East-to-West Learnings

Breaking down by industry, restaurants were the hardest hit, down 43%, jewelry sales -41%, fashion -31%, beauty -14%.  Very few categories showed positive growth, food was up 10% and beverage 3%.

 

Carlo: how did online fare during the shutdown, compared to brick-and-mortar?

 

Xia: eCom showed resilience. Overall, eCom grew by 3%. Food sales online jumped by 27%, and household supplies up 7%, but fashion sales dropped 18% online, which was still far better than the estimated drop in brick-and-mortar fashion retail, a dramatic 35% decline.

 

Carlo: NetCommSuisse is organizing many events for Fashion and Luxury. And you spoke and attended many of them. Can you tell us more about how fashion and luxury in China responded?

 

Xia: it was a devastating time for fashion brands. Their stores were closed for almost two months. To survive, they shifted to online as quickly as possible.  In addition to massive discounts and give-aways, many brands adopted some smart strategies. 

 

One local brand used location-based Wechat ads to acquire new customers. Store by store, the brand developed a rough customer profile based on store associates' empirical observations. It then pushed location-based Wechat ads to users who live nearby and may fit the profile. Thru a click, the user would come to the brand's e-store on JD.com and receive a coupon to use online or in the store later. 

 

For luxury brands, the main goal was to keep customers engaged. The store associates usually keep contact with their VIPs or potential buyers on WeChat. During this outbreak, while stores were closed, some luxury brands provided product training to store associates via livestreaming. The associates then reached out to each customer via Wechat. They posted product photos, released new products in their chat group, provided customer service, completed the transaction directly in the chat room via Wechat Transfer, and arranged delivery to the customer's home. 

 

Carlo: those are excellent learnings for our members. We know China has always been a more advanced eCom market before the outbreak. What’s different now?

 

Xia: Livestreaming, livestreaming, and livestreaming. You might have read news about Milan Fashion Week experimenting with livestreaming. But livestreaming became the most popular selling method in eCom in China. It is widely adopted by almost every industry this time - from chefs to lipstick makers, from electronic stores to car dealers, from farms to night clubs.

 

Livestreaming in China is like an online version of TV shopping. The hosts showcase or try on products in real-time broadcasting. Thanks to the ubiquitous online payment methods, viewers can instantly buy the item from an embedded link online.  Before coronavirus, the hosts were usually influencers who had millions of followers. During the outbreak, thousands of store associates became hosts of livestreaming sessions. Some department stores reported that their sales personnel achieved one-week worth of sales in just one livestreaming session. 

 

Tmall, Tiktok, Kwai and Wechat were the major livestreaming channels. Wechat's mini-program, with its 300 million daily active users, stood out this time. On March 8, during the Woman's International Day promotion, 2000 hosts livestreamed for an aggregated 900 hours in total. Each viewer gave 280 likes on average. The most viewed livestreaming session was shared 20,000 times. Sales grew as much as 5X. The best sessions had 40% conversion rate!

 

Carlo: wow, this is very encouraging news. What learnings do you think our Fashion community may draw from China's experience?

 

Xia: most importantly, make sure you understand your customer needs at this crucial moment and adjust accordingly. For example, in China, lipsticks were the best selling makeup product before the outbreak. But now it is eye makeup because everyone is wearing a mask. So beauty brands must quickly shift their digital resource to eye makeup.

 

If you don't have eCom, it is time to start. It doesn't mean you must build a website overnight. For example, lots of restaurants in China made their chefs the hosts and set up livestreaming on Tiktok from their kitchen in one day. They broadcast phone numbers and took take-out orders offline. So, think creatively and be entrepreneurial!

 

For those who have eCom, make sure you cover the basics. Does your site accept all popular payments? If you offer a discount, is the promo code correctly set up in the system? For local services, can local residents easily find you on Google?

 

Keeping consumers engaged is very important during this period. Nike's fitness app saw user activity jumped by 80% in China during the quarantine. Their online sales rose by 30%. Not every company has a fitness app. But think about other ways, such as email newsletters, Instagram, or Facebook account. Empower your store staff, especially those digitally savvy ones. They can become your online brand ambassador. 

 

Carlo: these are great suggestions. Now China is re-opening its economy. It is said that China will lead the global rebound. What kind of opportunities will Swiss companies have?

 

The Chinese consumers' demand for natural and healthy products such as vitamins and supplements are on the rise. Many great Swiss companies offer such products. It may be an excellent opportunity for them to enter China now.

 

eCom growth will be accelerated further in China. Prada, MiuMiu, Armani, Alexander Wang, Cartier, Kenzo, Delvaux, and Lavin all launched their flagship store on Tmall or its likes in the past month. If you are not in China yet, you may like to consider what a China eCom strategy looks like for your business. 

 

The coronavirus and recent geo-political issues are posing great challenges to China. But its 420 million middle-class Chinese consumers are still on their way to trade up for a better life. It’s likely at a decelerated rate but the upward movement momentum is hard to stop.

 

Xia Feng is the founder and CEO of The How Consulting. You can contact her at xia.feng@thehowconsulting or linkedin.com/in/xiafeng

The How Consulting is a trusted service provider to help western companies bridge cultural and operational gaps entering China and succeed in the long run.