China omni-channel marketing

Guide to China omni-channel marketing | Finding a path through China’s complex O2O ecosystem

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In 2015, China omni-channel marketing and O2O became the key words of the retail industry. Brick-and-mortal retail companies opened up online channels, e-commerce companies have joined with brick-and-mortal retail companies to exploit the offline battlefield. This blending of online and offline, and omni-channel approach is also known as new retail in China.

“In the next ten or twenty years, there will be no more individual e-commerce stores. Online, Offline and logistics must be well integrated to create an authentic “New Retail”.

Jack Ma, Founder of Alibaba

In the New Retail era, companies will not only focus on brick-and-mortal stores, but also e-commerce and mobile internet. Through the integration of online and offline to realize the data fusion and intercommunication of commodities, memberships, transactions and marketing. And provides Chinese consumers a cross-channel and seamless experience.

Omni-channel in China means reaching consumers at multiple points in the consumption process through a variety of channels.

Source: medium, Omni-channel means reaching consumers at multiple points in the consumption process through a variety of channels.

To be a good player in China’s omni-channel ecosystem, you need to understand these three types of Chinese consumers

According to data from Kantar Worldpanel, the ratio of omni-channel consumers in China has increased significantly in 2019. The number of consumers has increased by 25% compared from 2018, constituting 61% of the total number of FMCG consumers. Their consumption power is strong; the total consumption contributes 67% of the overall FMCG market sales.

Based on the demographics, purchase channels and Chinese consumer categories, the omni-channel consumers in China are divided into the following three groups: The high-end category pursuers in high-tiers cities, family consumers who seek a convenient purchasing experience and the pragmatists in lower-tier cities.

The three types of Chinese consumers benefit the China omni-channel world

In high-tiers cities, many consumers pursue a higher and higher quality of life. They tend to spend more frequently and spend more on high-end categories. They also pay more attention to appearance related products such as apparel and beauty, especially the turnover of cosmetics and skincare products are the highest.

Convenience-seeking family consumers  mainly purchase household necessities. Whether the products make good value for the money is one of the most important factors when family consumers make purchase decision. Secondly, the convenience of shopping experience such as logistics, discounts and after-sales services is another important factor of consumption.

Consumers in China’s underdeveloped provinces are driving the next wave of consumption growth. In the past three years, the gap in e-commerce penetration rates between lower-level and higher-level cities has narrowed, and 75.7% of shoppers in lower-level cities use e-commerce to purchase fast-moving consumer goods. The pragmatists in lower-tier cities prefer discounted products, but the quality of products is much less important to them. Such cities contributed 70% of Alibaba’s new active users in 2019. Corresponding to this is Pinduoduo (拼多多) which is the group buying platform focuses on low-level cities.

The definition of China omni-channel consumers are those who purchase through online and offline channels twice or more in one year, and at least one online shopping during the non-sales seasons such as 618 and 11:11 (618大促, 双十一)

China omni-channel consumer penetration rate and mainstream media/e-commerce platforms

In 2019, the sales of social e-commerce platforms (电商社交平台) increased by 59% over the same period in 2018. It can clearly be seen that, the growth engine of e-commerce channel which leads the Chinese retail industry has gradually changed from traditional e-commerce platforms such as Taobao and Tmall (天猫) to Mini-app shop of WeChat (小程序商城) , RED (小红书) and Pinduoduo which are the leading social e-commerce platforms.

XiaoHongShu

XiaoHongShu (sometimes known as RED)  has several advantages over other platforms, the posts by many celebrities and high-quality KOLs and KOCs made it the most famous fashion “recommendation” platform (种草平台), also as a hub of “advertorial” (软文聚集地), precisely targeting women with a medium or high spending power which forms itself to an ultra-precise user pool.

Maybelline RED

Source: Maybelline, Maybelline RED

WeChat Mini-program Shops (小程序商城)

WeChat mini-program shops benefit brands by its install-free, barrier-free, consumer experience. Furthermore, WeChat moments (朋友圈) and group message (群发) functions open up an unobstructed passage to the audience click, reach, impression and engagement.

Maybelline WeChat  China omni-channel strategy

Source: Maybelline, Maybelline WeChat

Pinduoduo (拼多多)

Pinduoduo has also achieved a super high conversion rate by virtue of its socialization, gamification and consideration of user experience. To minimize the process, there is no shopping cart, which reduces the chances of not completing the purchase. The group buying makes every individual become the resource and bridge of communication and sharing by users contact and interact with different relationship groups such as friends, family members and neighbors.

Maybelline Pinduoduo China omni-channel strategy

Source: Maybelline, Maybelline Pinduoduo

How to leverage omni-channel integration to increase the conversion rate

The continuous increase in online customer acquisition costs and the decline in offline performance have prompted online and offline retailers to pay more attention to innovation and integration. The advantages and disadvantages of online and offline are different, and there is an obvious complementary relationship in the customer group, scene, and channel. Online channels are convenient and fast, but offline experience and reliability advantages cannot be replaced. Both offline and online should complement each other’s advantages and promote each other.

Online and offline have different appeals to Chinese consumers. Consumers who prefer to shop online believe that “the rich category of products”, “affordable prices”, “home delivery” and “time-saving” are the keys to their preference for online shopping. Consumers who prefer to go shopping in physical stores believe that they can pick up the products by themselves and the quality is assured. Online and offline integration can enable retailers to better meet the diverse needs of consumers.

To implement the China omni-channel integration, technology support is an indispensable element. The changes in Chinese consumer demand have driven the online and offline integration of retailers beyond the industry. The development of technology and the improvement and opening of retail infrastructure provide strong support for industry upgrades and changes. The emerging technologies such as cloud computing, artificial intelligence, big data, AR/VR and blockchain are the backbone for innovative marketing tools and obtains necessary data of users and logistic and so on.

Omni-channel marketing is essentially integrated multichannel marketing

Source: searchadvertising, Omni-channel marketing is essentially integrated multichannel marketing

Marketing tips to increase conversion rate

In today’s marketing environment, you can easily pick up the data on potential customers’ purchasing behavior by generating their purchasing history. Learn about potential customers step by step in subsequent interaction instead of collecting all the information at the early stage. It is more likely to convert the precisely targeted potential customers by understanding accurate and clear information about them.

Content marketing also increases the conversion rate. These contents can be in the form of  UGC (User-generated Content) and PGC (Professionally generated Content). This creates a higher customer stickiness. Also, the product title, product head image and product detail page design must conform to the product tone and present the strategic promotional benefits and core benefits of the product.

Daxue Consulting, OGC vs PGC omni-channel marketing

Source: Daxue Consulting, OGC vs PGC in China omni-channel marketing

At present, China omni-channel marketing which based on new retail has been accepted by Chinese consumers. Affected by the COVID-19, consumers’ huge demand for home delivery has awakened, which further promotes the extensive development of China omni-channel marketing. After the pandemic gradually passed, offline consumption will recover even with the retaliatory offline purchase behavior. The integration of omni-channel consumption will be much more critical to brands.

Author: Shannon Yeh


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