SHOP.ORG Day 1: Enter the Dragon – e-commerce in China 101

SHOP.ORG Day 1: Enter the Dragon – e-commerce in China 101

We’re in LA this week at shop.org! It’s the annual NRF e-commerce spin-off that showcases the digital retail trends, techniques and technology that savvy retailers need to be on top of.

On Day 1, we attended the Global e-commerce Leaders Forum which focused on key issues for retailers looking to enter the fastest growing e-commerce market in the world – China.

Key points we found interesting:
1. How is the Chinese customer different?
2. How do you play in an environment where Google, Facebook and Instagram are banned?
3. How do you protect your brand from counterfeiting?

How is the Chinese customer different?

Firstly, the Chinese consumer’s frame of reference is completely different to the Australian, or more broadly ‘Western’ consumer. In the West, when we buy something from a western brand overseas, it’s common to do a bit of research on the product, where we can get them at what price, what are the shipping times, then we buy it. For the typical Chinese consumer considering a western brand, the process is more drawn out. The biggest difference is acute concern that the product/brand is fake, and a complex import tax calculation on top of the purchase price. These hurdles lead to hours of extended research that lengthen the conversion period by weeks.

In addition, most Chinese millenials prefer to shop within social media / messenger apps like WeChat or Weibo which isn’t even really a thing here! Messenger apps like WeChat are commonly connected to consumer bank accounts and partner with marketplaces like JD.com to offer a seamless way to shop in social media. WeChat Pay is in fact one of the most popular payment methods in China, and even more widely accepted than credit cards. JD.com told us that an extraordinary 80% of their sales are done through chat, and so is a similar proportion of customer service. It’s worth nothing that Facebook messenger is going the same way, due to launch payment capability in the US this year.


Image from Facebook: A preview of Facebook Messenger’s new group payments tool.

How do you play in an environment where Google, Facebook and Instagram are banned?

The short answer is, you’re best off finding a local partner who knows the market – few, if any brands have succeeded in going it alone. Commonly referred to as “TPs” which stands for third-party, Tmall Partner or Trusted Partner depending on who you talk to, these are the guys western brands are pairing up with to help them navigate this vastly different territory and manage day-to-day ops.

There are many TPs to choose from, we heard from one of them – Revolve, who helped American beauty brand Lime Crime launch successfully in China, shifting over 1 million units in the first 12 months. It was interesting to hear that part of the launch strategy involved Lime Crime actually redirecting Chinese consumers away from their own website to the Revolve website, reinforcing a strong message that Revolve is the only place customers can buy authentic Lime Crime product.

How do you protect your brand from counterfeiting?

Well, you can’t. But you can at least help your legal case by making sure you register your trademark well before you enter the market. Like, years before you even think about it. In China, the trademark is given to whomever is the first to file for it, which means if you wait until you have any kind of success in China to file, chances are someone else will own your trademark and you’ll be out in the cold. Hey, it happened to Michael Jordan and it’s taken over 20 years for him to win the rights the Chinese translation of his own name, pronounced “Chee-ow-dahn” for those of you interested.

Stay tuned for more on our shop.org and LA adventures!

Author Jace Loh

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