On Wednesday April 11, 2018, we presented our insights into WeChat eCommerce in cooperation with Westwin during our event “Utilizing WeChat to Lift Your Business in 2018”. In 2018 more and more retailers are riding the WeChat eCommerce wave. But how much do you really know about WeChat eCommerce? During this event we shared our extensive knowledge on how to start your China eCommerce from a WeChat store.
In this article we will provide you with a summary of the key points. Also, feel free to check out our presentation down below or take a look at our WeChat solutions and how we can assist you by developing your WeChat Store.
China eCommerce Channels
The perception that by merely making one’s products available to China’s enormous consumer base will automatically translate into sales is outdated. Due to the emergence of online shopping in combination with the huge number of foreign merchants and brands has created hyper-competitiveness and over-saturation of the Chinese eCommerce market. As such, it would be naive to think that by just making one’s brand available to Chinese online platforms, demand for one’s product will be automatic.
After thorough consideration we suggest that there are three major channels through which foreign brands may consider to sell their products online in China, namely: through their own stand-alone brand eCommerce website; third-party platforms or marketplaces; and finally through WeChat stores.
As will become evident from our slides (slide 4) every channel has its own function, both in terms of the prospective volume or traffic the channel may generate as well as how marketing strategies must be tailored to reach your target customers. And most importantly, China is characterised by a diverse eCommerce landscape.
WeChat in 2018
A unique feature of Chinese eCommerce is its connection with social media. Social media application such as WeChat allows companies to both sell to, and, engage with their customers and followers on one overarching platform which is deeply rooted into everyday Chinese lives.
Naturally each brand will be interested in using a social platform with 902 million active daily users. Moreover, WeChat is an interesting platform for companies as 25% of its users buy products or services from WeChat, whereas another 12% buy through WeChat stores and 11% click on WeChat ads respectively.
You might wonder however, why should you choose to sell to Chinese consumers using WeChat instead of for example third-party platforms?
In order to determine how foreign business can use the differing sales channels to their advantage, TMO broadly defines two business development strategies (slide 6):
- Fast Growth Strategy (high costs, higher growth).
- Organic Growth Strategy (lower costs, slower growth).
A WeChat store presents an excellent organic growth strategy. To be specific, brands who have yet to enter the public eye can strengthen their brand influence through social media. After all, without brand awareness, relying solely on a big platform for higher traffic will be of no use.
Furthermore, WeChat commerce can also help to:
- Focus on a key target group.
- Understand who your customer is.
- Learn what your customer desires.
- Establish a long-term relationship.
Social Commerce – Business Models
In our presentation we identified a number of social commerce business models, which we will briefly explain below:
- The Subscription Model – customers pay a fixed amount each week, month, or year and receive the agreed-upon products in return. For your customers it provides convenience, whereas it creates recurring sales for and simplifies inventory management for sellers. At the same time you build a customer base and customer loyalty.
- Mini Group Buying – this model encourages the user to activate their WeChat network by inviting friends to join a group. It takes 3 to 5 people to obtain the discounted price. Customers will still be able to purchase the product at the original price if the group size is too small. For sellers it may result in the perfect viral social effects.
- Pop-up Store – this model offers a short-term campaign which creates a urgency to purchase the products. Scarcity drives customers wanting exclusive, limited edition, or products they can otherwise not get to action. Even with a sold-out status you may keep the campaign page to for lasting advertisements.
- Consumer Activation – via this model you transform your consumers into brand ambassadors. You can award them with additional loyalty points or a commission scheme.
- KOL & Content-driven – you can display professional product knowledge to show the best usage to the customers. Moreover, by linking for example the baking receipt, cocktail receipt, or fashion guide you create the desire to buy and drive conversions. Of course KOL’s are great content marketeers. You may cooperate with them by embedding your WeChat Mini program link in their posts to reach potential customers.
- User Generated Content – by encouraging users to create own content, engaging them in different campaigns and by building a strong community, you will enhance the bond between users, user and brands, and user and products.
- Voucher/Gift Card – via this model your user introduces your product or services to their social connections. It is often considered one part of the O2O mechanism: buy online and redeem the service offline.
Finally, selling to Chinese consumers through WeChat commerce allows you to gather in-depth knowledge and insights into your consumers. For example, you can tag your users based on specific actions they have taken and KPI’s. Moreover, you will be able to recognise your consumer through multiple channels such as their Mobile ID or behavioural user data.
If you would like to see all our insights, please check the presentation down below, or contact us at firstname.lastname@example.org.