E-COMMERCE CAN MAKE CHINESE CONSUMERS APATHETIC TOWARD BRAND DIFFERENCES, BUT IT’S ALSO AN OPPORTUNITY FOR CHINESE MARKETERS TO TAKE THE LEAD IN A NEW ERA OF BRAND-BUILDING.
By Dennis Potgraven
Chief Strategy Officer for Greater China, Havas Group
August 27, 2019
We all know China’s domestic e-commerce market is poised to be one of the largest in the world with digital shopping behavior that reaches across every touchpoint of daily activity. On average, Chinese Taobao users open the app four times a day on their mobile phones and three times for the JD app. The 200 million users of the XiaoHongShu (小红书) “Little Red Book” e-commerce app use it like an Instagram platform for posting and following brands and influencers while shopping along the way. Meanwhile, social commerce is booming thanks to WeChat and all its mini-programs.
Additionally, the user scale of “new retail” (combining product, service and content in a seamless combined online and offline experience) is beefing up. O2O2O innovations like Alibaba’s Hema supermarket and Luckin Coffee have grown out of their infancy status. Hema operates more than 100 stores now, delivering more than 10,000 online orders per day, per store, while Luckin grew 2,370 coffee shops in 17 months with a 50% delivery share of total transactions.
But what are the consequences of this shopping process and how does it influence consumer-brand interaction and attribution? There are a few trends worth noting.
E-commerce is accelerating Chinese consumer detachment from brands
More than half (54%) of brands in China could disappear and no one would care, according to Havas’ Meaningful Brands 2019 survey (versus 50% in 2015). The Chinese consumer has progressively moved on to become a “reviewing consumer,” which means their buying behavior is governed by tangible product- or service-related benefits, and how they compare to others in the same category rather than on the image or profile of the brands. Across online and offline channels, ‘smart buyers’ start with a wider set of choices that drive buying patterns and category selection.
Brand communication needs to focus on more tangible benefits.
It’s not that brands and brand-building has become less important, but campaigns, product launches and innovations need to focus on clear and tangible benefits that improve people’s lives. Eighty-four percent of Chinese consumers want brands to play a role in improving their quality of life (versus 71% in 2015). Product upgrades can be made on a functional level where quality is key, but also more and more need to include personal level (indulgence, satisfaction, health, financial skills) uplifts and even more benefits on a collective (national pride and environmental) level than before.
Attribution by overall brand image to the overall purchase decision-making has dropped by 12% over the last four years. It seems younger Chinese audiences in particular, are more focused on actual “meaningful benefits.” They are constantly in the mode of mastering reviewing, evaluating and switching brands.