Find here the China Paradigm 82. Do not miss any details of Daphne Tuijn’s story and her SaaS company for cross border e-commerce in China.
Full transcript below:
MATTHIEU DAVID: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting – a Chinese market research company based in Beijing, Shanghai and Hong Kong – and its podcast China Paradigm and today I am with Daphne Tuijn. I have known you for two years because we are part of the same accelerator program in EO; Entrepreneurial Organisation and you have started two businesses; WebShopinChina.com and Chaoly. Both are linked to the big topic of China which is e-commerce.
E-commerce has become so big; much bigger than any other country compared to the other side of the business which is purely retail. So, WebShopinChina.com is helping foreign companies to go in and explore and sell on the Chinese market, online on China’s e-commerce platforms? Chaoly is an insight SaaS company in China offers as a service and it provides insight on social media, online sales for many foreign businesses to understand better the Chinese ecosystem and the Chinese online sales. Thanks, Daphne, for being with us and the first question as we always ask is about where are you in your development right now in terms of clients, in terms of the size of the team, etc.?
DAPHNE TUIJN: Sure, well thank you first of all for having me. So, yeah as you said we have two businesses. We started with Web Shop in China and it was just more like a service; e-commerce service provider and now we are pivoting more into our data analytics and software tools by developing a SaaS company in China. So, also in terms of the development, it’s an exciting time because we have our current TP business and also building up the new more tech-related business. So, yeah, we have a team right now of 15 people and we have offices; both in Shanghai and in the Netherlands. I guess we have helped over 30 companies with different questions related to e-commerce and yeah there is a big overlap between the clients of both companies. Does that answer your question?
MATTHIEU DAVID: Yes, thank you very much. So, for people who are listening to us, I believe most of them know about TP, but TP means Taobao Partner or Teemo Partner. I feel it could be better translated in Teemo Partner because for Taobao you don’t really need help to open on Taobao, but it’s more for Teemo.
DAPHNE TUIJN: Yeah, exactly so TP’s; well, I mean Alibaba named it indeed Teemo Partner or Taobao Partner, but overall we use it more as a third party or third partner because of course Alibaba is the biggest platform, but we actually also run and we set up in some stores in Jing Dong or WeChat nowadays is also used quite often for cross-border e-commerce in China. So, we don’t only focus on one, but yeah; several China’s e-commerce platforms.
MATTHIEU DAVID: I’d like to go back to the start. You started in China and you started a shop on Jing Dong selling baby products or mother care products and that’s when you realized that actually when you start a shop online you need help. You need a lot of help. It is a lot of work and you need to have someone localized in China. Could you tell us more about this first experience and being very hands-on in the Chinese market?
DAPHNE TUIJN: Yeah sure, so when it was first announced that western brands could enter the Chinese market without a business license, without a bank account here so that meant it would be easier to sell to Chinese consumers, we realized it would bring a lot of opportunities not only for the very big players already active in China but also perhaps for some medium-sized brands and so when we started Web Shop in China there weren’t any success cases yet. We were the very first company in the Netherlands also to focus on cross-border e-commerce in China. So, that’s when we decided we needed to get the first-hand experience and we started the Daphne Holland store simply because I look the most Dutch in the team and back in the day there was a very big demand for Dutch baby milk formula or baby milk powder so yeah, we decided let’s do this from the beginning and let’s make it a success and see what is needed. So, well soon we found out that it’s really… it’s not that easy to enter the market. There are still a lot of things like the application procedure in Chinese and, of course, it’s important to understand the Chinese consumer and to really see well, what are the types of products that they like and so in our case, for instance, our best-seller turned out to be goat milk powder and so and baby milk powder. That was our best selling item and well, step by step we then understood what the customer support was like, for instance, Jing Dong like the live chat program; how do you set up campaigns, how do you maximize your return on investment and so really had hands-on experience, I would say.
MATTHIEU DAVID: I see. When was it; 2013?
DAPHNE TUIJN: We started in 2015.
MATTHIEU DAVID: I see. For people listening to us as well, we make sure that we are on the same page; you are mentioning actually the possibility to do cross-border e-commerce in China that has opened roughly at that time 14-15 where Teemo was opening TMG or TM Global and Jing Dong was also making it possible to sell in China without a business in China from wherever you are in the world and shipping cross-border which actually was very surprising to me that it was so easy to actually sell in China without having to comply to the regulations and so on because we already saw it in the west that they were considering that it was good enough so that you could sell in China. Could you share how you managed this business? Did you manage it from Europe? How did you do it?
DAPHNE TUIJN: So, like you said it was also quite surprising to me and it was an interesting opportunity for many brands if you know; they were active overseas, that they could then also sell to China without for instance having their product certified or animal tested or whatsoever, right and so you have a few options. I mean how our company has this set up is that we have our team in China who is running the stores. So, setting up the store and running the store in terms of customer support. You need to be locally on the ground with the time difference and everything so we have the team here is responsible for the customer support, for the marketing campaigns and also for liaising with the people either from Alibaba or Jing Dong. So, discussing with China’s e-commerce platforms to join promotions, but indeed for the brand owners, they actually do not have to have a physical presence here if they work with a partner who runs the store then they don’t need to have a team here. They need to make sure that they have the supply arranged of the products and that they have access to the products and that indeed the shipment is arranged. You can ship from overseas. As you said, so you can either use your stock in your home country or you know at some point you can also move your stock to, for instance, Hong Kong or to a bonded warehouse in China meaning that the products are closer to the consumers and the delivery time is a little bit shorter, but for instance, if you want to ship from Europe to the consumer; that can already be done in 7-10 days door to door. So, that is pretty fast. It’s amazing.
MATTHIEU DAVID: I see. There are so many questions I have about it. Is it still relevant now to talk about it or it has changed too much?
DAPHNE TUIJN: Well, I would say what we see is that Teemo Global, Jing Dong Worldwide; you know those global cross-border e-commerce platforms in China were always a good stepping stone to the Chinese market, right? So, it’s a good way to enter. However you see if brands are very serious about the Chinese market they also want to be for instance offline in stores or to have like B2B arrangements and in that case you know; we do recommend that then the next step would be to have your business license here in China and have a more local operations, but the cross-border e-commerce in China is a great way to start.
MATTHIEU DAVID: So, if I summarise you can open without a license a shop on Jing Dong, Teemo, Chaoly maybe or other platforms and the e-commerce logistics in China is provided by the platform or do you have to find it on your own? Could you help to understand what you have to do to open the shop and to operate a cross-border e-commerce shop in China?
DAPHNE TUIJN: Yeah sure, so there are a few things. So, on the one hand, it is the whole application procedure with the platform. They do look at the brands and see whether the brand is viable for the Chinese market and how successful the brand already is in the home market. So, the application is a bit of a selection and stuff like that and then indeed the logistics are offered by China’s e-commerce platforms. So, Jing Dong has its logistics network, Teemo has Chi Young and they also help you with your shipment from overseas and it’s easy because it is similar to Amazon. You can put your stock with them and the order fulfillment and everything is arranged automatically so you don’t have to worry about that.
MATTHIEU DAVID: I see. You are mentioning FBA; Fulfilment by the Amazon Way. You put your product in the Amazon warehouse and they ship for you. So, it is the same for Alibaba and Jing Dong. Does it mean you have to send them the product first and store it in the warehouse in Europe and then they will ship to the customers in China?
DAPHNE TUIJN: Yes, so it is not mandatory, but it is an option. So, you can decide. We also have clients who prefer you know; especially with high-value products, they are not always too keen to boot stock in different places. Simply it’s expensive to put stock everywhere. So, some of our clients also prefer to keep the stock in their own warehouse, but with all the order coming in they then send it to Chin Young or Jing Dong Logistics and they take care of the e-commerce logistics in China, but then you can still use your own warehouse. You can do both.
MATTHIEU DAVID: I see. What about the cost of doing that; of open a shop or managing it? What are the costs that the platforms are asking for and what is a typical model you charge?
DAPHNE TUIJN: Yeah so, the cost really depends on the platform. So, that’s why also you know, we say we are not only linked to Alibaba, but also to different China’s e-commerce platforms because the right platform depends on a few things. So, it depends on partly is how much investment or how much money or resources would you have available, but also what kind of products are you selling, what is your target customer and where is that target customer active and so we would really do an analysis first to see what is the best platform that best suits your profile. So, the platforms always charge a deposit and that deposit for the cross-border e-commerce platforms in China is anywhere between 15 000 and 25 000 USD. That is a deposit. So, if you were ever to close your store you would get it back, but it is still cash and they charge a yearly fee to be able to make use of the IT system and all the technology behind it and they would also charge you commission on sales which depends on the product category, but normally is anywhere between 2.5 and 5%; commission of sales. So that is what China’s e-commerce platforms charge and you always own your store. So, the contract or agreement would be direct with the platform and you have the ownership of the brand and then the TP’s; the agencies helping you, like us; that business model is always fixed and variable so you pay a fixed amount to cover the costs, but also to make sure that it’s a win-win and making sure that the best is getting profited and revenue in. So, there is also a small commission on sales there as well.
MATTHIEU DAVID: I see. What about e-commerce logistics in China? I know that FBA is charging for the warehouse; how long they stay and if it stays too long, they would charge more, for instance. They have been pricy depending on the size and the weight of the product. What about logistics? Do you have some direction to give to the audience about the cost of the e-commerce logistics in China to work with Alibaba or Jing Dong?
DAPHNE TUIJN: Indeed, as you said. So, it very much depends on how fast the turnover of your product is, so the stock. Indeed, from our experience, it becomes quite costly if your products don’t sell especially if they are a bit bulky because the warehouse is also based on the space that you take up. I would say in that sense also the forecasting is important and then like the e-commerce logistics in China in itself is based also on the volume. Let’s say for instance three cans of baby milk powder will be anywhere between 10 and 13 Euros. I am sorry I am using different currencies here.
MATTHIEU DAVID: No problem. 10 or 13 Euros for 3 cans of infant formula which is something like 2.5kg’s?
DAPHNE TUIJN: Yeah it could be dependant. It depends on the kind of packaging, but yeah.
MATTHIEU DAVID: So, it could be like 5-6 Euro per kilogram; something like this?
DAPHNE TUIJN: It could add up. It’s not easy to calculate it like this because there is always your fixed portion and your variable portion. So, you always have your starting rate and then per kilogram, it adds up. Yeah.
MATTHIEU DAVID: So, does it mean that for cross-border e-commerce in China you would actually favor clients whose product value is higher and the weight is lower so it can easily be shipped to China?
DAPHNE TUIJN: Absolutely yes. So, what we see… so e-commerce logistics in China – let me stress this out. It is extremely important for the success of your cross-border e-commerce store in China. So, China’s e-commerce platforms also in terms of your store rating look at your logistics. Your store rating is based on three items. It’s your customer support, it is how well your products look like; you know the actual products are in line with the images and your product pages and the third part is logistics. So, if there’s a complaint about your logistics that severely impacts your store rating even to the point that you are no longer allowed to join promotions, right? So, we always sit down with our customers and explain to them especially if they decide to arrange it themselves; we explain how important it is that there is good e-commerce logistics in China that the parcels are not stuck at customs and so on, but also indeed logistics turned out to have a heavyweight on the profit margin and in the calculation, we have just shown. So, indeed we always aim to have a higher basket value. So, for instance, we offer free logistics to the Chinese customers above a certain order value so you always want to make sure that you get the highest order value; the basket value which is better for your e-commerce logistics in China or for your profit margin, overall.
MATTHIEU DAVID: I see. How do people or how do Chinese people react to international sales? I remember talking with the founders or managers; the co-managing and nearly funded of Glamour Sales and it was like four years after they started and they told me they had to change their model because the Chinese did not want to wait for the product. Usually, you wait for a product when it is in flash sales. You wait like one month, but China didn’t want to wait so they had to create a warehouse to stock the products and to ship very quickly which was impacting the cash flow and so on, but how do the Chinese react to the fact that they have to wait, they don’t really know the person behind the shop, they don’t know the company behind the shop, maybe and it’s so far away and if there is a problem with the product they may not be able to ask any authority to do anything. We saw one of your casts on LinkedIn you said that there were many, many customer complaints in China for the first half of 2019. So, Chinese customers are demanding and are active. How do they react to cross-border e-commerce in China? You have to wait a long time and you don’t know who is behind it.
DAPHNE TUIJN: Yeah well it is a very good question. So, absolutely I mean I think there is no country where there is faster delivery than China, right? Normally if you buy something from local Taobao or Teemo or Jing Dong even your groceries can be delivered within 30 minutes here in China. So, they are very used to speed. So, indeed waiting a long time for a parcel to arrive; yeah, they might just not like that, right? So, I guess there are a few things. So, first of all, it starts with an indication. So, telling them and informing them and to communicate with them clearly on the product pages that that is the delivery time, but also explain to them why the delivery time is a bit longer because they are authentic products from a certain country and so, it’s important to communicate that first. I would also say in terms of well, they don’t know who is behind the shop; the Chinese consumers do trust China’s e-commerce platforms in their screening and selection. So, the moment you want to join one of the big platforms they will always have you show your trademark registrations, your business license or your purchase documents, your license agreements and so they do a really thorough screening to make absolutely sure that the shop owners are… it is a legitimate business with authentic products and of course as you know Chinese consumers; they also always look at the reviews, right? Yeah, there are a lot of reviews that you can find in the online stores where the previous customers will share their experiences and that also helps a lot in selling.
MATTHIEU DAVID: Yeah, I’m surprised that indeed China’s e-commerce platforms can check documents that are from foreign countries because of the experience I had with Alibaba; they opened a French shop and in this French shop actually many players were not French at all. So, their ability to check I felt was a bit challenged by the fact that they are not able to see if a company is French or not, but actually, I feel that what is happening is that the consumer is helping the platform to check the product in itself and not only the platform. Do you agree with this view?
DAPHNE TUIJN: Yeah, absolutely. I totally agree. Indeed, with all the countries and all the different documents that we have how can the platforms check if all the documents are in place? I think there are a few trends or firstly what you said is indeed the consumer will help the platform check. We have many cases that I remember once with for instance the baby milk formula that the producer changed the ingredients with 0.1 grams. So, like a very, very minor change, but because on the product pages you always have a lot of detailed pictures and one of the detailed pictures showed a recipe and then when the customer actually received the products she noticed the difference of 0.1 gram and took a picture, informed the platform, was wondering whether it was actually an authentic product. So, the same for fashion where one of our clients changed their label inside and even then, it was challenged whether the products were authentic; yes or no and so yes, the customer is definitely helping China’s e-commerce platforms with checking whether the products are real. That is one thing and I think also a general trend that we see is that China’s e-commerce platforms more and more prefer brand owners instead of retailers. So, with a retailer, there’s a layer in between and so it’s more difficult for the platforms to check whether the products are actually the real brands and so you do see a preference now more for the original brand and brand owned flagship stores compared to retailers.
MATTHIEU DAVID: Interesting. You are using two words in your presentation and on your communication. I would like to get a better explanation of it. The first one is the pre-sales. Pre-sales is very important and I’d like to understand more about what you put behind these words. The second thing is growth hacking. You mention growth hacking several times in your presentation and I’d like to get some ideas of what could be a growth hack on cross-border e-commerce in China?
DAPHNE TUIJN: Sure. Let’s start with the pre-sales question. So, basically yeah; pre-sales is the communication before the customer actually buys the product; the actual sale. So, what we see is that in China compared with – I am originally from Holland where customer service is like you write an e-mail and you have to wait for 24 or sometimes even 48 hours before you get a response, but customer service in China is really fast. It’s all live chat programs and the Chinese consumer; they expect a response very fast, but there are also more often than they ask questions compared to what we are used to in Europe so that can be questions related to the logistics, related to the brands, to the products and we find that more cases compared to e-commerce in Europe people will have a question and the moment they reach out to you it is also, of course, the moment you can engage and interact and also to see if you can sell more products, right so try to upsell, cross-sell and so that’s why we say pre-sales especially I guess also with cross-border e-commerce in China were at the beginning with the new store when there are not so many reviews yet it is also a bit to persuade the client to buy the products and sometimes they would even… sure.
MATTHIEU DAVID: May I jump in? What you are saying pre-sales is the description of the product is considered as pre-sales because you describe it and so and then you would add a live chat on Alibaba, Teemo or Taobao is making it compulsory to have a live chat if my memory is correct and I think that Jing Dong is the same. Does it mean that you need someone full time actually to be available all the time; at night and day to answer questions to the clients, live? Does that mean they would accept Chinese clients to actually get an answer within 24 hours and finally, does it mean that chatbots are the bright future in China because so many things go through live chat?
DAPHNE TUIJN: Yeah, that is definitely what you see more and more now and what China’s e-commerce platforms would also offer is that you need a chatbot because there are not that many brands who actually have a customer service agent available 24/7. What we see from the research also is that there are three peak moments where Chinese consumers buy their products. One is during lunch; the second one is just before they finish work, so while they are still in the office and the third peak is before they go to bed. So, you at least want to make sure that those three peak moments are covered by actual humans. I mean, of course, chatbots are getting more and more advanced so that there is definitely how to say first response or first reply, but then you know at some point real people should take over also depending on the type of question. So, yeah it is important to have someone there and Chinese consumers are definitely not willing to wait for 24 or 48 hours. Though I mean the platform for instance if you file a complaint or if you like to return a product, the platform does allow you to have like 24 or 48 hours to respond, but good customer support means fast response time in China.
MATTHIEU DAVID: So, you say the description of the product and the live chat; do we have most of the pre-sales imports or are we missing something?
DAPHNE TUIJN: I would say a very detailed product description including your e-commerce logistics in China, your return policy is the most important as most questions are related to that and then you have your customer support and that’s a good start.
MATTHIEU DAVID: Interesting. So, talking about growth hacking. How do you connect pre-sales to growth hacking? I believe that you also use coupons to actually engage with the customers or the leads or clients. Coupons have been in China a major driver for traffic, for conversion and to engage with clients. What kind of growth hacking tactics have you found in China?
DAPHNE TUIJN: Yeah so well again for the people who haven’t heard of growth hacking. Growth hacking basically means data-driven mini-experiments. So, we as an agency always focus on data in China, right? We want to have insights based on data in China and see what works and what doesn’t work. You can use this in many ways. So, a very well-known example, for instance, is AB testing. It is to have like different banners or different products with visuals or images that work better. So, that would be one and we use for instance growth hacking for several clients now to understand the needs of the Chinese consumer better when they are developing products. So, for instance for very big electronics companies from the Netherlands; they want to launch a new product and instead of spending a lot of money and resources and time on fully developing the products they will ask our help and we use our online stores and we set up you know like paid traffic and things to see what does the Chinese consumer prefer? Which products would they prefer? Which packaging do they like better? Which unique selling point should be stretched out? So, it can get a lot of data in China from these experiments and pricing like you mentioned coupons, price discounts; that is definitely a way also for growth hacking to see well, what works better? When do we have higher sales? Is that with coupons? Is it with bundled sales or other discounts? So, there are endless possibilities to do digital experiments.
MATTHIEU DAVID: I see so basically you base your growth hacks on testing and you mentioned that you are very much linked to AB testing; testing campaigns and testing different products and driving traffic to see how Chinese clients would react and based on that you could define a tactic and the strategies. That is what you are saying?
DAPHNE TUIJN: Yes absolutely. So, the whole idea is to run the experiment to do testing in a smaller setting because we know it is very easy to lose a lot of money especially also in e-commerce if you set up a wrong keyword campaign for instance, which is designed to run it is easy to just lose a lot of money and I mean losing a very lot of ROI, right and so that is why we always look at how we can maximize the return on investment, how can we grow the revenue and you will first test that in a small environment, for instance, and testing it with one product or on one product page and then if you see that it works we can then scale it up to the entire store. It just starts with a lot of brainstorming and a lot of sometimes crazy ideas, but there is no way that you can fail. There is only one way to find out is to actually do it in a small setting and see whether it works; yes or no.
MATTHIEU DAVID: You mentioned data in China several times and I feel that is a perfect transition to the pivot you are creating. You have started purely Insights Company; SaaS company in China, service or software, called Chaoly. Would you mind describing what it is and what we can get from Chaoly?
DAPHNE TUIJN: Yeah sure so because we used to focus on the YP business on the e-commerce and running e-commerce, but what we see in the market is that especially in China where e-commerce is such a huge part of a company’s revenue that more and more companies are taking it in-house also. They want to learn themselves and they want to be able to manage the store instead of outsourcing that to a third party and also in terms of course of the industry business model with fixed and variable. At some point when the store or the brand is doing very well, it is cheaper actually for them to take it in-house. So, they don’t have to pay the commission to their GP. So, all in all also what we saw you know; things are happening in the industry and we looked at what we are good at and then it has always been our focus on data in China and we also realized that there’s so much data in China. You have your team on the back end, you have a lot of data providers and so data in China is everywhere, but not every team also has the resources or the capacity to analyze that data and to learn from it and make adjustments accordingly and we started also the part of benchmarking and looking at the markets; understanding. A lot of people told us that China is like a black box to us. No idea what is good revenue, which should be the sales targets; it is very difficult especially in the beginning. So, in that sense, it is good to look at your competitors, see how long they have been active, what are their best-selling items and to learn from that. So yeah, that’s why we created Chaoly, a SaaS company in China, so we developed a software tool which we say well, it is insights as a service. So, on the one hand, you can get the data in China in a nicely organized way to see that you can track your performance, but also benchmark it and in the end, ultimately it is about improving your performance on China’s e-commerce platforms and social media platforms like Teemo, WeChat, and Weibo which are the main ones. So yeah, we are about to launch the first version which we are very excited about.
MATTHIEU DAVID: One of the first interviews I ran was with Thomas from Global Chat and he went to the time when he was actually switching from agency to a SaaS company in China developing software to sell products on WeChat from cross-border e-commerce in China and he shared how difficult it was to move from service company to a product company; a SaaS company in China. Do you have the same feeling of pain to switch from a model where your clients are earning a sizeable amount of money every month to actually pay your staff and pay your campaign and so on to actually much smaller amount so engagement and actually something which is scalable so the future is brighter, but in the beginning, it may be hard? Would you mind sharing a little bit about the transition?
DAPHNE TUIJN: Yeah absolutely the transition is definitely hard. I can be honest about that because I mean, on the one hand, you have your current business, your current team, your current clients whom you still want to keep satisfied and you still want to do a great job in helping them becomes successful in China and then at the same time also basically setting up a new start-up which is then also in terms of finances being financed by the current business, right because we at the moment don’t have external investment yet. So, it’s a bootstrap and so I guess the hardest thing about the transition is that you would need a new team because you simply need different talents, different skilled people in terms of developers, product owners and so setting up that new team and really also keeping your focus I guess as an entrepreneur. We are already multi-tasking with one business let alone if you also set up your new business venture. So yeah challenging and difficult times, but we do believe that it is the right path considering the trends that we see in e-commerce and the insights that are serviced and are developing are based on conversations with hundreds of managers; e-commerce managers from our TP business so we had that experience and we believe that we are going to create more value with Chaoly, our SaaS company in China, with what we are launching right now.
MATTHIEU DAVID: That’s the thing. There are so many software’s in the west that are helping us to understand the market. You have similar webs, you have malls, you have Google Analytics which is very powerful, you have Google AdWords which is powerful and what people are looking for. In China, there are so little and actually, I feel there is a lot to do in this industry of software to provide insight into the market. Talking about the development of your software how did you develop a SaaS company in China where actually you didn’t have this background of developing software? You were a service company managing e-commerce shops. So, working with the technology of all others and understanding it, managing it, but not developing your own technology. How have you organized the switch? Have you hired developers internally? Do you work with an agency? Have you learned to code yourself?
DAPHNE TUIJN: Well yes, a good question. So, we were fortunate enough to have acquaintances and friends who have a Ph.D. in computer science and had a lot of developing experience and also fellow entrepreneurs because we are in a big network of entrepreneurs who develop their own software. So, it starts with the idea. It’s starting to say, “Okay well if we see this future and this value in the insights as a service and software tool, what would that product look like?” So, a lot of brainstorming and a lot of talking with other people and then luckily you know the whole framework. The whole foundation was in a very good starting team. So, that we built future proof and we can add modules and we can take out modules without Chaoly collapsing so I guess it starts with really understanding that you have your basics in terms of your server and your database set up and all of that and then we found the – I would say the developers needed for the specific tasks and the specific functionalities and we hired them in-house because yeah; we believe that you could work in an agency, but in our case, we really wanted to be close in the development because we are the product owner now, we know the functionalities and the value that we want to create. So, frequent interaction is to be able to sit next to each other, look at what has been developed and improvements. That’s the choice then that we made. So, in-house teams.
MATTHIEU DAVID: That sounds like a big choice because learning how to manage developers is… there is a learning curve to that and it is not something that you can learn very quickly and extensively.
DAPHNE TUIJN: Absolutely and as an entrepreneur, I have been the product owner also with you know; Web Shop in China. We worked with friends and agencies and then also created apps and so on. So, as much as I have been involved in the process; that was only more on the product side and definitely not a development side. Besides studying Chinese, studying price; it is definitely on my wish list, but yeah so it is difficult sometimes when you don’t speak the same language, right? So, I feel like a toddler explaining it very simply to the developers and then they need to make sense out of it and see how they should actually code and develop it so that it’s aligned. It sometimes can be a complicated conversation.
MATTHIEU DAVID: About the service that your SaaS company in China, Chaoly, is providing; so as far as I understand it is a place where you can aggregate your information on your own social media and your own shop performance. That is one thing. I understand as well that you are making it possible to compare with the competition as well. For social media, I understand you can follow the followers on Weibo. You can get the number of followers on Weibo and so on. I think it is a bit more difficult on WeChat, but I would like to have your view on that. What about the sales of competitors? How do you get the sales of competitors? You can get some of the best sellers on Teemo or Weibo because you see the number of sales, but can you get more? What can you get from Jing Dong or from other China’s e-commerce platforms? So, what can you provide with the platform?
DAPHNE TUIJN: Well, as you know, but in China; so the whole reason why the French are not such a thing as Google Analytics or you know the other big ones that you mentioned is that they are all very closed ecosystems in China and so it is not easy also to follow, for instance, the customer’s path across the different ecosystems. So for instance when a user or a consumer finds out about your brand because someone shared something on WeChat you know because Ten Cent and Alibaba do not collaborate it’s actually not even possible to jump into Taobao or Teemo store so in terms of this whole traffic and customer journey it is a little bit more complicated in China. So, what we do is for indeed the clients; we would get their login details. So, we see and we can also help them in terms of ROI, in terms of campaign optimization, with keyword bidding and so that would be more also on a marketing campaign level. For competitors; that is then entirely based on publically available data in China, but that is also data that, for instance, Teemo shows you the sales in the last 30 days, but it is impossible to go back and to see you know if that was the 1 December and you see very high sales because of sales day you can’t go back in time and see what was the actual prices charged or what was the campaign. So, we keep track of all that so the price levels, the effect on sales, the best-selling items, but also a part of it is like social listening to see what people mention in their reviews about a product. Is it indeed related to logistics or are they very enthusiastic about the pink colored toothbrush and should you perhaps add pink to your product range? So, there is a lot of information that we can find from the publically available data in China.
MATTHIEU DAVID: So you say that you cannot go back in time on the data, but that’s the beauty actually of your software, commercially speaking because once I’m tracking something I cannot leave your software because I want to keep the data otherwise I would not be able to get it back.
DAPHNE TUIJN: I hope so. I mean, otherwise, you are not able to look back in time. Is that what you are saying?
MATTHIEU DAVID: For the competition at least. I believe that.
DAPHNE TUIJN: Yeah exactly. So, that is… we believe that that is a great value and it is as of the moment that you start tracking with Weibo and with WeChat; when we look at the performance it is more related to engagement. Parklu is the one that is the most well-known KOL tool out there and they also formulate the formulas for engagement and so with the social media you can look back in time in which articles, for instance, have the highest engagements. With Teemo it is a little more difficult to look back in time.
MATTHIEU DAVID: We have ten questions to end the interview. We may not go through all of them, but the ones you are comfortable to answer. The first one is what books inspired you most in your entrepreneur journey?
DAPHNE TUIJN: Yeah there are so many of them. I love business books, but I thought about this question and I think there are two of them which are quite interesting. One of them is called Miracle Morning. It is more related to a lifestyle. Have you heard of the book?
MATTHIEU DAVID: No. I haven’t.
DAPHNE TUIJN: Okay right so the whole idea about A Miracle Morning is that you wake up one hour early. So, for instance, instead of waking up at 7:30 it is going to be 6:30, but in that one hour is the time for personal growth, personal development and also to get you ready or to prepare you for the entire day and I guess especially as an entrepreneur as you know as well; you are super busy and once your day starts when you walk into the office or perhaps earlier than from that moment onward it is work, work, work and so waking up for me that hour early or basically they suggest that you in an hour do things related to meditation, affirmation, visualization. So how you picture your life and then have some time for exercise, reading, and writing. So, these are the 6 elements that even in one hour you can do all of those and it made a really big change in my life because indeed, that one hour feels like me-time and prepares me for the rest of the day.
MATTHIEU DAVID: Interesting.
DAPHNE TUIJN: Yeah.
MATTHIEU DAVID: What do you read to stay up to date on China? I feel as many foreigners have a hard time understanding China and they are looking for good sources for good websites, good channels to follow.
DAPHNE TUIJN: Yeah. Well, definitely a lot of blogs and newsletters. Obviously, Dash Rate is always very insightful. I like Jing Daily which is more related to fashion. I mainly focus on anything related to digital marketing and to e-commerce, right? So, also Alibaba has its own newsletter.
MATTHIEU DAVID: what book on China would you recommend?
DAPHNE TUIJN: Well, actually I have to be honest I don’t read that many books about China because I believe the moment it is published; that is the moment when it is already kind of out of date. So, yeah, I would rather focus on books or sorry, internet-free sources, blogs, newsletters and so on to make sure that I really receive the latest information in my mailbox.
MATTHIEU DAVID: what productivity tool do you like most?
DAPHNE TUIJN: In our office, we use Monday and Monday is a project management tool and that really allows us to have a clear overview of all the one-time projects, but also the ongoing work. We have a straight planning dot line and you can see who is accountable and you can assign tasks. That works very well, especially because we have offices in Amsterdam and Shanghai so we need to have a central place where there is a clear overview instead of all the e-mails sent to each other in the e-mail box. So, we try to make sure that we don’t send any e-mails internally.
MATTHIEU DAVID: if you had some extra time what idea would you work on?
DAPHNE TUIJN: Well, before we started Web Shop in China and Chaoly which is namely focused on overseas businesses doing business in China, we actually had a company focused on Chinese companies who wanted to expand overseas. So, this is years ago. I would say like 7 years ago where you already had Lenovo and Huawei; those ones were the two most famous examples and we thought that more and more Chinese businesses would go overseas and in doing so they would also need help in setting up local websites or do marketing on Facebook and Instagram. So, we started that business, but it was a bit too innovative or too early and at that time China wasn’t really a server economy, but we do see a shift in that. We also see that more and more businesses are focusing on this, but yes perhaps we would invest that again. How to help Chinese companies become successful overseas.
MATTHIEU DAVID: What is the most surprising experience you had so far in China?
DAPHNE TUIJN: I guess my most surprising experience is that I normally tend to have a really good memory, but I forgot the pin code of my ATM card because literally in months I did not take out cash. So yeah especially when friends or family are visiting or people from abroad; they are surprised by the cashless society, but yeah it is really true. You do not need cash. Everything is paid by QR codes and with your Ali-Pay and your WeChat-Pay so now I still need to get a new code for my ATM card.
MATTHIEU DAVID: What have you done in the past that very few people know about you?
DAPHNE TUIJN: wow, I guess in the past what I’ve done… well, I guess so with our business we want to make sure that besides helping companies we also want to make the world like a better place, we want to make sure that our employees are happy and healthy and on a personal note in a time when I was still living in Amsterdam I also wanted to devote my time to hopefully bring some joy in someone else’s life so I signed up for volunteer work and every other Sunday I baked pancakes for mentally disabled people which was great fun. They really became our friends and I really loved doing that because I am a terrible cook, but pancakes I can make it.
MATTHIEU DAVID: What is interesting you most in China?
DAPHNE TUIJN: For me, the most interesting thing in China is the speed, the high pace. It is the fact that it’s never the same, right? So, if I go on a business trip or a holiday and then come back to Shanghai there is just new restaurants popping up or new bars, but also in our field; in the field of e-commerce, there are new things happening on Alibaba and new ways to promote your products, new platforms even so I guess the dynamics of it is what fascinates me most.
MATTHIEU DAVID: What unexpected success have you witnessed?
DAPHNE TUIJN: I think the most unexpected recently that I have seen is a platform called Tuangou. They focus on middle-aged and elderly women who love dancing and, of course, we all see people and the ladies outside dancing with each other and so they already have two hundred million users and it’s not only an app where you can see free dancing tutorials and you can communicate and connect with other dancers, you can form groups and it’s also this good example where it is not only online but also offline because they organize four thousand offline activities every month and it is also a really interesting one for marketers, for instance, to have their brands promoted in this target group.
MATTHIEU DAVID: What unexpected failure have you recently witnessed?
DAPHNE TUIJN: well, the most unexpected one I guess for me was still Ofo. I remember when I first moved here about two and a half years ago; Ofo was everywhere. I mean the yellow bikes; you can’t miss them and it seemed to be a pretty successful business. You know there are competitors entering the market and I guess yeah; it didn’t end up well. So, I guess we are not the only ones who did not get their deposit back and yeah, the yellow bikes have disappeared from the streets. I wonder what they did with them, but yeah that would be the most unexpected failure”
Alright, thank you very much for having me in the show. I hope it was insightful for the business of course. People can reach out to me if they have any other questions and thank you Daxue for setting this up. You guys are really one of the sources that I go to, to stay up to date so keep up the good work.
China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.
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