Eye On The Changes In China’s E-Commerce Boom

by Queenie Yao & Davy Huang

The Chinese market presents enormous opportunities to international brands. It is one of the biggest consumer markets in the world, with over 1.4 billion population and over 200 million middle class citizens. However it is also a significant challenge for brands trying to capitalize on the growing consumer demands.

China's online ecosystem one step ahead and moves at breakneck speed. eMarketer forecasts China's e-commerce market will grow at 18.5%YoY  for a  total of $2.564 trillion[1] in 2021. From livestream, to short video and WeChat mini-programs, the digital landscape in China has witnessed huge change.

While the proliferation of new e-commerce channels in the past few years has significantly transformed how brands approach customers in China.  Understanding the constant evolution of behavior, trends, and market shifts is requisite for China's success.

Top 4 Changes that are happening

1) Chinese online consumers' daily shopping behavior and screen hours become increasingly scattered, according to iiMedia analysis[2]. During this year 6.18, 2.7 APPs were used per capita, and multi-channel price comparison has become a habit of users during the shopping festival, QuestMobile 6.18 Report shows[3].

The report spotlights that diversified consumption scenarios have led to consumers no longer being limited to specific platforms. This means that brands should consider adopting a multi-channel approach to China – if their budget allows. 

2) All major platforms nowadays can drive customers from awareness building, interest, and purchase.  In WeChat, customers can easily buy from mini-program, which can be launched when reading an article, chatting with friends, and share their shopping cart with their friends and family.

Take Douyin (China's TikTok), the largest short-video platform in China has removed video links to 3rd party e-commerce platforms, which allow customers to access from video to product page on other 3rd party platforms.  This means consumers can only complete their purchases within the Douyin shop, which will drive merchants to launch their shops in Douyin to improve their conversion rate. 

3) When customer traffic to a brand becomes fragmented, brands cannot only rely on a single sales channel or social media platform to achieve marketing and sales purposes.

Yet, each platform has its strengths and weaknesses. For instance, Douyin has a low unit price and is particularly suitable for the apparel category. Fashion players offer limited-time deep discounts to platform customers mainly through live streaming to drive sales. They should also look at opportunities at other marketplaces to grow the sales. 

4) Mini-program in WeChat is better suitable for O2O and customer loyalty building. It's also considered a great platform to execute viral campaigns. Beauty players like Lancôme are relying heavily on the popup for brick-and-mortar buzz. Lancôme encourages in-store customers to scan the QRcode to follow its official Wechat official account and register as a new member. Then these new members can receive a free sample of the latest lipstick.

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A crowd of consumers is in the queue in front of a vendor

With WeChat mini-programs, brands can leverage their existing customer base to spread brand awareness amongst potential customers that may not have discovered their brand in the first place.

However, for new brands with a limited amount of customers following the WeChat official account, adopting a WeChat-centric approach to e-commerce in China could be a big failure because new customer acquisition cost in WeChat can be costly and unstable ROI.

Do brands need to spend more to be on every platform?

Yes & no.

For brands that need to expand into any new market, new platforms and new customer segments will require upfront & consistent investment. When a brand only has a certain budget, covering more platforms when launching could be challenging from a financial standpoint. Some of these sales channels require a consistent investment to see a return, such as Tmall Global or JD Global.

Here’s an example. Leading livesteamer such as Austin Li and Viya, in fact, has a very high entry barrier for new brands. The application could be refused because of low brand awareness, not attractive selling points, or a low sales record. To successfully form a partnership with leading livestreamers, brands need to work their way up by partnering with smaller livestreamer to gradually build up sales.

Brands could make a transition to focus more on emerging marketing channels – which may be able to cut overall costs and increase the efficiency of marketing. In the past year, Jurlique reported robust growth of sales in China, thanks to successful live-stream campaigns strategies. Jurlique had been in close collaboration with Chinese homegrown influencers on social media platforms and livestream platforms, which are proving to be very helpful at generating sales and brand awareness. Making the transition from an advertisement-intensive marketing approach to a live-stream-focused approach is not easy for a known brand like Jurlique. 

For early-stage brands, it is not necessary to be present on all platforms. WeChat, for example, launching on the WeChat mini-program is not the primary choice for small brands. Driving traffic to a WeChat mini-program is still heavily reliant on advertisement and influencer campaigns – which can have low ROI. In this case, B2C e-commerce platform could be a better model, because brands can leverage consistent performance-based marketing to grow sales incrementally.

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Who is more suitable for a multi-channel approach?

Large brands and retailers with the budget and a wide selection of SKUs adopt a multi-channel approach that enables them to capture demand from different user groups.

They may have already hit a growth bottleneck in their existing channels. Instead of suffering from involution in the major platforms, they should try new platforms and gameplays.

In the 618 shopping event, Estee Lauder had an outstanding performance. The GMV of the Mini program increased by more than 100% compared to last year. The total sales of the Estee Lauder mini-program recorded a 600% YoY surge driven by the self-broadcast sessions.

Through the official account, KOL live-stream linkage, exclusive benefits for live-streaming, WeChat group chat, and other features, Estee Lauder using private domain traffic to drive performance multiplier. Estee Lauder's bet on private traffic is undoubtedly a success. It has given a reference to other high-end beauty seeking new traffic growth.

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The whitepaper shares global e-commerce and digital marketing best practices to help companies earn customer loyalty among digital-savvy Chinese shoppers. 

Key Takeaways

The typical path of how brands reach consumers remains the same: generating brand awareness, debuting the channel, and maintaining customer relationships.

Many foreign brands have become popular in China because influencers, daigou, or ordinary customers have brought the brand back to China and started posting about them on social media.

When dominant western platforms are unavailable in China, the main driver of brand awareness happens within the unique Chinese digital landscape. International brands need to keep learning about the ever-involving ecosystem and appeal to digital-savvy Chinese consumers.

[1] eMarketer: China Ecommerce Forecast 2021; URL

[2]IiMedia: China E-Commerce Industry Insight, 2020; URL

[3] QuestMobile: 2021 618 E-Commerce Market Insight Report,2021; URL

WeChat Beauty Retail Tmall Tmall Global Livestreaming Little Red Book WeChat Mini-Programs

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