How can brands stand out on Alibaba’s cluttered ecommerce market places? Rex Cheuk, business development director for Hong Kong, Macau & Southeast Asia, Tmall Global HK, shared his tips for B2C ecommerce marketing into China.
China is the largest ecommerce market in the world. The value of its ecommerce sector is expected to exceed US$1 trillion by 2017.
There are a number of reasons for this:
- China’s massive population sits at 1.36 billion people
- There are 649 million internet users
- 557 million mobile users
- There are more than 400 million online shoppers in China (expected to hit 750 million by 2020)
- Incomes are rising, as are disposable incomes
- A large and growing consumer class (22 million affluent Chinese and 523 million middle class Chinese, according to McKinsey estimates for 2015)
- Chinese people save more as a percentage of GDP than people in the rest of the world
So how can foreign brands reach this lucrative market?
Alibaba hosts three ecommerce platforms. These are its C2C platform, Taobao, its B2C platform, Tmall, and its cross-border ecommerce site, Tmall Global.
At the Retail Asia Expo in Hong Kong, Cheuk outlined several ways foreign brands could improve traffic to their Taobao, Tmall and Tmall Global stores. Here’s how:
The Golden formula for sales in China
Cheuk began by outlining the Golden Formula for sales in China.
In its simple form the Golden Formula looks like this:
UV (Unique Visitor) x CR (Conversion Rate) x AOV (Average Order Volume)
For example, 1000 people visit your store x 3% who buy something x $80 (the average spend) = $2400 revenue for your store.
“Therefore, the conversion rate is the first thing to think about to promote your brand,” says Cheuk.
There are two types of conversion rates.
1. Passive conversion rates are ways to push the customer to buy online via design, product and brands. For design, have a call to action where something triggers visitors to pass by your site. For product, ensure there are a lot of attractive photographs. For the brands, tell a good brand story.
These are critical to conversion rates and whether people come to your store, says Cheuk.
2. Reactive conversion rates are the aspects of a conversion that are often overlooked by brands – such as customer service and CRM. “The attitude of your customer service people, their knowledge of the products, affects how your customers react to your store,” says Cheuk.
Colours are important. For example, content for an electronics product or those that need more of an explanation, should be presented in blue or purple, according to scientific evidence for colour associations. For more emotional products, orange and green colours help people develop certain warm sentiments around purchase decisions.
The Unique Visitor (UV)
There are three types of unique visitors who come to an ecommerce site – paid unique visitors, free unique visitors and direct unique visitors.
Paid UV comes from CPM, CPC, CPS.
Free UV comes via campaigns, product searches, category searches.
Language should be a key consideration for keyword search: both English and Chinese. Common words or terms should be localized according to different dialects across Greater China, which includes language nuances for the Hong Kong, Taiwanese and Mainland Chinese regions.
Fully utilize the 30-word title description allowance.
Common keywords are: brand name, country, functions, delivery, new release, celebrity.
Cross-border ecommerce channels
Tmall Global was established in 2014 to facilitate ecommerce in China’s growing free trade zones. Cross-border allows overseas brands to export goods into China without facing the same regulatory and tax frameworks as goods being sold across Chinese domestic channels.
Cross-border ecommerce is not a new thing created by Alibaba, says Cheuk. Chinese consumers have been buying things from overseas for quite some time through various channels, including overseas friends and relatives sending foreign goods into China or purchasing online on popular foreign sites like Amazon, Yahoo or eBay.
Tmall Global has a number of big name foreign brands, which interestingly, includes Amazon.
Overseas brands using cross-border to access the Chinese market should take note of the following:
Chinese consumers have unique online customer behavior. This includes:
- Price negotiation. Chinese consumers are used to negotiating on price, even if they are only buying one or two items. Therefore have a strong customer service team ready for this.
- Product information. The more details about the product the better. A product description should include between 6-10 detailed photos. Therefore have a sophisticated design team.
- SMN. Social media networks are a large part of the Chinese consumer purchase journey. Therefore have a digital marketing team in China.
- Direct mailing challenges. Cross-border logistics faces higher costs and longer delivery times. As a side note, Chinese customers are used to delivery times for local ecommerce channels of two days (across the entire country and China is a big country). However, for sought after overseas products like diapers or dairy formula, they are prepared to wait longer and will pay more, says Cheuk. Research from Accenture and AliResearch suggests that by 2020, China will be the largest ecommerce market for imported products – worth US$245 billion in 2020, up from US$21 billion in 2014.
*Graphics courtesy Alibaba Group
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