THE SHIFT from Marketplaces to Social Commerce & Brand-Owned Solutions

2020-03-01 149浏览

  • 1.ECOMMERCE IN MAINLAND CHINA THE SHIFT from Marketplaces to Social Commerce & Brand-Owned Solutions
  • 2.WHY IS CHINA’s ONLINE MARKET SO APPEALING?
  • 3.A FAST DEVELOPMENT 1994 12.7 million people have internet access 2000 121 million (4.8%) people have internet access 2000 computers connected to the internet 22.5 million people have internet access (43.1%) (1.8%) 2006 206 million people have internet access 138 million people have internet access 2012 250 million (68.9%) people have internet access 300 million people have internet access (92%) Internet penetration 573 million people have internet access (42.3%) (79.3%) 2018 (10.5%) 92% 812 million people have internet access (57%) 90.2% 57%Source:
  • 4.A MOBILE COUNTRY Climbing the Technology LadderSource:China Internet Network Information Center (CNNIC).
  • 5.SELLING IN CHINA How could brands serve China’s huge market? Brick & Mortar • Very expensive • Limited reach Before 2010s… After 2010s… A third option isavailable:ECOMMERCE Partners/Distributor •s High commissions • • Loss in decisional power No control of brand image
  • 6.ECOMMERCE REVOLUTION Products Potentially Available Nationwide eCommerce allows companiesto:Cut costs Control sales price (and branding) Expand their reach
  • 7.ECOMMERCE REVOLUTION A Tale of Two Companies Why brands and retailers chose to join these platforms? 400M 600M 370M Avg monthly visits Avg monthly visits Avg monthly visits  Easy “hands off” solution  High traffic  Efficient mobile apps  Very reliable  Shopping holidays 58.2% 16.3% Online Retail Market Shares Online Retail Market Shares  Logistics  Popular in China and worldwide
  • 8.HOWEVER… Some companies already decided to leave one or both platforms
  • 9.WHY?
  • 10.HIGH COSTS Deposit US$ 10,000 – 45,000 Initial shop design US$ 9,000+ Annual fee US$ 4,500 – 10,000 / year In-site promotion US$ 1,500 – 15,000+ / month Sales commissions 0.5 to 5% Payment gateway commissions 1% US$ 4,500+ / month TP Fees (shop management)(+X% commission?) TOTAL (first year) US$ 100,000 – 500,000+ plus 1.5 – 6% sales (+TP commission?)
  • 11.VISIBILITY High-end brands are having hard times in having visibility and keeping the brand image intact Own (and pay for) more than 90% of brand searches But sometimes still struggle to get traffic…why?
  • 12.SALES VOLUMES Search results are mainly ranked by sales volume Chinese sellers active on the platforms and for a longer time, that probably sold higher volumes, have higher chances to get a better ranking in search results
  • 13.COUNTERFEIT Albeit marketplaces are fighting hard, counterfeit is still a problem, especially on Taobao
  • 14.MARKETPLACES COMPETITION 44 BRANDS in 2017 closed their JD shop, among theothers:EXCLUSIVITY Recently, in some cases, marketplaces ask forexclusivity:Meaning companies have to choose which side they want to take
  • 15.DIRECT IMPORT The competition is even tougher for global retailers as they need to compete with the marketplaces’ Direct retail business Marketplaces indeed buy in bulk abroad and reach better economies of scale (and margins) In addition, TMall even highlights its own products
  • 16.CUSTOMER EXPERIENCE IT’S THE SAME FOR EVERYONE NO WAY TO MAKE CUSTOMERS FEEL “SPECIAL” LOW RETENTION
  • 17.RESULT:LOW ROI All the previous factors result in a discrepancy (on average) between customer acquisition cost and revenue per customer INFACT:~20% PROFIT Avg customer acquisition cost Avg revenue per customerSource:China Merchants Securities, Company Filings ~20% BREAKEVEN 60% LOSE MONEY
  • 18.THE SHIFT
  • 19.SOCIAL COMMERCE WeChat Some brands realized that selling directly on WeChat could be more convenient, both in terms of price and promotion. A social network is the ideal platform for traffic generation and content sharing activities MINI PROGRAMS WECHAT STORE
  • 20.SOCIAL COMMERCE Xiao Hong Shu (RED) Little Red Book is the N°1 platform for new products discovery & KOLs’ favorite AWARENESS ENGAGEMENT PURCHASE
  • 21.BRAND-OWNED WEBSITE A custom user experience for loyal customers Some brands and retailers also chose to open a brand-owned “dot cn” eCommerce website, in orderto:SHOW THE FULL CATALOGUE CUSTOMIZE THE CUSTOMER EXPERIENCE TRACK THE FULL CUSTOMER LIFE CYCLE
  • 22.A NEW KIND OF COMPETITION Brands & retailers are not merely competing on a cost-price level  Customers want to stand out of the crowd, products need to be CUSTOMIZED  Customers are not only looking for physical products but also for EXPERIENCES  In order to offer customized shopping experiences, brands require KNOWLEDGE Competition is now mainly about DATA
  • 23.TO WRAP UP Why is THE SHIFT happening? eCommerce at an embryonic stage • • • • • • Few online customers Not much digital competition No need of much customer data Marketplaces • • • • Easy “hands off” choice for digitally unprepared companies Standardized customer experience High costs Few pieces of data provided, as they’re owned (and sold) by marketplaces ’sTIPS:eCommerce is evolving Online customers grow in number and become more demanding Digital competition increases Companies need large amounts of data to succeed Brand-owned solutions & Social Commerce • • • • Companies have more freedom to express themselves Customized customer experience Flexible costs Full data ownership and visibility 1) Reach your customers from as many touchpoints as possible, but with limited budget try to choose those that are most convenient to you and provide you with the most customer data 2) Differentiate yourself from competition, customize your offer and customer experience according to data 3) Monitor the market closely and keep adjusting your strategy accordingly
  • 24.THANK YOU! FOLLOW US ON SOCIALMEDIA:FACEBOOKhttps://www.facebook.com/tlgcommerce/WECHAT LINKEDINhttps://www.linkedin.com/company/tlg-commerceThis is a confidential document. It contains important, strategic information about TLG Commerce’s business. Because of this commercially-sensitive material, the document should be treated as highly confidential. It should only be shared internally and