From Traditional Retail Business Model to Ecommerce

Unlike traditional retail business model, a well-executed e-commerce platform gives Xiao Gou Company a more cost-effective way to reach to a wider range of Chinese consumers. Staying solely on online retail platform helps Xiao Gou company to channel synergies to attract consumers from all parts of China, unlimited to the geographical limitation of offline stores, helping them win and retain the most valued customers – and to do it profitably.

Xiao Gou Company estimated that the sales closed by a sale staff in a departmental store is near to the number of deals Xiao Gou Company closes in a day on one single e-commerce platform. In addition, online sites serve as effective marketing tools, as shoppers increasingly rely on web searches and reviews. These sites provide an effective way for filling gaps in a company’s physical store network, including untapped markets with little competition or product offerings that might not be available in physical stores.

Quality Control

Xiao Gou Company believes that stellar product quality is the key to retaining customers. Xiao Gou Company’s purchase team stations at Suzhou, where its suppliers are located, to frequently conduct inspections on productions, so to ensure quality control from raw materials to final products.

Xiao Gou Company promises a “7 days return/exchange” service to all customers. Even with such flexible return/exchange service, and a monthly sales of 20 000 vacuum cleaners monthly, Xiao Gou Company manages to keep its refund rate at a low 0.9% due to its outstanding products quality.

Post Purchase Customer Service

Apart from producing quality products, another aspect Xiao Gou Company holds dearly is providing excellent customer service. Xiao Gou Company sees this as a crucial value-adding component, where only constant upgrading and improving of customer service can help to establish customer-brand loyalty. This has allowed Xiao Gou to champion all major ecommerce platforms as the No 1 vacuum cleaner for five consecutive years.

Competitors

Domestic brands such as Midea, Haier and Deerma as well as international brands such as Philips, Panasonic and Electrolux are Xiao Gou’s main rivals. Domestic brands especially have less product differentiation, from product specifications to price and to design.

Consumers

Target customers of Xiao Gou are mainly customers between the ages of 25 to 40 and the bulk of Xiao Gou sales tend to be for household purchases.

Marketing Efforts

Xiao Gou’s current marketing efforts are solely based online. It takes forms of promotional advertisements on latest Xiao Gou products. Xiao Gou’s brand manager revealed that there is no deliberate intention of focusing their marketing efforts online.

As Xiao Gou is only operating through online ecommerce platforms, it naturally directed its marketing efforts on the web. Xiao Gou’s brand manager also mentioned that they haven’t found a right timing or campaign idea to launch an offline campaign. Execution of an offline campaign is possible and will need to contain a strong message and have an effective delivery.

This post is an excerpt from BizAsia, a student society of Guanghua School of Management, Peking University.

Do You still remember the “nickname bottle” that Coca Cola launched last summer? Such an impressive case was not so long ago, now Coca Cola has shifted its focus from bottle to cap, joining up with WeChat. 

Caps are beverage manufacturers’ favorite widget for doing promotion, other than bottles. Such as the most popular “one more bottle” printed on caps in previous years, used to be a common promotion way for many manufacturers. As consumers get used to marketing strategies like “free taste”, “special sale” and “different bottle packaging”, beverage manufacturers are forced to search for new strategies.

Coca Cola tried some creative marketing activities for many years in China. They set up ICOKE platform in 2005, combining traditional marketing with internet platform. By holding iCoke events and communicating with young consumers, Coca Cola successfully built an online community and strengthened their brand awareness.

In the past year, Coca Cola launched a brand new packaging specially for Chinese young consumers. They printed dozens of internet nicknames on the bottle packaging, including popular nicknames such as “Chi huo” (meaning foodie), “Xiao qing xin” (people like indie pop) and “Bai fu mei” (white rich beautiful woman). By carrying out various marketing tactics, the nickname bottle won much attention and became a distinguishing brand marketing case in 2013.

Coca Cola, in cooperation with WeChat, launched a promotion activity named “3PM drink and win Coca Cola” on March 3 in 2014. The activity was jointly organized by Coca Cola, WeChat and Yixun. For getting the chance of “seckilling”, consumers just need to join the Coca Cola Interactive Platform on WeChat, and input the Pincode on the cap. Coca Cola prepared 990 million Coca Cola, Sprite and Fanta with WeChat logo printed on the bottle for the activity. A special 15-second advertisement was on TV since March 3 and the creative information about the activity was also spread on social media.

It was the first time that Coca Cola tried to do exchange promotion on mobile; and WeChat created a new channel to interact and promote on mobile. The activity provided a true sense of retaining consumer relationship management, and an excellent marketing opportunity. Here are some noteworthy points of this cooperation:

• Traditional beverage giant initiated a cooperation with WeChat, trying new O2O interaction mode. WeChat is no doubt significant for branding, attributed to its high penetration rate on mobile. While Coca Cola has been testing water in mobile marketing, WeChat will positively help it improve consumer participation, get closer to the young and boost sale.
• For the first time, the manufacturer uses a combination of Pincode and mobile internet to pull offline consumers to online, then retains and interacts with them. When participating in this activity, consumers need to follow the official Coca Cola account on WeChat, so consumers are retained and might become die-hard fans of Coca Cola. It increases the consumer stickiness, as well as the feedback value of Pincode.
• The tripartite cooperation (Coca Cola, WeChat and Yixun) inspires other enterprises with innovation and creative ideas of WeChat marketing. WeChat is more than an information carrier; WeChat marketing is not only a single pattern of information push, fans interaction, customer service or online transaction, but a combination of sources for marketing. In this way conversion will be easier. Many FMCG enterprises are expecting a cooperation opportunity, however not all brands have the chance to cooperate with WeChat and Yixun.

How to do WeChat marketing? There have been many representative cases, but Coca Cola gave us an inspiration. The primary user group of WeChat is the young, coinciding with the younger brand image of Coca Cola. Online shopping, WeChat interaction and “seckill”, these tactics are all preferred by young consumers, helping Coca Cola get close to the young people. “3PM drink and win Coca Cola” integrate the online and offline advertising sources, and WeChat utilized its advantage on mobile to offer marketing and service scenario. It brings branding and promotion closer and provides other brands a reference for mobile marketing. “WeChat and Didi” and “WeChat and Red Envelope” both caught people’s eye, now “WeChat and Coca Cola” would very likely to be popular with consumers and becomes a typical crossover marketing case in 2014.

After viewing the landing page, I realized Airbnb is likely to fail in its attempt in expanding into Chinese market; let me tell you why.

China is a huge market, not to mention its revenue potential for travel sector. It’s too appealing to be ignored by many internet based businesses such as Airbnb. Yet, it’s not dedicated at all in this one of the most competitive markets in the world.

The banner ad is in traditional Chinese while people use simplified Chinese in China. Though many Chinese won’t have a problem reading traditional Chinese, the non-localized ad make internet users feel disconnected.

Airbnb website does have a Chinese landing page, but some text doesn’t sound native and my guesses they automated it with tools like Google Translate with some possible manual editing.  And, the landing page is not appealing to Chinese internet users at all. It offers login method with Facebook which can’t be accessed in China.

Few friends of mine in China heard of Airbnb and for those who haven’t, what would they do? They would likely to conduct a search if they’re going to do anything at all. Airbnb should be worried about what’s on Baidu search results page of its brand term:

The subdomain, luckily, was indexed and ranked on top of Baidu SERP for this brand term. However, the title and meta description is clearly not optimized for Chinese audience, telling no unique benefits of using Airbnb.

The two listings below its official website about critique about its business model and a robbing incident.

My suggestion for all companies looking forward to expanding their business into China is,

1. Do your research and develop a business/market strategy for this unique market instead of making half dedicated efforts with a campaign on Google Display Network or Baidu PPC
2. Develop an integrated digital strategy for China with help from someone having local expertise in this market, ignoring whatever worked for you in other markets
3. Form a testing strategy. China is a dynamic and competitive market; it’s unlikely you can see results right after launching a campaign

For those not far from Zurich, you can join me in September Connect China conference when I’ll share some insights on China digital strategy.

The heavy storm yesterday afternoon in Beijing flooded some areas and stopped the operation of several lines of subway. However, there were a few lessons marketers can learn on social media marketing on Weibo from how some Chinese companies took advantage of the storm.

Lesson 1: Monitor the conversation & take advantage of trending topic

A Weibo user, whose seems to produce funny and humorous content, posted a few photos of him using a few Durex condoms as protection of his shoes from the rain, which was “retweeted” by some of his 8000 followers. In two minutes after the post was published, Durex’ official account “retweeted” this post to over 100K followers and interacted with people who replied. 

At the time of writing this post, this single post was “retweeted” to over forty five thousand times with over seven thousand comments.

Lesson 2: prompt response to customers concerns via Weibo

Kuaishubao.com, an online book retailer, posted a message on its Weibo account assuring its customers that books would be delivered if the rain stopped before 6pm; if not, books would be delivered the next morning. Their customer service staff also made calls to customers about the delay.

Lesson 3: create fun on trending topics

Baihe.com, an online dating website, published this post on their official Sina Weibo account:

Here’s the translation if you can’t read Chinese:

[Beijing storm] The world’s most romantic thing is enjoying the “sea” view in the office at work, and seeing the “waterfalls” in the subway…

This post was “retweeted” over thirteen thousand times with over 1870 comments.

Statistics: Weibo monthly active users (MAU); DAU