In E-Commerce, Friendship Circles Just Don’t Cut It
For companies looking to set up an online retail platform in China, the words “social media” are all too often misinterpreted as “friendship circles”. Circles of friends and acquaintances are just a drop in the ocean when it comes to SNS. So why is it that an overreliance on these circles is a rookie mistake? Firstly, promoting a brand in a limited number of social circles is like trying to build a house on shifting sands – users’ friendship groups are constantly evolving in new and unpredictable ways, which makes it difficult to quantify a brand’s online presence. Secondly, the bonds of friendship between key SNS platform, Weibo’s users are not based on the frequency of online transactions, as the bonds between businesspeople are. Weibo users might look at what their friends have to say about particular brands once in a while – but not on a daily basis. The result is a low frequency of online purchases within the same friendship circles, which in turn leads to low online sales revenue.
Chinese Consumer Loyalty
When comparing Chinese consumers to others in the developed markets, one will notice that the first ones lack brand loyalty. In fact, many classify Chinese consumers as “promotion driven” which means that they have the tendency of purchasing goods based on promotion and less on brands. Today promotion programs are implemented across all industries in China but the most successful sectors are phone companies, banks and Internet providers. However, lately many Chinese buyers are indicating that customer loyalty is not solely based driven by financial incentives, but also earned when the provider offers them open communications. More specific, a 2012 study on Chinese customer behavior indicated the open communications were important to 68 percent of them. But what does open communications mean? It means allowing the customer to choose a preferred way of interaction between him and the provider and achieve it through the flexibility of a multichannel customer service.
Big Data is Big News
In today’s increasingly multichannel online retail environment, 75% of companies worldwide consider the way consumers behave when exposed to different online channels as the most important data to stockpile. That’s the verdict of eMarketer’s latest report, which also emphasized the growing importance of SNS in e-commerce. In 2012, only 56% of respondents considered data collected from social media to have value. In 2013, by contrast, that figure had risen to 63%. In China, online retail platforms and social networking sites are moving towards ever data sharing and account synchronization – most recently Sina Weibo and Taobao. By working together, they can amass mountains of data to improve their competitive advantage – data related to consumer behaviour, individual user preferences and brand loyalty, but to name a few.
WeChat 5.0 is Business Friendly
WeChat 5.0 does not just contain new features that promise to significantly improve the user experience; it also includes a new structure aimed to organized B2C accounts on the app. Though a lot of effort has been placed to keep spam away from users, the new version of the app does provide features that facilitate safe communication between consumers and buyers. Perhaps the most significant B2C addition is the Services account. This account type allows brands to send messages directly to the personal chat window of each customer, however, since Services accounts can only send one message monthly, customers will not be inundated with information. Moreover, among the payment integration features, the most significant is the one that allows users to purchase directly through a brand’s WeChat account. In addition, WeChat 5.0 allows users to scan a product using its barcode, then taking the user automatically to a e-commerce platform selling the scanned product.
Watch out Baidu . . . Qihoo is Approaching!
Baidu has long been the dominant player in the Chinese search engine market. With more than half of the market share, many would have thought it was very unlikely for any other search engines to challenge the giant search engine platform. Well around a year ago Qihoo was introduced into the market, and along with its introduction many expectations were broken. Very shortly after it was introduced to the market, the search engine platform became China’s second largest. By June of 2013, Qihoo already controlled 16.58% of the search market share, very significant when compared Baidu’s 65.7% market share. Furthermore, the struggle for the supremacy in the search engine field is expected to heat up as Qihoo and Sogou (China’s third largest search engine), which together account for 25% of the search market share, are seeing the possibilities of cooperation, as a way of challenging Baidu.