The grand opening of Costco’s first store in mainland China has received massive success on 27th August. 120,000 new members were recruited and its US share price rose by 5% to a record high, even while the broader S&P 500 Index declined. click for more…
INSIGHT & IMPLICATION: Costco’s opening in Shanghai received a highly enthusiastic response from Chinese consumers. That said, Costco has been preparing for the past 5 years leading up to the store launch by taking a very rigorous approach to fully understand the complexity of the Chinese market, especially the challenges brought by the advanced eCommerce industry.
In 2014, Costco began selling to Chinese consumers through Alibaba’s Tmall cross-border eCommerce platform. Three years later, its flagship store was opened on Tmall’s local marketplace and offered expanded assortment beyond food, supplements, beauty products and apparel to include furniture, electronics and wine. It also gradually introduced the brand to the market through content in the last 5 years. This was the reason why the retailer was confident about its success. However, only several days after the store opening, a wave of membership cancellations followed because the consumers were dissatisfied with removal of some hot items and price increases of others. This shows the high expectations of Chinese consumers who are willing to completely cut off their relationship with retailers and brands that do not live up to their expectations.
A survey conducted by AlixPartners found that 90% of Chinese millennial consumers said purchasing green beauty products was important to them while only 56% of British millennials agreed. Also 38% of those Chinese millennials claimed that green products are not readily available where they shop. click for more…
INSIGHT & IMPLICATION: The new generation of Chinese consumers are reshaping the beauty and personal care category. Green beauty products (containing natural or organic ingredients sourced and manufactured by ethical and environmental standards) are increasingly finding their space on their bathroom shelves. Sourcing fresh, organic ingredients does not always come cheaply—“natural” or “organic” is often perceived as premium, and Chinse millennials are willing to pay more for these products.
That said, brands need to be cautious of not overpricing their products beyond the reach of these consumers and offer an authentic story that will resonate with them. Brands need to understand that premium-priced products labelled as organic are not likely to succeed without a compelling story and that their branding, marketing and communications plans need to take this element into consideration before diving into this increasingly lucrative market.
Sina Finance has reported that 86% of Chinese consumers say their privacy should not be violated, and over 50% see data breaches as a severe problem. Kantar also found that 43% of online consumers are concerned about their privacy and the integrity of their information. click for more….
INSIGHT & IMPLICATION: As the government introduces more strict laws to regulate consumer data collection and usage, Chinese consumers are also increasingly becoming conscious of the value of their data and the risks of its breach, abuse and leakage. Critics of Alibaba, Tencent and Baidu claim that the three digital behemoths have a stranglehold over the personal data of China’s vast population, which further compels consumers to considering protecting their personal information from abuse and excessive commercialization. One example of this is an AI-powered face-swapping app ZAO that went viral across social media within a very short period of time. However due to risk of data privacy, the related app content is now being blocked on WeChat only one week after launch.
The reason behind it is the discovery that the user terms and conditions that demand to allow ZAO “completely free, irrevocable, perpetual, transferrable, and re-licensable rights” to edit and distribute content uploaded and created on the platform, as well as full copyright and ownership. The backlash that followed after the initial enthusiasm of users shows the increasing awareness of data collection importance and, in spite of the highly appealing marketing and media opportunities that data can create, brands need to be highly cautious about its collection and ensure that consent is received through user agreements that clearly stipulate the purpose of data collection and the benefits (such as personalized experience) that users will receive.
According to QuestMobile, the time spent inside WeChat dropped by 8.6% between December 2018 and June 2019. The decrease of engagement on WeChat is mostly due to competition from ByteDance (mostly via Douyin (Tiktok) and Toutiao). By ecosystem, time spent in Tencent decreased by 3.6% and for ByteDance and others (ecosystems outside Tencent, Alibaba, ByteDance and Baidu), it saw 1.4% and 3.4% increase respectively. click to learn more…
INSIGHT & IMPLICATION: From the original BAT to the BATB of today, China’s digital media landscape has been changing dramatically, and now it includes a large number of niche vertical platforms. With more apps trying to attract consumer attention, the media landscape is becoming even more fragmented, which is why brands need to be more agile than ever. Short video and the increasing number of paying online video (OV) subscribers whose service access is pre-roll-free requires brands to develop creative solutions that are dramatically different from the standard 5s and 15s TVCs. Enhancing, rather than interrupting the experience, is becoming the right way to reach consumers in this new digital landscape and non-TVC media formats such as product placement, creative mid-roll, in-video ads and brand integration represent media alternatives consumers might find more appealing.
Have a great weekend!