The Extraordinary Effectiveness of SMS Coupons

The-Extraordinary-Effectiveness-of-SMS-Coupons

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.

Taking your first steps in China? What makes this market unique?

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

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

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.

AMZN Crushing Mobile

As BI reports, Amazon is dominating the mobile commerce space. Oppenheimer highlighted by just how much saying …“At the end of 2014, Amazon had roughly the same number of mobile unique visitors as Walmart and eBay, in the US. As of December 2016, Amazon has more unique visitors than the apps of those two companies’ combined,”.

And outside of Walmart and Ebay, the rest of the entire retail industry is way behind to the point you could be forgiven for writing them off entirely in the future of mobile commerce:

amzn-mob

So we have an Amazon dominated mobile commerce landscape in the near future. But long-term, perhaps as has always happened, the Internet will throw something new at us.

Chinese brick and mortar is crumbling: the future is all digital!

Benji is a digital marketing specialist based in Shanghai, he writes extensively on digital strategy in China and is passionate about providing solutions for western businesses looking to expand into the aptly named ‘mysterious orient’. For more information see his blog and website here.

Image result for crumbling wakk

Traditional retail shopping in China is in decline alongside the continued growth of e-retail, online activity and digital spending generally. Retail revenue is falling by 15% year on year whilst the digital market grows by 25% per year. Unless businesses realize that the future is all digital they will incur the costs of not developing with the times.

Many malls with mainstream brands are struggling to generate enough revenue and attract a high footfall. There are also an increasing number of ‘ghost’ shopping areas, with many of the entrepreneurial peasant class opening shops with all their family savings only to find themselves closing within a year, the human cost is high. Small businesses are always hit hardest.

It is vital for western businesses to invest in digital first and foremost, ‘clicks not bricks’ should be your new mantra. There will always be some demand for physical shopping but those stores attracting the highest footfall are also implementing successful marketing campaigns on the Chinese internet, digital will always be a key component.

So why is traditional shopping on the decline and online now the solution?

1)      Convenience

The largest urban areas are increasingly polluted, congested and affected by overstretched public services, it is increasingly inconvenient to travel to shop, especially because of the size of the country. E-commerce offers an infinitely faster process with quality platforms such as ‘Tmall’ associated with genuine brands in a market known for counterfeits. Even if users are looking for copycat products platforms such as ‘Taobao’ are renowned for selling everything under the sun too. Shopping online is simply more convenient with quality not being sacrificed.

2)      Pace of life

Fast paced, frenetic modern China is still on an upward trajectory, this is a country (especially on the east coast) growing in a spectacular way. The new wave of Chinese careerists work hard and long hours, therefore the ease of e-commerce services combined with the speed of purchasing is a key factor. Online shopping is largely facilitated by the breakneck speed of modern China, it is a response to changing consumer habits.

3)      Alibaba have developed world leading e-commerce platforms

There is the quality of Chinese e-commerce to also consider. Retail outlets are always limited by where they can locate, the space available and high rental costs. Alibaba however grew online without such burdens and developed a world leading network and series of platforms which facilitated this move to digital e-commerce. Tmall, their flagship site is hosting official branded ‘stores’, it is popular with international brands as their target market regularly shop here. ‘Alipay’ the companies payment system also facilities cross border commerce with both RMB and international payments accepted.

4)      The nationwide e-commerce infrastructure has grown

With a select number of tier 1 cities boasting the best in shopping services other tier 2 and 3 urbanites were previously left out. Now however with the growth of Alibaba’s national delivery network smaller cities are benefiting from the same range of products on offer. Physical store expansion has inevitably not grown at this same rate due to the far higher costs, Chinese stores therefore need to embrace e-commerce and utilize the range of platforms on offer to grow in the digital sphere.

5)      China’s propensity for digital

The digital revolution in China has been unprecedented, this is especially so with the uptake of mass market smartphone technology. With such a strong mobile culture it is unsurprising that users also shop in this way. With e-commerce platforms optimized for mobile, shopping ‘on the go’ is a growing trend. The new wave of Chinese consumers are growing up in a culture where they expect this type of ‘instant gratification’ and e-shopping in such a strong consumer culture is inevitably affected.

6)      e-commerce in conjunction with WeChat’s social network has a promising future

It is still early days but businesses can now open micro stores on WeChat which can be linked to their official accounts. With WeChat pay already linked to users bank accounts this facilitates incredible ease of purchase. Marrying e-commerce and social media in this way is a revolutionary step that will further promote the rise of e-retail over traditional store shopping. When one door closes another one opens.

The good news is that for every Chinese merchant stuck in the offline paradigm, there is at least one getting there online game on. McKinsey has estimated 46m new online jobs will be created by 2025 against to 31m lost. It is timely that, with the Chinese states drive to move from a manufacturing economy towards a creative and innovative tertiary economy, that such digital growth has been witnessed. China is hurtling towards the future and commercial activities need to embrace new digital solutions to grow in this changing environment.

 

 

 

 

Amazon and Walmart Face-off

It looks like the big two in retail, Amazon and Walmart, are going to collide both online and offline. Following the Jet.com acquisition, Walmart are talking up future ecommerce initiatives and their impact on the stores business.

Likewise now Amazon plans to more aggressively get into physical retail as noted by WSJ.

With curbside pickup, Amazon will have to contend with Wal-Mart, which plans to bring the service to nearly a quarter of its roughly 4,600 U.S. stores by the end of next year, executives said on a conference call last week .

So will Walmart’s physical competency beat Amazon’s digital expertise? Time will tell but if you were to bet on anyone you’d be hard to bet against Amazon. The digital pie is growing and the market already says Amazon’s future earnings will continue to rise. The same can’t be said about Walmart, especially when you consider the customer base that was built on the middle to lower class is stagnating.

Should be fun to watch.

Re-evaluating Valuations

TechCrunch reports Rocket Internet – perhaps the most ambitious ecommerce play in terms of global operations and reach – has written down the valuation of it’s GFG fashion businesses.

On the heels of Alibaba investing in its Amazon clone Lazada, today the Berlin-based incubator announced that Global Fashion Group, the company’s unprofitable merged fashion businesses, raised €300 million ($340 million) “at least” (indicating there is actually a higher number that isn’t being disclosed).

What we learn with this news and previous Rocket Internet releases since they IPO’d that once again, ecommerce is a bear. Andy Dunn’s prescient essay correctly suggests that Rocket and indeed almost every other ecommerce bar Amazon and Ebay (and Alibaba) is struggling to generate cash.

It’s obvious that the economics of price are having a downward effect on pricing, regardless of the top line growth of most pure play ecommerce websites. Dunn’s remedy is still obvious; own your own proprietary brand or at least have some of proprietary merchandising in place.

So what’s the strategy for ecommerce in 2016 and beyond? Personally I still see ecommerce at the high-end (read luxury goods) doing well. But what I don’t see is low price/commodity ecommerce doing well despite the ongoing success of dollar stores and the like offline.

And what about the middle? Perhaps the toughest place to be in all of retail and it’s playing out right now with numerous established retailers biting the dust as well as employees being laid off everywhere.

What’s your ecommerce strategy? What do you think is working? Share in the comments.

The E-commerce Subscription Model in China

Subscription based e-commerce platforms are a growing phenomenon in China. As cities become increasingly polluted and congested more Chinese consumers generally turn to online shopping. When you consider the size and scale of China it is unsurprising that the convenient online, subscription model is proving to be a success. 50% of the Chinese now have access to the internet with over 600 million potential online customers to target.

One company making waves in China with this subscription model is the ‘French Cellar’. For a monthly subscription fee they deliver premium, bio-dynamic, French wines selected by “Nicolas Rebut”, a prestigious sommelier, directly to the customer’s door.

In a nation where fake products are rife, the Chinese consumer wants to guarantee authenticity and quality. Therein lies the key appeal of a subscription model, the consumer can trust the quality and over time becomes loyal to the brand. It is also convenient as the selection is made by an expert, (China is renowned for many things but high quality wine is not one of them), and affluent consumers now expect the best from outside of the orient.

The whole process becomes more exciting and a surprise for the customer with lesser known yet prestigious wines being showcased. The concept has also proved popular in other Asian markets such as Singapore. In China the consumer is especially concerned with ‘keeping face’, they wish to present themselves in a positive light with greater specialization, quality and variety reflecting positively on the customer themselves.

This subscription model approach for high quality, niche, European products (that are a rarity in China) is set to become increasingly popular. This is potentially a very lucrative market for selling western products in the middle kingdom. Online shopping is in vogue in here with variations such as the monthly subscription becoming attractive to the wealth of middle/upper class Chinese consumers whom are more interested than ever in western cultures, in this case the refined wines that nations such as France produce.

Benji has lived and worked in Shanghai, China for 5 years and specializes in E-commerce in China. For more information see his website here.