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FASHION INDUSTRY FROM CHALLENGES TO OPPORTUNITIES: CHINA’ ECOMMERCE SECTOR POST-COVID19

2020/07/24


E-COMMERCE IS THE NEW OPPORTUNITY FOR BRANDS IN CHINA

 

With the lockdown due to the health crisis, the temporary closure of offline stores resulted in a boost to e-commerce as people shifting toward more online shopping.

 

Despite the drama of Covid19, in fact, new opportunities have opened up for brands that has seen e-commerce, a sector that was already worth 36% of total sales in China, growing by 5.9% in the first quarter of 2020.

 

The three major Chinese e-commerce platforms have seen strong growth:

 

Tmall sales of physical goods had a year-on-year growth rate of 10% in Q1 2020.

JingDong grew by 24% in terms of the total value of all orders at the end of 2019

Pinduoduo saw an increase in sales of 108% from RMB 557 billion in Q1 2019 to RMB 1.15 trillion in Q1 of 2020.

Foreign brands looking to enter the Chinese market or establish new online sales channels should pay attention to the new trends emerging in China following Covid-19.

 

2020 TRENDS IN THE E-COMMERCE SECTOR IN CHINA

LIVE STREAMING AS A SALES MEDIUM

 

Il live streaming è diffusissimo e molto amato in Cina ed ha visto una crescita esponenziale, grazie anche al supporto di piattaforme come Taobao Live, Xiaohognshu, JD Live, Yizhibo, dai mini-program di WeChat ed altri.

 

Livestreaming sessions host real-time broadcasting of video content by presenters such as social media KOLs (Key Opinion Leaders) that model or try out products. Viewers are able to purchase featured items while watching a video through embedded online links.

 

KOLS & KOCS AS A MARKETING STRATEGY

 

Brands will have to rely more and more on a strategy that integrates Key Opinion Leader with Key Opinion Consumer since while KOLs have millions of followers and influence the preferences of the masses, KOCs attract more selected consumer niches.

 

Key opinion consumers (KOCs) are “normal” buyers who create videos and posts about their own product reviews and recommendations. Therefore, they are more trusted by Chinese consumers because:

 

The recommendation comes from real consumers

Compared to KOLs they are more authentic

For example, KOC marketing is actually one of the key components of Perfect Diary’s marketing plan that has helped it to become one of the top cosmetics brands in China.

 

An integrated influencer marketing strategy is the optimal way to reach all consumer groups.

 

SHORT-VIDEO PLATFORMS

 

Apps for creating short videos like Douyin or Kuaishou are widely used and loved in China. One of the reasons for this success is precisely the integration of these platforms with online shopping sites.

 

The border between business and socialization continues to blur. It will not surprise you that more and more Chinese are using short video apps.

 

Users are encouraged to spend time on these platforms by customizing personalized content based on browsing history and preferences, thanks to the integrated AI technology.

 

SMART LOGISTIC IS A KEY ELEMENT OF CHINESE ECOMMERCE

 

Thanks to an ever-improving distribution network, e-commerce has had a great boost in the country. Just think that in some first-class urban areas Alibaba guarantees deliveries in 30 minutes within a radius of 3km.

 

In recent months, digital and logistics transformation have strongly favored the online retail sector.

 

GROUP & SOCIAL BUYING

 

Group buying refers to the offer of products and services at reduced prices if purchased in large quantities.

 

The group-buying model expands the e-commerce market to third and fourth-tier cities as they can join together to take advantage of the lower prices.

 

Major e-commerce players have launched group-buying platforms to tap into this segment of shoppers:

Pinduoduo (2015)

com (It started its group-buying mini program on WeChat in 2018 and launched its group-buying app Jingxi in 2019)

Alibaba (Juhuasuan in 2010, Pingou in 2018)

Suning (2018)

 

MINI PROGRAMS: A NEW TREND OF CHINESE ECOMMERCE

 

Mini-programs work as secondary apps within large platforms such as WeChat and are used to expand the functions of the applications. Users can perform similar functions without having to download a separate app.

 

Mini-programs are characterized by the fact of:

Being able to be used to replicate the activities of large e-commerce platforms on a small scale

Brands can use them as a second sales channel

They are useful for content marketing to better engage customers and encourage them to share content with friends

Thanks to the support of augmented reality (AR), companies can overlay virtual images on the physical world. For example, Armani’s cosmetics mini-program allowed users to test the look of different makeup items through users’ self-facing camera on their cell phones.

 

SOCIAL ECOMMERCE

 

Social commerce is the merging of social networking and online shopping functionality. The use of social media is becoming increasingly indispensable to reach users and push them to buy.

 

Thanks to these platforms:

Brands can increase Awareness through social media

Brands can focus on sales conversion through an e-commerce platform

Increasing numbers of consumers are making their purchases

Ecommerce platforms have content on the product page, accelerating purchasing

IP cooperates with e-commerce, turning culture into cash.

The two main platforms that are known for their use of social e-commerce include Xiaohongshu and Pinduoduo.

 

According to a report released by China Internet Watch, the total volume of sales from social e-commerce is predicted to increase to 2.06 trillion RMB by the end of 2020.

 

It is therefore necessary for brands to fully exploit the potential of this growing sector in the near future. For more news, please pay attention to International Fashion Fair.

 

Source: Marketing to CHINA

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