Beyond Tmall: Inside vitamin maker Swanson Health’s China strategy

Natural health products brand Swanson Health is making a major play for the China consumer market and is launching a new Chinese site, as well as building up existing presences on Alibaba-owned Tmall and JD.com to make it happen.

The Fargo, North Dakota-based company has been selling to Chinese customers for two years on marketplaces. Like Amazon in the U.S., Tmall and JD.com have a massive scale in China, but the company is rolling out its own site to complement its marketplace presence, nurture a direct connection with customers and learn more about them.

But while marketplaces offer scale, they don’t provide the end-to-end customer data picture, since brand doesn’t “own” the customer relationship. “A lot of consumers want to feel like they’re interacting directly with the brand,” said John Eisel, chief operating officer at Swanson Health. “Through the site, it maintains that brand feeling that we have on swansonvitamins.com, but brings different logistics capabilities to serving customers in mainland China.”

Despite the advantages of a standalone e-commerce site, a multi-channel approach to marketing is essential to maximize reach of a foreign brand in China, according to Franklin Chu, the U.S. managing director at Azoya, Swanson’s partner company in China that’s running its Chinese e-commerce operations and retail strategy. This includes search placement through Baidu, and digital advertising on social networks like WeChat and Sina Weibo. The company is also working with online shopping guides and local influencers. For Swanson, Azoya, which has worked with other Western brands on efforts to scale in China, is considering an approach it calls “walk into” that’s worked well for other companies — taking Chinese influencers abroad to production facilities to enhance consumer confidence at home. Content from the trips form the basis of digital advertising and influencer posts to social media forums.

A key consideration when launching a Chinese e-commerce site is maintaining as broad a selection of products as possible, mirroring the company’s U.S. site. Based on sales information Swanson gets from Tmall and JD.com, as well as proprietary market research carried out by Azoya, it promotes the best-selling products in digital ads and promotional content.

“Often when [Chinese customers] look at the Chinese site they immediately toggle the Swanson U.S. site in a different browser window,” Chu said. “What [a broad selection of inventory] does is it gives customers confidence that the products they’re looking at on the U.S. site mirror what they’re being offered in the local market — that goes a long way in customer confidence in the integrity of the product and fairness of pricing.”

Swanson Vitamins’ China e-commerce strategy has some similarities to its U.S. approach: In the U.S., the company sells on Amazon and eBay and has wholesale relationships with retailers. The Chinese approach is similar, but more reliant on digital, the company said. It’s selling through marketplaces like Tmall and JD.com, and supplementing it with digital media marketing and wholesale business-to-business distribution relationships.

“The biggest advantage with retailers working on their own sites is they have access to all the data, and not a portion of it that the marketplace is willing to share,” said Chu. “[Swanson] will have access to real-time information and an understanding of the traffic and customer engagement; that will enable us to do much more accurate marketing and forecasting.”

According to Coresight Research analyst Freda Wan, a growing health-conscious Chinese middle class means they’re willing to spend on nutritional supplements, but a crowded market means a distinct brand message should be a priority for foreign brands looking to scale.

“Simply stating high quality, solid science and relevant certifications is not enough. Brands need to know their consumers in-depth and market to them specifically,” she said.

Chu said that the vitamin market in China is competitive, not only because of other foreign competitors but well-established local players. He said foreign brands often hold enhanced credibility in the Chinese market.

“Customers have very high expectations when looking for products that are not available in the Chinese domestic market,” he said. “There’s a distinct preference for overseas brands, especially in wellness, as some consumers have developed a distrust of local products because of scandals.”