Nicola Davison
Apr 4, 2014

Adding social to the sales basket

The influence of social media is opening up the potential of e-commerce as a branding platform.

Adding social to the sales basket

In 1946, the American inventor Earl Tupper launched a line of sealable plastic boxes. Two years of languishing profits later, he hired Brownie Wise as head of home sales. Wise pioneered the company’s ‘party plan’, in which a company representative would gather female friends, acquaintances and neighbours in a homely, convenient place to socialise, share tips and ultimately sell Tupperware containers. The model grew quickly into a worldwide, multimillion-dollar success. By the 1990s, 90 per cent of American homes owned at least one piece of Tupperware.

Brands navigating Asian e-commerce today should take note of Tupperware’s unique blend of socialisation and selling. Shopping habits have been transformed by digital retailing. Consumers are drifting away from bricks-and-mortar retail to online shops and marketplaces that, through the integration of social media, increasingly resemble the Tupperware party living rooms of yesteryear. In such environments, traditional advertising and communications are becoming redundant. But, for brands that can keep up with rapidly shifting online consumer behaviour, new opportunities abound.

“Consumers have pulled the advertisers along with them, in my view,” says Jerry Smith, regional president of OgilvyOne Worldwide. “Once, successful branding came through good advertising and a prominent retail property, which lured consumers to the site. What we’re seeing now is consumers taking photos of themselves trying on a product, consulting their friends, and then walking outside to buy it on Tmall or Net-a-Porter.”

Different countries in Asia are in vastly different stages of e-commerce development. One thing that unites markets, though, is explosive growth. This year, consumers in the Asia-Pacific will for the first time spend more money online than North America, according to eMarketer. Fuelled by mobile commerce, particularly in emerging markets, the region’s online sales are expected to reach US$525 billion, while North America’s will amount to $482 billion in 2014.

China is the continent’s biggest e-commerce market and the one that is growing faster and in a more singular way than any in the world. Last year, revenue from online sales in China was between $190 billion and $210 billion, second only to America, according to research by McKinsey. The consulting firm predicts that if China’s current 15-20 per cent annual growth rates continue, the e-commerce sector could generate up to $650 billion in sales by 2020, or the equivalent of the markets of America, Japan, the UK, Germany and France combined today.

The way retail has evolved in China is unique and specific. The bricks-and-mortar stage of development took root comparatively recently. Most brands only have shops in first-tier cities leaving vast swathes of the country’s population in smaller cities — the emerging consumer class — understocked. 

Meanwhile the penetration of smartphones and greater internet connectivity has given these consumers unprecedented access to both home-grown and foreign brands. Seven out of 10 areas of China where online shopping is growing fastest are in rural, less-developed areas, according to Alibaba, the parent company of Taobao, which controls around 80 per cent of the country’s e-commerce. Alibaba is expected to go public on a US stock exchange soon, possibly raising up to $15 billion in the biggest initial public offering since Facebook.

With Taobao, says Vincent Digonnet, executive chairman of Razorfish Asia-Pacific, Alibaba was “way ahead of the rest of the world. Taobao is an e-commerce platform, but it’s also a social media platform,” says Digonnet. “You’ve got chat, you can post comments, you can post pictures and deals. Consumers can debate the ranking of the shops. They created a platform in which consumers are king.” Brands that can successfully build a strong e-commerce presence will be those that allow more consumer-generated content and more interaction, he adds. 

Min Lai, regional e-commerce and digital marketing manager at Fossil, says engaging with consumers through social media is one of the pillars of their sales strategy. “We constantly monitor and attend to consumers’ enquiries, interacting with them on social through a dedicated social customer care team,” she says

A level of interaction is crucial to replicate the engagement that naturally occurs in bricks-and-mortar shops. “We’re trying to find the point where we can exchange content and communications with our consumers in order to draw them into a relationship,” says Smith. “Brands should look to form a full- value relationship, where people can become advocates and bring other consumers in. By sharing stuff with their friends and circles, consumers almost work as a marketing department.” Brands can reward consumers, for instance, with credits towards future purchases.

In China, brands are incorporating social media elements into their own e-commerce platforms. L’Oréal China recently launched www.eskin.com.cn, a one-stop skincare shop and “online shopping community”. Customers can create an eSkin profile, put questions to skincare experts, participate in forums and rate or review products.

“Online commerce platforms in China, among other web-based sources of information, have become an important research tool for consumers seeking to find out more about goods before they purchase,” says Ajit Sivadasan, vice-president and general manager of Lenovo.com sales and marketing. “We are focused on achieving a greater share of voice and positive reviews on the major e-commerce websites, which will enable us to gain mindshare and drive sales. At the same time, we also leverage these platforms, which already have a massive visitor and buyer base, to launch new products and drive excitement around them.”

By the numbers:

  • 60 per cent of every dollar spent on e-commerce in Asia will come from China this year 
  • 610 million people in China, or just under half of the population, are currently online. More than 80 per cent of China’s internet users access it via their phones
  • 2.5 billion of the world’s 4.3 billion mobile phone years this year will be in Asia-Pacific
  • $5.5 billion was spent on Alibaba on November 11, 2013, China’s Singles’ Day. Around 25 per cent of purchases were made on mobile
  • $150 billion worth of merchandise is exchanged on Alibaba each year, more than on Amazon and eBay combined
  • $190 billion to $210bn in revenue came from online sales in China last year, a close second to the US’s $220 billion to $230billion
  • $525 billion in online sales are expected in Asia this year, overtaking those in the US
  • $650 billion: The value McKinsey forecasts China’s e-commerce market could reach by 2020

Sources: eMarketer, McKinsey, Alibaba, Techinasia.com

Social media also acts as a data collection point. Data allows brands to move beyond customised marketing and into personalised offers. “Social gives definite data on the exact individual that gives brands the opportunity to scale up one-on-one conversations,” says Derek Tan, Initiative’s executive director of social media for world markets, Asia. “Malaysia Airlines has been building up rich working networks through Facebook activation. They are trying to understand preferences as well as the social connection between that individual and their friends. For instance, if a person likes diving, they will push forward an offer to a diving destination.”

Eventually, Tan says, data will be used to optimise real-time marketing. “More precise data, in terms of understanding individuals’ behaviour and their potential to act as an advocate, will be a huge success factor,” he says. “I think there is a underestimation of how much impact technology has come to have in driving commerce.”

Last year, Alibaba founder Jack Ma commented that the mission of Alibaba’s mobile department “is to eliminate Taobao — by replacing it with Taobao mobile”. Figures from last year’s Singles’ Day suggest that the mission is well underway. Every November 11, China’s e-commerce companies create an online shopping bonanza by offering deep discounts and bargains for a 24-hour period as consolation for the country’s lonely hearts. Within the first four minutes of the sales, Taobao took over 100 million yuan ($16.4 million) in mobile purchases. Within an hour, 1 billion yuan ($164 million) mobile purchases had been made, beating the total 24-hour tally of the previous year.

Markets across Asia are poised to follow suit. Nearly 2.5 billion of the world’s 4.3 billion mobile phone users this year will be in Asia-Pacific, according to eMarketer’s Global Media Intelligence Report. The region now has 740 million smartphone users, compared to just 86 million in 2009.

Despite the staggering figures, brands are failing to optimise their mobile services. “Marketers now know how big mobile is, but they lack strategy,” says Arthur Policarpio, head of Mobext Asia-Pacific. 

A 2012 survey carried out by Mobext among more than  800 marketers in Asia is revealing. The two biggest barriers cited by non-investors in mobile are the lack of a uniform framework to measure mobile marketing ROI and the lack of case studies to prove mobile marketing’s effectiveness. While there is a lot of talk about mobile marketing technology, there have been few case studies to prove its efficacy. 

But when brands get it right, mobile allows them to engage with consumers in what feels like new and exciting ways. In 2012, Emart, the Wal-Mart of South Korea, launched its “Sunny Sale” campaign to boost sinking lunchtime sales. Taking advantage of the territory’s wide adoption of smartphone technology, the company placed three-dimensional QR codes outside dozens of stores in downtown Seoul. Only in the middle of the day, when the sun was at its height, would the shadows align in a way that made the code scannable, granting users access to coupons and special offers. As well as coverage in traditional media, the campaign boosted Emart mall’s lunchtime sales by 25 per cent.

“In emerging markets such as India and the Philippines, mobile commerce success for brands will rely mostly on simplicity and how it can address the underserved market,” says Policarpio. “We’ve seen case studies in India where mobile was used to reach out to rural areas where TV and computers are not widespread.” 

In the Philippines, Policarpio adds, one of their most successful mobile commerce campaigns was through simple couponing for McDonald’s. “The brand earned millions of dollars with mobile in less than three months, all because we relied on simplicity,” he adds. “We wanted to ease the public into using mobile to purchase.”

Mobile commerce faces several barriers. In emerging markets, offering payment options other than credit cards would encourage consumers to buy with their mobile, as often those without credit cards are the younger, tech-savvy generation. Also, “E-commerce sites, from dedicated online stores to brands’ e-commerce channels should improve their mobile properties so consumers will have a good experience when shopping on mobiles,” says Policarpio. He adds that there needs to be more cooperation between several industries, from telecommunications companies to retailers and financial services. Without better connectivity in retail areas, real-time mobile marketing remains just a promise.

The future of e-commerce looks to lie in its synergy with mobile and social platforms. Eyes are on China and particularly the trailblazing social media app, WeChat. “It started as a messaging platform, but when it gained its huge numbers, it expanded its capabilities immensely,” says Policarpio. 

According to WeChat’s parent company Tencent, the app has 270 million users. “Now people use it to blog, interact with their favourite brands, read the news, and even pay for goods in-app. Brands with official WeChat accounts are capable not only of pushing deals and coupons in-app, but transactions can now be completed.”

The platform last year began experimenting seriously with e-commerce, allowing users to pay for cinema tickets, mobile games and to access promotional offers by partner vendors. Tencent has also experimented with online-to-offline payments by connecting WeChat to vending machines. Now the company has launched its own e-payment platform, Tenpay, which looks set to rival Alibaba’s popular system, Alipay. 

Xiaomi, the innovative Chinese smartphone company, is one of the first brands to test the bounds of WeChat’s e-commerce capability. Through competitive pricing and savvy branding the “Apple of China” has quickly risen from a start-up in 2010 to rival smartphone giants Samsung and Apple in its home market after selling almost 20 million smartphones last year.

Xiaomi’s marketing strategy has always been socially-minded. At first, founder Lei Jun assigned little budget for branding. Rather, staff spent time on forums, commenting, posting and advertising, and cherry-picking users to offer feedback on the company’s first operating system (OS), who became known as Mi-fans. Today Xiaomi outsources designs and features online from its army of Mi-fans, releasing a new version of its OS every Friday, generating discussion. 

Xiaomi has long used its public WeChat account, which has around 1.5 million subscribers, as a highly responsive customer service provider, which Vincent Digonnet of Razorfish calls “a big part of their success story and brand building”.

In August 2011 Xiaomi launched its first smartphone, the Mi-1, which sold out in two days. Its next phone, the Mi-2, sold out so quickly some commentators accused the company of “scarcity marketing”, or creating an artificial shortage geared to generate buzz. “Every new product launch is a great show via social, which successfully boosts online sales,” Digonnet adds. 

Last November the company released 150,000 of its Mi-3 handsets for purchase through WeChat. They sold out in less than 10 minutes.


 

CASE STUDY Crayola engages China’s children on Tmall

Crayola is an iconic children’s brand in its home market the United States, where it has 99 per cent name recognition. But in China, Crayola is a new brand in a niche category with plenty of competition.

Research indicates that only 19 per cent of Chinese online shoppers buy from official brand sites (versus 60 per cent in Europe and 41 per cent in Japan), so Tmall was chosen as the strategic entry point.

Young working women who will soon be mothers are already shopping on Tmall, while the platform provides the sort of peer reviewing that is trusted in China.

Crayola launched on Tmall last June with an emphasis on the brand’s philosophy of “unleashing creativity and originality”. Videos and graphics around the idea of ‘Colour unlimited’ were created for social media, and consumers engaged with the brand through Tencent’s WeChat and Sina Weibo.

An online drawing contest was incorporated into a Tmall-based gallery and a real, physical white space was built in which over 100 children used Crayola products to create art on the walls, floor and furniture.

Sales increased steadily in the first months of the launch before the brand’s first major sales push on China’s Singles’ Day on November 11.

Aggressive sales tactics included bundling, coupons, flash sales and group buys. Sales on Singles’ Day were 150 times greater than in the average day for the previous month, while search volume on Tmall was up 100 per cent.

 

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