There’s a Chinese proverb that says, “I hear and I forget; I see and I remember; I do and I understand.” It’s a useful reminder for brands that are reviewing the burgeoning Chinese e-commerce market and considering their next move. There’s been much conjecture about both the pitfalls and merits of e-commerce in China. Brands have been able to dip their toes in the marketplace from afar, assessing e-commerce viability via established commerce platforms and online marketplaces such as Taobao, Pai Pai and Tmall. Yet to truly understand the Chinese consumer and the digital economy it’s time for brands to go further. As the proverb suggests, it’s imperative that brands “do” business in China to genuinely “understand” e-commerce in China. As such, it is time that leading brands launch their own B2C e-commerce sites.
Brands in China are still witnessing an e-commerce marketplace in its infancy. But the infant is big and growing fast. China ended 2012 with 242 million online shoppers, a year-on-year increase of almost 25 percent, according to China Internet Network Information Center (CNNIC), a government source. In other words, China’s e-commerce audience is larger than the population of almost every other country, but it’s less than one-fifth of China’s population of over 1.3 billion.
These are enticing numbers. However, it’s important to understand that this isn’t simply a gold rush where every brand will be successful due to a huge population and hockey stick shaped e-commerce adoption rates. A backdrop of complex cultural, political and geographic factors requires understanding. Brands can’t hope to expand (or enter) the Chinese e-commerce market without giving serious consideration to their strategy, technical infrastructure and the means by which they aim to execute effectively locally.
Beyond the hype and statistics?that surround e-commerce in China, how should brands begin?to exploit the e-commerce opportunity in China? Here are my tips aimed for brands looking to successfully deliver their own direct e-commerce presence in China.
1. Be aware that existing e-commerce “rules” most likely won’t apply.
Getting the right products to the right customers at the right time and for the right price is not peculiar to e-commerce?in China. But e-commerce?is different in China. Around 50 percent of the country’s population lives in rural areas. It will take many years and several transitions for the economy to become consumer-led and for the income gap between rich and poor to shrink significantly. Because the e-commerce landscape is changing so rapidly in China, be super analytical in your e-commerce operations straight away. Start gathering and acting on consumer data immediately.
2. Build trust.
Against a backdrop of?fake products, fake stores?and replica labels there?is widespread mistrust and a?fear of counterfeiting and?fraud. This is in contrast?to a general appetite?and appreciation?for prestige brands.?Therefore, develop a channel strategy that embraces China’s existing and popular commerce platforms, even as you develop your own direct presence. Use every conceivable means and sales channel to build trust for your brand with potential buyers.