive.
QR codes really took off here and have created strong opportunities to drive traffic from offline to online. By scanning a code, users can be linked to a company website, wechat page or some specific content. QR’s are now featured on most ads, in magazines and newspapers and on physical products. This highlights the nations pre-occupation with digital engagement. It is commonplace to see someone scan the code from an ad in a metro station because this links to the bulk of the content. The take home message is that even with offline activities, the main goal is to drive the prospect online, especially as paying via digital wallets is the best and easiest method for payment.
China is a fascinating market, especially because of its uniqueness coupled with its profitability. Nowhere else on earth will you find a closed system with such a vast user uptake of digital services and as a passionate marketer this captivates me.
Benji is a digital marketing specialist focused on the Chinese market, for more information see his blog and website here.
The Chinese New Year Travel Rush, known as ‘Spring Movement’ (春运 Chunyun), usually begins 15 days ahead of Lunar New Year’s Day and lasts for about 40 days (usually from mid-January to late February).
This year an estimated 450-500 million Chinese citizens are expected to travel to their home towns to spend China’s biggest and longest holiday with their families.
This huge holiday presents a great opportunity for savy marketers tapping into the largest consumer market in the world. The mass uptake of transport orientated advertising, e-hongbaos, Chinese tourists making trips overseas and novelty items that cash in on ‘the year of the Rooster’ are not to be under-estimated in a country prioritizing this time of year and the unique Chinese cultural practices surrounding it. For international brands it is important to stay ontop of these trends.
Advertising on public transport
CNY sees the largest mass migration of human beings on the planet, it is the longest and highest annual period of transport usage anywhere in the world. In 2016, it was estimated that Chinese travelers made around 2.9 billion trips in total during the 40-day period.
This widespread use of public transport, particularly the bullet train network, represents a huge opportunity for advertisers. The modern CRP train network now boast digital screens, placed in the back of seats. Digital ads are screened between content played with interactive QR code based ads encouraging users to scan and interact. Whilst on long journeys across China (which can be up to 15 hours), there is a relatively captive market with a lot of time on their hands.
Metro systems in the larger cities see increased usage as they effectively act as the major transport hubs. The metro in both Beijing and Shanghai are now implementing LED ad boards which are built into the tunnels and spaced out correctly to create moving, digital displays. The footfall and exposure will be much higher at this time of year.
Vehicle usage increases by four times on the roads so large physical billboards are erected at busy intersections, although this is costly it certainly results in high levels of traffic, if you excuse the pun..
‘Hongbao’ is the infamous ‘red envelope’ that is traditionally presented at this time. It is an envelope filled with cash and reflects good will and prosperous fortune for the year ahead.
In the digital age e-versions are now hugely popular with Alipay, the largest third party payment system in China encouraging users to send their red envelopes via their APP. Users then receive the money into their account. To incentivize users last year Alipay gave away millions of dollars in free prizes for users who used their e-hongbao service.
WeChat are also hot on their heels with their e-wallet service. Users send hongbaos via personal chat or they can be posted in a group with a random or equal allocation of the total figure shared to everyone who opens it. It has not surprisingly been a way of motivating users to engage with brands on the social network by sharing their posts and attracting followers.
This is such a popular phenomenon that Alipay are now launching a ‘Pokemon Go’ style augmented reality game where users interact with the physical world and locations around them (based on GPS) to locate hongbaos. This presents huge opportunites for O2O, that is online to offline based marketing and vice versa.
E-commerce, users with spare time shop online.
Alibaba, the largest e-commerce player in China have developed the largest e-commerce infrastructure in the world. This includes reaching to smaller 2nd and 3rd tier cities. In the run up to CNY shoppers will order to deliver to their homes in more rural areas and the smaller cites. Alibaba will typically see an increase in orders before the festival begins, with the improved road network, delivery fleet and internet penetration rate China has become more connected than ever before. Digital ecommerce facilitates shopping for consumers across the country, not just those in the large, 1st tier cosmopolitan cities. This also benefits cross-border ecommerce which has become the key infrastructure for sales for international brands. With large families giving gifts in the form of hongbaos e-retail also typically spikes just after the CNY period.
Then of course with this being the longest holiday there is the opportunity to travel. Ctrip, the largest travel provider in mainland, reported there will be 6 million outbound trips this year. Catering for Chinese visitors at this time is important, many destinations now offer special New Year dinners and events in hotels and destinations around the globe.
The most popular destinations for tourists are South Korea, Thailand, Japan, US, Singapore, Australia and Indonesia. The focus still tends to be on Asian countries that are closer and more convenient in terms of location. Having said this, as disposable incomes keep rising you expect to see the Chinese middle class choosing luxurious destinations further away in the western hemisphere.
‘Year of the Rooster’ products
This is the year of the Rooster, many novelty product variations around this sell very well. Limited editions versions or packaging is a good move. Features and games based around this theme can also be launched to drive traffic online and up-promote Rooster related content. The symbolism of each animal is important with the Chinese being associated with an animal from birth based on which year they were born. Special offers or rewards for those born in this animal year remain popular with brands.
To conclude it is important to capitalize on such seasonal trends as CNY. The Chinese greatly appreciate such tailored marketing whilst the mass movement, travel trends, hongbao culture and large gatherings of families in their home towns can be tapped into by savy marketers operating in China.
Benji is a digital specialist based in Shanghai, for more information see his website here.
The E-commerce giant Alibaba’s 11.11 online sale or ‘singles day’ has become the biggest day in the Chinese shoppers’ calendar reflecting the giant Chinese e-commerce market and its growth on an unprecedented scale. This is indicative of the largest e-commerce market in the world with 800 million Chinese now connected online, they are embracing western style consumerism in a way they never could before throughout China’s tempestuous history.
What does Alibaba’s 11.11 represent? It is the biggest online shopping day in the world where on November 11 Alibaba slashes prices on all their online platforms but most notably Tmall and Taobao. In 2015 the Chinese spent $9.3 billion dollars in a 12 hour period on November 11th. This figure is only set to increase this year with a growing internet penetration rate, up from 45% to 55%.
The Alibaba Nov 11 sale is a tradition that started in 2009, when 27 merchants on the company’s Tmall site offered discounts to increase sales during a usually slower period for e-commerce. It has since been promoted year on year to become a huge shopping phenomenon in the world of e-commerce.
The Chinese e-commerce giant cleverly utilized the existing (but less established) Chinese tradition of ‘singles day’. This tradition started in Universities where students would celebrate their single status on this day because the figures ‘11.11’ were thought to be aesthetically representative of single life.
With the growth of consumerism in China it was a logical step to link this expression of single identity with the purchasing habits of Chinese citizens. This e-shopping festival is ultimately enabled by Alibaba’s established e-commerce infrastructure across China and it’s strong digital marketing strategy which established 11.11 as an ‘anti-valentines day’ whereby consumers are encouraged to assert their independence through purchases.
The event has received strong support from the government at a time when China’s economic expansion is slowing and Beijing is trying to transform the Chinese growth model into a more sustainable one driven by consumption and technological developments rather than manufacturing. Alibaba as an innovative Chinese e-commerce platform are arguably the greatest domestic success story for the state.
How has Alibaba, which developed a host of platforms linking buyers and sellers, achieved this? Crucially, it has been able to tap into China’s changing market demographics, marketing to the emerging middle class and its increasingly affluent younger population. It also positioned itself as a wholly digital company at the cusp of China’s internet revolution. This is a time where traditional brick and mortar retail no longer dominates in the aptly named ‘mysterious orient’, everything has moved online, especially with the wide-scale adoption of smartphones.
These developments and savy business practices have allowed the company to go from being a small start-up to the largest retail giant on the planet in the space of 15 years. It’s platforms now carry some 80% of Chinese online commerce. Forbes has named Jack Ma, its charismatic founder, as the richest person in China, with an estimated fortune of over $20 bn.
What we care about is what is behind the numbers,” Alibaba Chairman Jack Ma told reporters at the company’s headquarters. “Behind the numbers we can see the power of the market.” He said more competition and diversity in e-commerce would help strengthen this burgeoning industry in China.
Alibaba when speaking about singles day the previous year said its logistical division and its partners would utilize more than 1.7 million personnel, 400,000 vehicles, 5,000 warehouses and 200 planes to handle deliveries on this epic scale. China can be thought of more as a continent than a single country and this scale of infrastructure is necessary for the delivery to Chinese tier 1,2 and 3 cities as well as more rural areas.
With so many Chinese buyers looking for products online this is a key time to develop your business in the Middle Kingdom. Tmall the platform which kick-started this online shopping occasion boasts a whole division of its business ‘Tmall Global’ dedicated to providing online stores for western brands and companies. In these major sales the Chinese are often looking for western products, which have become a byword for quality in a market flooded with counterfeits and fakes.
Alibaba has strong global aspirations that are in line with this trend. 200 overseas merchants from more than 20 countries have confirmed participation in its Singles’ Day sales this year, with many multinational brands taking part in the “11.11 shopping festival” for the first time.
Looking to develop your e-reputation and online visibility in China is absolutely vital for you to succeed in E-commerce and tap into this lucrative market. The most powerful thing about selling your products on Tmall or Taobao is that suddenly you are exposed to the largest consumer market in the world where you can benefit from Alibaba’s existing infrastructure for sales and delivery. The scale of online shopping and deliveries for singles day represents this.
Benji specializes in Chinese e-commerce and tailoring digital campaigns to this market enabling companies and brands to make that first step into China. See here.
New York-based eMarketer reported that annual mainland spending is forecast to grow 13.3pc to US $4.886 trillion. This will overtake the United States’ at US $4.823 trillion.
The Chinese mainland is home to the worlds largest e-commerce market and this year is set to become the largest retail market in the world. This news comes two years earlier than expected by initial forecasts but the huge uptake of e-commerce in the mysterious orient has been unprecedented. This is especially so now as smaller, lower tier cities have become increasingly connected with better internet connection nationwide and an improving infrastructure for the delivery of goods. Aliababa the Chinese internet behemoth now have the largest, most developed delivery network in the world across the China. From first tier to fifth tier cities.
Monica Beart, the forecasting director at eMarketer, said e-commerce will continue to anchor overall retail growth on the mainland in conjunction of the expansion of its middle class, deeper mobile and internet penetration, and improvement in logistics and infrastructure.
This is all part of the overall trend whereby China is gradually switching from a manufacturing based economy to a service based economy. Currently the combination of the two is proving to be an effective one.
The eMarketer data showed the gap between the overall retail spending in China and the US to significantly widen by 2020. Total retail sales on the mainland that year would hit US$7.086 trillion, compared with US$5.476 trillion in the US.“China will continue to see massive gains in retail e-commerce over the next few years, with sales topping US$2.416 trillion in 2020,” Beart said.
Recent data from iResearch showed that Tmall.com, the main online shopping platform of Alibaba Group, dominated with 58 per cent of China’s business-to-consumer e-commerce market last year. Jd.com which is backed by other digital giants Tencent held a 26% marketshare.
With the market showing continual signs of growth it is a crucial time for western firms to move into this lucrative market. There are a number of difficulties for western companies with different laws and regulations, customs policies and a whole different internet landscape to navigate. It is important to utilize Chinese connections and expertise in this area in order to expand effectively into the middle kingdom.
Growing markets to invest in currently include cosmetics, fashion and e-tourism. This fast paced digital landscape is certainly one of the most fascinating and lucrative in the world but firms need help navigating what can often seem like an alien world in China.
Benji is a marketing and e-commerce expert based in Shanghai. For more information see his blog and website here.