China 2016: INSIGHTS | E-COMMERCE
E-COMMERCE WITH CHINESE CHARACTERISTICS – A POWERFUL BRAND BUILDING PLATFORM
Chief Client and Insights Officer
China is e-commerce’s greatest success story to date. In the five years to the end of 2015, the amount spent online has more than quadrupled to nearly half a trillion dollars, driving it past the US (US$300 billion) as the world’s largest e-commerce market. The e-commerce environment that has emerged in China is significantly di erent to the model in Western markets and more than just a sales channel; it’s a potent ecosystem for brand building, CRM, innovation, test marketing, and more – the foundation for entire go-to-market strategies. E-commerce platforms are already the largest digital advertising channel in China, with spend on them forecast to grow 30 percent in 2015 according to forecasts from GroupM.
The rise of local brands such as Junlebao demonstrates just how disruptive this distinct online shopping ecosystem can be. The crucial difference is that by following a digital- only brand building strategy and creating their own branded flagship store on Tmall, the world’s largest B2C E-commerce marketplace, Junlebao is able to cut its marketing costs significantly and pass the savings on to consumers. And in the value-conscious and immensely discoverable online shopping environment, selling a quality product at a lower price enables you to amplify brand awareness quickly through recommendations and positive user reviews – both of which have been key elements in Junlebao’s marketing strategy. This approach has significantly contributed to Junlebao becoming a top three instant milk formula brand on Alibaba’s Tmall site within less than a year of its launch.
E-commerce’s hugely disruptive influence on the brand environment in China is far from a passing phase, and as marketing budgets come under greater pressure, it seems that e-commerce platforms will emerge as an ever-more important brand building opportunity.