The “Amazon effect” has disrupted the entire retail industry by conditioning consumers to expect personalized, customer-centric service. As ecommerce gains market share, U.S. retailers are looking abroad for growth. Nordstrom, for instance, recently expanded to Canada and boosted revenue.
Another hot market for foreign expansion is China, with nearly 1.4 billion consumers who are tech-savvy, increasingly affluent and ravenous for American products. To delight Chinese shoppers, U.S. retailers can make it easy and convenient to shop anywhere and anytime. Retailers need a cross-border strategy supported by relevant omnichannel marketing to realize ecommerce success in China.
Why U.S. Retailers are Expanding to China
In 2016, China’s cross-border ecommerce market reached $917 billion US, according to iMedia.
Mobile shopping accounted for 56% of China’s 2016 online sales. On Singles Day or 11/11 – the world’s biggest online shopping event, created by Alibaba in China and held on November 11 – mobile accounted for an astounding 82% of total sales; experts expect this figure to rise in 2017.
In rural China, online shopping is often consumers’ only option – especially for U.S. and foreign products. While China’s tier 1 cities, including Beijing and Shanghai, represent affluent markets, Tier 2 cities like Suzhou and Ningbo enjoy lower living costs, giving consumers more disposable income for overseas shopping.
U.S. retailers can reduce risk and costs by entering China through cross-border ecommerce and prioritizing five omnichannel essentials. Here are 5 tips to help you create ecommerce success in the massive, growing Chinese market:
A responsive, localized website
China’s multiscreen users – online shoppers who use a combination of desktop, smartphone and tablet – spend 17% more than their mobile-only peers, according to McKinsey. Effective omnichannel strategies include responsive web design to reach these engaged shoppers who also shop online in 29% more categories and interact 14% more with businesses through social networks.
To maximize online conversion rates, retailers must also localize their marketing to suit Chinese consumers’ shopping expectations. A user-friendly, mobile website with easy navigation, full language support, integrated payment and multilingual search are a must for retailers entering China.
China is the world’s largest market for both smartphones and mobile payments. iResearch Global reports the transaction volume of Chinese mobile payments reached $1.5 trillion US in 2015; experts expect it will reach $3.20 trillion US in 2017. Six in 10 Chinese Internet users have used mobile payment, including Alibaba’s Alipay, WeChat Pay and Union Pay. Integrating these mobile payment methods in ecommerce websites can help U.S. retailers entice China’s burgeoning middle class.
Pervasive social media platform WeChat attracts 700 million users and gives retailers the ultimate multichannel gateway for shopper engagement. WeChat’s integrated online browser, messaging app and social media platform lets users access over 10 million internal apps. WeChat users are highly engaged, as 94% users log in every day, 61% use it more than 10 times a day and 36% log in more than 30 times a day, according to Chinese Micro News. Starbucks just announced WeChat Pay now accounts for 29% of the retailer’s total transactions in China, according to Inside Retail Asia.
German online pharmacy Bodyguard Apotheke created a successful Black Friday WeChat promotion. A well-respected mother and baby care influencer published a WeChat post on suitable medicines for babies, which earned more than 26,000 views and 2,100 likes, boosting brand awareness.
In China, QR Codes are ubiquitous. Shoppers can scan codes (on print marketing, product labels, packaging, shop windows and receipts) with their smartphone WeChat app and store the information on their phone. Consumers can even pay for purchases using a QR code. Mobile integration helps retailers personalize their marketing to boost engagement.
Bodyguard Apotheke produced banners and postcards with an offer for shoppers who scanned a QR code and became WeChat fans. The retailer increased traffic from its WeChat account, which represented 19% of total campaign sales and an average basket value of $93 US.
Incentivized brand activities
U.S. retailers can connect with shoppers through loyalty rewards programs and interactive online games. These activities allow retailers to gather consumer data related to their shopping behaviors, then personalize their marketing to encourage sales and loyalty.
These recommendations can help U.S. retailers realize cross-border ecommerce success in China by reflecting local shopping behaviors and product trends through relevant omnichannel marketing. For sustainable growth, many U.S. retailers form strategic partnerships with local experts to minimize their financial and infrastructural investments, and conquer China’s legal, financial, regulatory, linguistic and cultural barriers. Ultimately, success in China involves building a trusted brand by making multichannel shopping easy, convenient and seamless.
Franklin Chu is Managing Director of Azoya International