Five Lessons from China: The Truth about 1.4 Billion Shoppers
Following a recent open invitation to U.S. retailers from Alibaba’s Jack Ma, everyone from established American brands to smaller mom and pop operations are looking to plug into the China opportunity. But what most American retailers don’t realize is that even with the reduced friction that technology has recently afforded, selling to the Chinese consumer is harder than it looks.
While there are obvious language, lifestyle and cultural differences that have to be considered in any cross-border play, consumer expectations and mindsets are so radically different in China, that many U.S. marketers miss them completely. Here are several key insights that U.S. retailers need to understand in order to succeed with the increasingly important Chinese consumer:
1. Chinese shoppers are highly creative, savvier, and more motivated than most when it comes to online shopping. A Chinese shopper will do all the usual due diligence that comes with an online purchase, without content translated into their native language and without having seen or experienced most products in person. They overcome these challenges to get what they want, with far fewer resources. And the fortitude goes beyond finding and decoding a product they’ve never seen or touched.
A Chinese shopper will deftly identify the best price and optimal channel for purchasing in a way we can only sit back and admire. Price discovery in China is a way of life, not a unique skill for digital natives.
2. Social is foundational. We all talk about the importance of social media in U.S. ecommerce but, in China, social is foundational to a brand’s entire business strategy. No other buying population trusts social media recommendations or relies on social more to make purchases than China. Consumers use social channels to learn about new brands, get trustworthy peer input on brands & products, find channels to buy, engage with customer service to ask (loads of!) questions about their prospective purchase, and follow up with reviews.
And forget U.S. platforms like Facebook and Twitter; they do not have a viable presence in China. Social media apps — like WeChat — are the integral engagement channel for consumers doing product research and determining what to buy. Brands with the ability to manage this aspect of selling there—with responsiveness and local intelligence — isn’t just recommended, it’s essential.
3. Basic ecommerce best practices are the cost of entry, but a lot harder from 5,000 miles away. While Chinese consumers are willing to jump through more hoops than others when buying online, retailers still need to invest in conventional best practices to attract and retain these customers. Understanding the consumer and what they want, delivering a clear and easy UX, making it easy for a shopper to check out, all are still imperative. For instance, successful fashion retailers know that Michael Kors is a hot brand in China right now so they’ll leverage their relevant assortment and products to engage and draw in those consumers.
Recognizing and applying simple things — such as launching promotions that align to China time zones and developing size charts that help Chinese consumers translate U.S. sizing—can make significant impact in results. That said, it’s a challenge to do all of this very well from our perch in the U.S., and without a local China team.
4. Brands matter. Chinese consumers have recently had to deal with catastrophic lack of trust in local products and retailers, as demonstrated by recent incidences of food poisoning and the proliferation of inauthentic product that is ubiquitous online in China. Consumers now seek to find the best and most trustworthy products they can afford. U.S. brands have an opportunity there — and need to capitalize on it by building trust and creating preference.
The good news is that we already have a leg up — most Chinese consumers inherently trust U.S. brands and products; they just need time and engagement to build a relationship with a brand. But there are no short cuts. Companies have to spend the time and use China-specific marketing approaches to be relevant and accessible.
5. Sales, rebates and promotions work for a reason. But not the same reason you think when it comes to China. All brands know that holiday-driven sales and promotions are a strategy for customer acquisition, also true in China. Where else can you imagine creating a shopping holiday targeting “singles” that generated over $9B in sales in one day? But U.S. retailers operate on the premise that a customer will try a product at a lower price, and come back for the same or different product because of the established relationship, and pay full price. In China, it’s rare to pay full price – ever. Thinking the purchase of sale items will lead to repeat (full price) business is a very American assumption. There is an important and fine balance to strike when building a brand, business, and loyal customer base in China.
While China can seem as easy as ‘plug and play’, we’ve learned that the real strategy is ‘build and engage.’ Jack Ma’s vision for global access — for a borderless consumer experience — is clearly upon us. But the challenge of reaching, enticing and establishing a long-term relationship with the increasingly important Chinese consumer, requires an investment in understanding these consumers, including the likes, dislikes and overall shopping habits. We’ve learned not to underestimate the potential for growth in China with a population of 1.4 billion consumers. And we’ve also learned that it’s critical to make a good first impression and put your best foot forward.
Scott Thompson is the CEO of ShopRunner, a leader in helping U.S. retailers with their domestic and global e-commerce strategies. Working with over 125 leading global brands such as Neiman Marcus, Under Armour, and GNC, ShopRunner has been on the ground in China for the last year helping navigate the biggest market opportunity for U.S. retailers.