Launching an e-commerce presence in China requires careful consideration: should you choose an e-commerce giant like Tmall or a social commerce platform like Douyin or WeChat? Agnes Yung, group account director at digital agency Hylink UK, explains the advantages of each platform
China has the largest population of digital buyers in the world – 780 million people in 2021 – and the e-commerce market is projected to reach $3 trillion in 2024. That’s a huge market, but it’s also a market with an entirely different landscape from the Western world. As a result, many brands and businesses find it difficult to navigate the Chinese e-commerce landscape due to budget and resource constraints, and most of all, a lack of local knowledge.
If you are operating an e-commerce website in Europe, it’s likely that you have some cross-border orders from China already, so may be considering creating a ‘.cn’ website as a next step. However, particularly as an SME, it is prudent to be mindful of the commitment required to create a website infrastructure in China (including tackling the firewall issue) and engage with local logistics. Most importantly, however, Chinese customers are much more accustomed to shopping from giant e-commerce platforms or social e-commerce, rather than individual brand websites.
The e-commerce giants
Tmall Global is China’s largest cross-border B2C digital marketplace, enabling brands without operations in China to create virtual storefronts and ship products into China. Tmall Global offers one-stop solutions for inventory and logistics management, providing options such as bonded warehouses and consolidated shipping from overseas, with Tmall Partners (certified third-party operators) managing the business locally and providing customer support. Some companies use Tmall Global as a stepping stone before committing to a store on domestic brand-focused platform Tmall for more established brands.
JD runs a substantially different business model to Tmall Global as it takes ownership of merchandise sold and is directly responsible to customers for product quality, authenticity, and any after-sales service. JD has its own logistics system, with a vast network of distribution stations and warehouses to fulfil orders quickly. Traditionally known for consumer electronics, the platform has also built up a luxury fashion portfolio in recent years.
However, working with the above platforms comes with cost implications and reduced control over your brand, something that not every business is ready for. Other challenges include gaining and maintaining visibility on a competitive platform and building brand equity in a sales-driven environment.
Social commerce platforms
For SMEs, social commerce platforms can be an effective way of establishing roots in China whilst providing more brand control and ways of building brand equity.
Hosted within Tencent super app WeChat (which has 1.15 billion monthly active users), WeChat mini-programs boast 400 million active users and facilitate one-to-one communication with consumers. They create a powerful platform with multiple features beyond pure e-commerce. Being within the WeChat ecosystem is a distinct advantage, and as such, it is suitable for brands that prefer more autonomy in terms of CRM, CMS, and content marketing.
Xiaohongshu (aka RED)
Popular with Gen Z and millennials, particularly young women, Xiaohongshu (RED) is an important platform for consumers to discover information about trending topics and brands, particularly in the fashion and beauty fields – effectively a search engine. This is also a platform seeing a strong market value for KOLs/KOCs, which brands can work with for product trials and reviews if they have an official account.
Owned by ByteDance, Douyin is one of the fastest-growing social media platforms and is primarily focused on short video sharing (it’s China’s version of TikTok). For brands who are ready to connect with Gen Z and ready to invest in video content, creating a Douyin Store enables a seamless online experience from product discovery via videos to landing on in-app shopping pages.
Other platforms including Weibo and Bilibili also have e-commerce functions. These social platforms are touchpoints to build market awareness and engage with potential customers. As a result, social and marketing strategies should be considered in tandem with e-commerce capabilities if you are looking to build a sustainable brand presence in China.
Case study: Emma Bridgewater
Emma Bridgewater is a handmade and hand-painted homeware brand from the UK. It has an e-commerce store on Tmall Global supported by a social media presence on WeChat, Weibo and RED. It has no physical stores in China.
Challenge: Maintaining engagement with Chinese consumers during Covid-19 lockdowns as a niche brand entering the Chinese market through Tmall.
Approach: Give consumers a way to feel good and have fun at home with Emma Bridgewater products during lockdown through a marketing campaign, driving purchases on Tmall.
Making it happen: Launched a product giveaway on Weibo and RED with the message that even though you’re at home you can still feel ‘lucky’. Built affinity with followers by sharing relatable content and positive messaging through creative campaigns.
Results: 122% increase in followers across three social platforms during the campaign. Emma Bridgewater launched on Tmall in 2019 as part of an international strategic growth plan. Sales have reached 10% more than the forecasted figures for the past financial year, and there has been 49% growth compared to 2020. More than 20,000 mugs have been sold in China so far.
Case study: Estée Lauder
Estée Lauder is an international company with a diverse portfolio of makeup, skincare and fragrance brands. In addition to physical outlets in China, Estée Lauder operates e-commerce through Tmall and WeChat Mini-Programs, supported by social media marketing on WeChat, Weibo, RED and Douyin.
Challenge: Attracting the audience’s attention during one of the biggest shopping events (Singles’ Day) and stand out from other promotional activities in the market.
Approach: Use tier-one KOLs to connect with audiences.
Making it happen: Engaged KOL Li Jiaqi (China’s ‘Lipstick King’) for live streaming activities and actor Xiao Zhan for the promotion of ANR Eye Cream. Used strategic paid media to amplify social campaigns.
- $70 million in transactions
- More than 8.9 million core products sold in one hour
- 15,000 lipsticks sold in five minutes by influencer Li Jiaqi
- 400,000 units of eye cream sold out in 36 minutes
Reading about e-commerce in China can leave you with more questions than answers, and that’s perfectly normal – navigating e-commerce in China is a huge task and the case for each company is unique. The challenges of local operations, Chinese content production and the cultural gap mean that you should be sure to do effective research before you enter the market.