Cross-border social commerce formats accelerate success in Chinese market
But selecting the most brand-relevant formats is challenging
by Justin Teo
Chief Experience Officer
For foreign brands doing business in China, cross-border e-commerce while not new, has long been a Red Ocean with fierce competition and high acquisition cost.
But with WeChat enabling its commerce function to evolve into various formats, a Blue Ocean of opportunities has arrived for foreign brands. In part thanks to the 85 percent penetration rate of WeChat into the Chinese online population, China has witnessed 100.6 percent CAGR in social commerce over the last five years, setting the foundation for an emerging social commerce superpower.
But the offer is vast, and brands should carefully choose the right communication format to suit their own unique proposition. The key to conversion lies is the art of thoughtfully weaving affiliated marketing into social commerce, taking up many forms, such as: official account, Mini Program, short format video, reviews, KOLs, KOCs, live streaming, and community.
Commerce, whether online or offline, remains a profoundly social event. Even the more traditional e-commerce platforms have won by leveraging the social cues that encourage conversion, such as star ratings, reviews, and badged products. It is only logical that the next iteration of commerce be one anchored in social platforms. And China is leading the way by providing an exciting consumer-facing user experience, while also giving brands the data they need to continuously improve that experience.
The WeChat Mini Program is a good example of how to use the data to strategically go to market in social commerce. While most brands have an official WeChat account for brand communication purposes, some have gone a step further to link the content in the official account to a Mini Program store, allowing consumers to make purchases in a closed loop transaction. Beyond its simplicity and convenience, the strength of WeChat’s Mini Program is that it also allows brands to create interactive shopping environments that drive high engagement and true “retailtainment.”
Some of the key features include:
User generated content Consumers are incentivized to create their own content, increasing conversions and engagement.
Group buying campaign Consumers can pull in their friends to purchase goods in bulk to get a discount.
Personalization Consumers can customize their own products, adding their personal touch.
Key Opinion Leader selling KOLs have their own Mini Program stores to promote brands and co-branded products.
Livestreaming KOCs can livestream on Mini Programs to do video demos of products in real time, which allows the experience to be more authentic and engaging.
Winners will be those who embrace and explore cross-border social commerce, having brands’ WeChat storefronts fully ready. They will have a choice of using numerous social-driven activation tools available for engagement or conversion activities.
And the real battle for brands will require them to further optimize consumer behavior by leveraging intelligence gathered via social CRM tools that analyze browser behaviour inside WeChat. That is the starting point of driving targeted and effective conversion in a continuous cycle.
While the price and efforts are high, the rewards, too, are great. China is one of largest consumer markets in the world and continues to grow. From 2000 to 2018, its economy multiplied more than tenfold in size, as did imports of goods and services, according to the World Bank.
As China’s GDP continues to grow, disposable income across all cities and consumer segments has also increased. Worth noting is that consumers in big cities like Shanghai and Beijing have different spending behaviors compared to rural consumers. The former, who are already familiar with international brands and trends, has become more discerning towards brands, while the latter has just recently started having access to foreign brands, mostly via mobile internet.
Demand for overseas brands is even more impressive. In the first half of 2019, imports grew by 10 percent, close to twice the rate of overall FMCG growth. This was driven mostly by online sales of imports, which jumped by 30 percent during the same period. Imports accounted for 35 percent of all online sales in China during this time, according to the Worldpanel division of Kantar.
Adding to this trend, China government policy saw some changes in early 2019, giving more favorable terms to allow foreign brands to sell into China via cross border commerce. This means a lot of foreign brands wishing to enter the Chinese market can now access it faster and with greater ease.
With Chinese consumer demand for foreign brands rising, and applications and adoption of new functions on WeChat and its affiliate partners increasing, social commerce will soon become the next battle ground. Or it has already become one.
The key to conversion lies is the art of thoughtfully weaving affiliated marketing into social commerce, taking up many forms, such as: official account, Mini Program, short format video, reviews, KOLs, KOCs, livestreaming, and community