By Gabriel Grisham, Head of Growth at NihaoPay
For brands large and small, this is perhaps one of the most exciting times to be in retail. There are literally (no, not figuratively) hundreds of millions of consumers in China with purchasing power and a thirst for global brands. Ten years ago, reaching these consumers was incredibly difficult, requiring significant investment, knowledge, and risk before a single dollar of revenue could be earned. Today, this is happily not the case.
“In China, consumers are more likely to go directly to the source and shop on the… flagship ecommerce store.”
– Frank Lavin, CEO of ExportNow, on selling to China
Chinese consumers’ affinity for ecommerce and familiarity with international brands and websites means reaching them directly is possible without setting foot in China. Rather than viewing China’s consumer population as “cross-border,” the time has come to view them as a natural extension of your current buying population. This is because the two essential elements of a transaction – payment and delivery – are now easier than ever to implement.
If you want to reach Chinese consumers directly, effectively, and with purpose, you need a plan. I recommend breaking the process down into four major steps.
Step 1: Take a payment
Shopper #1: “Where did you buy that?”
Shopper #2: “I bought it online.”
– A conversation that happens every day in China
Buying habits and expectations are well established for Chinese consumers. Their primary motivation is not dissimilar to buyers anywhere in the world; they want to make purchases that reflect their own personalities and values. If you have a product and a story, you can sell to Chinese consumers. Your products might already available on Taobao. However, before you invest heavily in marketing or logistics, take one simple step: integrate a payment option, like UnionPay or AliPay, into your current checkout process on your website.
Your website should be where the core elements of your brand will be communicated to your audience in China. If you want to get to know your Chinese consumers and you want them to get to know your brand, your website is where this relationship starts. If visitors like what they see and they want to make a purchase, make it easy for them. The information and data you will collect from these visitors will be instrumental in informing how and when you take steps 2, 3, and 4.
Steps 2 & 3: Marketing and logistics
With Step 1 you get the early movers, the fashion forward consumers hungry for your brand. With Chinese travelers making more than 100 million trips outside China, assuming you have to ship to China to attract Chinese consumers is only partially true. Many have their own way to take delivery of your products if you don’t ship direct, whether it’s via a friend or relative who lives abroad and can forward the items, or a freight forwarder they have used in the past. However, to attract the next group and convert them from visitors to buyers, you need to invest in both your brand as well as a logistics solution that gets your products to the consumer’s doorstep efficiently.
These two separate steps can be implemented together or separately, depending on your specific market. For both tasks, multiple solutions exist, from building capabilities in house to outsourcing the entire process. It isn’t free, but you should have enough data from Step 1 to justify the investment. Create a Chinese website and a social presence on Weibo, QQ, and other social networks. Identify a few key opinion leaders to drive exposure and awareness, all the while measuring your ROI against the resulting increased traffic and purchases.
The goal is to find out what works and what doesn’t from a marketing perspective, and to better understand who and where your consumers are. Build your brand, learn what your consumers like, what products and sizes are popular, what effect promotions and sales have on transaction volume, and at what price point or discount. Once you have this information, you will be ready to succeed with a local solution.
Step 4: Local fulfillment
As sales and knowledge increase, the time will come where it makes sense to have a local fulfillment option for your consumers. This can be on a marketplace such as Tmall or JD.com, but it can also include distributors and your own branded brick and mortar stores. Again, you can outsource most of these operations completely, or keep tight control and hire your own team in China. The cost of operations will cut into your margins, but the sheer size of China’s consumer market should make the added investment well worth it.
How you manage these different channels will be essential to your overall success. Know the holiday schedule for China and arrange promotions accordingly. (Chinese consumers love a sale!) Promote traffic to the sales channels that makes the most sense, including your primary website, not just the China-based marketplaces. Constantly interact and learn about your consumers via social media and other promotional activities to form a lasting relationship with them.
The speed at which you move through these steps is up to you. While Chinese consumers’ shopping behavior may differ from their U.S. counterparts, the primary drivers motivating purchases are very similar: they want their purchases to make their lives better and reflect who they are. Some brands moved years ago through Steps 2 through 4, as Step 1, taking a payment, was neither easy nor in demand. Today it is not only available but also relatively simple to implement. You want your Chinese shoppers to identify with your brand and make a purchase; making that essential part of the relationship easy and smooth is where the process begins.