4 top trends in digital marketing in China
2019-07-25 11:26 Thursday
In 2019, China is expected to overtake the U.S. as the world's biggest retail market, with some analysts expecting annual retail sales to go up by as much as 7.5% to $5.6 trillion.
But the biggest retail market in the globe is also the most competitive. Brands from all around the world – Russia, Australia, Japan, Europe, and, of course, China itself – are looking for a tempting slice of the Middle Kingdom pie.
Because of the strong competition and China's notoriously picky consumers, brands and retailers have had to step up their game to engage and retain paying clients.
Here are a few trends that show how the Chinese retail ecosystem is ahead of the pack – and how retailers and brands from elsewhere can adapt proactively to emerging global retail trends to stay relevant and competitive.
1. QR codes are bringing down transaction times
The ubiquitous QR code can be found everywhere in China. In every retailer, grocery store and restaurant, you can use the codes to pay with hugely popular mobile payment apps such as WeChat Pay or Alipay.
At the cash till, all you need to do is scan the QR code with your phone's app, enter a pin code or fingerprint recognition prompt, and the money is withdrawn from your e-wallet or savings account. There is no need to swipe your credit card or sign a receipt.
How did China get to this point? For one, it is a mobile-first internet market that developed later than its global peers. Many of its people went straight to purchasing cheap, home-brand smartphones and skipped desktop PCs or laptop, which less affordable.
China's banking and fintech services system also developed later. The Chinese government has been slow to open up the China market to global card networks such as Visa and MasterCard. Chinese people are also averse to personal debt, meaning that credit cards never really took off.
The security of the technology makes it possible for people to pay friends, strangers and small businesses without any worries. QR codes are much cheaper for small businesses than the near-field communication (NFC) credit card terminals. It's because of these mom-and-pop-store merchants that WeChat Pay and Alipay adopted QR codes.
2. Social sharing routes are lowering customer acquisition costs
In China, paid user acquisition costs are astronomical. It takes 200-300 RMB (US$29-44) to acquire a new customer on e-commerce platforms such as Tmall and JD.com. There is no equivalent to Facebook in terms of low-cost advertising tools for small brands who want to expand their reach.
As a result, brands in China have turned to social commerce to help them entice new customers. Instead of using ads to reach new users, they leverage their current customer base to market their products for them, and providing incentives to share with friends or family, by creating appealing content.
With social commerce, new customers discover products through their immediate community, which enables brands to build trust and educate new customers more quickly.
3. Influencers are helping build brand loyalty faster
In China, influencers, or key opinion leaders (KOLs), play an important role by acting as a go-to resource for potential buyer looking to learn more about a brand or see how a certain product actually works. Popular platforms include Weibo, short-video platform Douyin (TikTok), Little Red Book, and, of course, WeChat.
Influencers shorten the customer buying route, which is much longer in China; research shows that Chinese consumers require 8 touch-points with a brand before they decide to buy (vs. four for shoppers in the West) due to greater mistrust of e-commerce goods and wanting to stretch a budget further.
The prevalence of fake or badly-made goods and the frequent occurrence of scandals over product quality in the media have made domestic consumers more wary and discerning.
Also, buyers are put off by overwhelming choice, as there are simply too many brands to choose from. So many brands from all over the world are looking for a foothold, but it's hard for a customer to make sense of which one is better, especially through a marketplace platform like Tmall or JD.com.
Therefore, people look to places where they can get independent, fair reviews of products: this is where the all-important influencers come in.
4. Content and commerce are more tightly knit
Lastly, content and commerce is more integrated in China, thanks to China's mobile-focused internet economy. Payment apps such as WeChat Pay and Alipay are integrated, so customers can pay for items inside their social media or shopping apps without having to take out a credit card.
Now China's social media and content platforms are developing the practice of linking users to influencers' own e-commerce stores. Social media personalities like Mr. Bags are selling luxury handbags through their own stores on WeChat. Big e-commerce platforms Mogujie and Taobao have TV-shopping-like live-streaming shows where viewers can make in-app purchases instantly.
Even short video platforms like TikTok and Kuaishou are rolling out e-commerce features, making it easier for influencers to peddle goods through their videos. Such features make it easier and faster for customers to go from browsing content to dipping their hand in their pockets and pinging that cash register at the checkout.