October 7, 2013, 4:38 PM

How Western companies can maximize brand equity when selling to Chinese web shoppers

Build a branded web site for promoting products but close sales on the marketplace Chinese shoppers know best, a Beijing-based marketing expert advises.

Retailers seeking to establish themselves in China’s flourishing online market are correct in assuming that, like all worthwhile goals, such establishment requires commitment and sustained action. China’s e-commerce gold, as editor Don Davis recently advised, is indeed hard to mine.

 However, Chinese demand for quality western goods is glaringly undersupplied. The gold is anything but hidden. The twin factors of a huge, hungry market and lack of competition present a rare opportunity to bold, persistent Western organizations.  A closer look at how China’s premier e-commerce platform operates will hopefully demonstrate how a retailer can best convert Chinese Internet users into consumers.

 Understanding that Chinese shoppers are much more like their Western counterparts than different is a crucial first step in getting the right perspective. It’s the environment that’s different. Hence the runaway popularity of Taobao, Alibaba Group’s version of Amazon, and Tmall, the newer upscale twin of Taobao.

 Chinese e-commerce has traditionally been a much less regulated “Wild East” version of what we’re used to, with rampant misrepresentation and fraud. Taobao’s rating system, based on sales, customer service, and delivery record, made its plethora of stores transparent and accountable. Ironclad return policies and a mandatory live chat feature gave shoppers extra levels of confidence.

 True, low price point also drove Taobao’s popularity, leading to rampant copycatting, and a race to the bottom. Alibaba launched Tmall as an ostensibly brand-verified, IP-protected alternative to Taobao, for vendors and shoppers alike. Note that Tmall’s popularity is based not on lowest prices, but brand verification and quality assurance, as well as replicating Taobao’s transparent shopping process. The point bears repeating: Chinese shoppers largely resemble Western shoppers, and ever more so.

 “China is immersed in consumer culture, so expressing oneself through one’s purchases is just as important as in the West,” says Shaoming Yang, CEO of Baipinhui, an e-commerce and logistics provider based in Shanghai. “Also, as per capita disposable income skyrockets, there is a corresponding spike in demand for genuine Western products and their assumed inherent quality.”

 So why do Western brands struggle on Tmall? “Competing on price point and delivery terms is not the answer for a brand which has the leverage of Western authenticity,” Yang maintains. “Chinese brands which have little equity or aught else to distinguish themselves from their competitors must use these tactics. By communicating its value, a Western brand stands out on the Chinese Internet landscape, and drives sales.”

 Thus the simultaneous charm and challenge of Tmall, a platform that sold over $3 billion worth of goods in one day in 2012, yet where starting out is a catch-22 proposal. “Customers want to see that you’ve sold a lot of goods and have earned good ratings before trusting you with their money,” says Yang, “so a new store generally has a tough time achieving momentum, unless it’s an already established and verified brand store, and even then…. “

 Perhaps the best way to frame the problem in order to arrive at a solution is to realize that Tmall and Taobao are China’s answer to Amazon. Beijing-based UX consultant Wendy Shijia puts the issue succinctly: “Tmall is an online catalogue. Any company that makes the platform its first touch point with a prospect is leaving a lot on the table.” To be fair, Tmall does allow for integration of video, customizable backgrounds, and other add-value features. What can’t be argued is that, given the constraints of maintaining such a vast site, Tmall cannot offer anything close to the brand experience a customized web site can, in Mandarin or otherwise.

 Tmall does offer, however, a range of SEO and paid search marketing services, an intelligent tactic for its vendors, given the alternative of extremely pricey banner advertising on the home page and category home pages, which must usually call attention to a sale to get any click-throughs. The analytics available are virtually identical to those of Baidu, China’s Google, allowing for a scalable approach to Tmall marketing. But keep in mind that just as many shoppers on Tmall navigate via a sidebar that offers a department store-style experience, as opposed to just entering a term in the search bar. Also, a store’s ratings will still play a large role in search rankings, and whether someone who finds a store via SEO or a paid search ad will be compelled to buy from it.

 “SEO and PPC [pay-per-click advertising] are the go-to tactics for high conversion rate and low cost per conversion,” says Alex Ververis, marketing manager for China Digital Labs. “But even though Tmall and Taobao together account for three-quarters of China’s e-commerce, 80% of China’s online traffic originates from search engines, particularly Baidu. You can’t optimize your Tmall store for Baidu; the latter has its own e-commerce interests and won’t list a direct link. For effective marketing to self-qualified leads across China, an SEO and/or SEM campaign on Baidu is highly recommended.”

 A truly effective China online presence, then, would combine touch points external to Tmall, and funnel a lead to a Tmall store for purchase. Ideally, this external touch point would be a stand-alone site, which affords the twin advantages of fully managing a viewer’s experience with the brand, and ability to draw the potentially vast amounts of traffic not specifically searching for a product on Tmall. There are other options, such as a Sina or Tencent blog/microblog platform, which are far less costly, but also far less effective at communicating the quality and authenticity of a Western brand.

Those opting for a stand-alone site could implement their own payment gateway and close sales on their own sites. But they would then forego the advantage of building up a reputation on Tmall, and drawing internal leads who could cross-reference with the site. Yang says many Western brands are taking the approach of building their own branded web sites, but closing sales on their Tmall stores.

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