Retail

These tactics are helping Chinese retailers survive the coronavirus crisis

As isolated Chinese consumers spend more time online, livestreaming, influencers and private social media groups help brands stay engaged and competitive.

In China, things are all but back to normal as restaurants, bars, and retail stores start to reopen. But for some time, many Chinese retail players saw sales hit rock bottom and had to resort to measures such as livestreaming and private social media groups to keep their businesses alive. We take a look at some of their proven, innovative tactics and how U.S. retail players can apply them now to stay alive.

Livestreaming and ecommerce

Livestreaming ecommerce in China is a phenomenon that began in 2014/15 and started to take off in 2018, with Taobao Live selling 100 billion RMB (~US$15 billion) of merchandise that year.

In China, most brands livestream on Taobao, Alibaba’s eBay-like C2C ecommerce platform where anyone from mom and pop shops to venture-backed retail start-ups and gray-market daigou sellers can sell to Chinese customers. Daigou is an emerging form of cross-border exporting in which an individual or group of exporters outside China purchases goods for customers in China.

Brands can either choose to host a livestreaming session on their own channels or elect to work with an influencer. During the session, the host presents the brand and tries on different products one by one, telling the audience how it looks and feels. “Lipstick King” influencer Austin Li reportedly tried on 300 different types of lipstick in a single day of livestreaming.

During the session, the host also tends to host a raffle or virtual game to keep customers entertained. Public chat is enabled during the session, so viewers can directly ask questions about the look and feel of each product and interact with the host. At any point during the session, viewers can purchase products by clicking on a small link and paying with Alipay, Alibaba’s mobile and online payments platform.

Which brands are livestreaming to stay alive through the coronavirus crisis?

In March, Swedish furniture retailer IKEA held a livestreaming session to promote the launch of its new Tmall store. IKEA’s Tmall launch was the first of the kind, as the retailer has spurned partnerships with ecommerce platforms in the past. Tmall and Taobao are part of the same Alibaba ecosystem; Tmall items can be found in Taobao searches and Taobao Live livestreams can link to Tmall stores.

Furniture is a difficult category to sell through ecommerce channels, given the complexities around shipping heavy cargo and the fact that most people want to try out the products in person. But the coronavirus crisis has forced the global furniture and home décor retailer to shut all 30 of its offline retail stores in China, robbing it of its primary source of revenues and leaving it with no choice but to double down on its ecommerce initiatives.

Private WeChat groups

Chinese retail players are also turning to private social media groups to keep their top customers engaged through the coronavirus crisis.

This is a phenomenon called private traffic and this method of marketing enables brands to more closely engage customers in a private setting. The main channel, in this case, is WeChat, China’s eponymous messaging app. In China, most customers are averse to communicating via e-mail and prefer more immediate forms of communication.

Since offline retail all but closed down entirely in China, some retail players trained their store employees to set up private WeChat groups, online promotions and discounts to keep consumption going. Each WeChat group can hold up to 500 people, and the group moderator typically is an employee that forwards promotions, product advice, and even interactive mini-games to keep customers engaged.

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Franklin Chu

Managing Director, Azoya International (Reprinted from Digital Commerce360)

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