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Learning from Chinese chat

Don Zhao, Co-founder, Azoya examines the mobile commerce landscape in China and explains what UK retailers could learn and bring home from this expanding market.

The success of mobile commerce in China is due to a combination of advanced digital technology and cultural trends. The country’s most popular messaging app, WeChat, has been described as ‘life’ – with 700 million users shopping, paying and searching over 10 million internal apps. With estimates for mobile commerce in China in 2016 accounting for 55.5% of online sales compared with 37% in the UK, what are British retailers missing?

While the key to selling internationally is to ‘think local’, different territories can offer inspiration to others’ own domestic operations, particularly when a country excels in retailing via a specific channel or uses technology resulting in huge commercial success. Despite being a fiercely competitive market dominated by commerce giant Alibaba, other retailers – both from China and overseas – are successfully fighting for market share by creating mobile products that are both dynamic and agile. As a result, mobile commerce in China is booming.

External factors have played a crucial role in the meteoric rise of mobile commerce. Smartphones are becoming cheaper and better and account for 92.4% of new phone sales, contributing to China’s position as the world’s largest smartphone market. Chinese consumers are also drawn to the convenience of mobile shopping, which allows them to buy anytime and anywhere – commuting is a particularly popular time. Major state investment in telecoms infrastructure and the availability of 4G are also significant factors.

Large scale ecommerce is newer in China, meaning there isn’t a tradition of using a PC to order online, plus its youthful demographic is willing to use the latest technology. Research has shown that half of China’s mobile shoppers are aged between 24 and 30. China’s physical retail sector is relatively underdeveloped compared to the UK, and in rural areas online is the only option, especially when purchasing non-Chinese products.

WeChat is life

While having the necessary technology and consumer demand provides a solid basis for China’s mobile commerce success, it has been the impact of WeChat, the country’s most popular messaging app that has transformed mobile commerce. Launched in 2011 by Chinese investment company Tencent, it has developed into an all-encompassing browser for mobile websites – with retailers from banks to fashion brands and pharmacists making the app home of their official online stores. Even Dior has signed up, recently becoming the first luxury brand to sell handbags on WeChat.

The figures are overwhelming for domestic and international retailers. 94% of users will log in to WeChat every day, with 61% using it more than 10 times a day and 36% logging in more than 30 times.

With such a powerful tool, the best approach for retailers has been to adapt to the platform rather than create a new one and use it to optimise the shopping experience; implementing tailored marketing and social media campaigns.

For consumers, following a retailer via its WeChat ‘official account’ is the main way to receive information, news, promotions and recommendations. Content is pushed to subscribers to enable sales, and a large number of APIs allow brands to customise their account interface.

Standing out is a major challenge as there are now so many businesses trading on WeChat. Converting buyers into loyal customers requires finding an alternative approach – being original and creative in front of people with an appetite for innovation.

WeChat takes social media to a new level. Although brands adapt content for different social networks in the UK, they must rely on limited parameters and users are confined

to liking, favouriting, commenting on or sharing posts – with WeChat brands are offered more options for interacting with their users, such as incentivising brand activities. For example, online cosmetics retailer Feelunique runs games and rewards users with coupons. If you invite your friends to play, you receive more rewards.

QR Codes – ahead of their time?

China is ahead of the world in its application of QR codes. While old news in the UK, with retailers trialling them since 2011 and seeing varying levels of success, in China they are ubiquitous and used by all retailers from street vendors to high-profile brands.

Five years of mobile commerce progress in any country is a lifetime, and during that time a whole new generation of people shopping primarily on their smartphones will also appear. With technology developing fast it’s easy to bypass earlier ideas – some of which may simply have been more advanced than their time; impeded by hardware or software constraints and not able to achieve critical mass.

Retailers in China are successfully marrying offline and online channels, most notably with the use of QR codes. A customer scans a QR code found on print marketing, product labels, packaging, shop windows or till receipts, and the information is stored on their phone. They can continue shopping from the same store on the phone and will typically share their experience on social media. Purchases can also be paid for via a QR code.

German online pharmacist Bodyguard Apotheke produced an offline advertising campaign using banners and postcards carrying an offer which could be taken up if shoppers scanned the QR codes and became WeChat fans. A simple and effective way of driving custom, the brand saw traffic from WeChat account for 18.8% of total sales during the campaign with an average basket value of £72.

Existing functionality within WeChat allows shoppers to scan QR codes without downloading a reader. In the UK, embedded QR code readers are slowly being introduced across mobile phone operating systems, such as within the iPhone’s Wallet app.

Effectively engaging people by using QR codes in the most compelling way to increase awareness and sales will help elevate multichannel shopping culture, and become ingrained in this new generation of mobile-first consumers’ behaviour. Loyalty is a differentiator and QR codes offer a vehicle to reach customers on a personal level.

Ultimately, it’s the payment function on WeChat that has revolutionised mobile commerce. Customers create a ‘wallet’ by linking to a bank or credit card and can then shop with all official WeChat apps, known as accounts. Since June 2010, the People’s Bank of China has issued over 200 licenses to non-financial institutions to provide third-party payment services and declared a national mobile payment standard. This has led to an explosive growth in Chinese mobile payments. Some 364 million people in China now shop via mobile, a growth rate of almost 25% compared to last year. Some predict that mobile payments will account for three quarters of all online retail transactions in 2018.

So what lessons can UK retailers learn from China’s mobile commerce success and how can they be applied to the UK marketplace? While a mobile-friendly presence is imperative, and many retailers have built impressive sites over the past couple of years, an app will add layers of functionality and engagement. Apps embrace technology. They personalise the shopping experience and streamline the path to purchase, driving conversion and revenue.

Simplify mobile payment methods – they need to be convenient. Provide instant rewards, offers and location-based messaging. Social media and mobile marketing strategies must be dynamic and engaging. There may not yet be a UK equivalent to WeChat, which offers seamless integration under one virtual roof, but there are plenty of standalone options. Facebook’s ‘Shop Now’, Pinterest’s ‘Buy it’ pins and Instagram’s click-to-buy functionality can be just as effective tools for social shopping.

Don’t underestimate the power of QR codes, which with increasing investment from software manufacturers, higher retailer adoption and consumer awareness could see them become a sturdy foundation of modern retail.

A considered approach to selling via mobile, acknowledging learnings from past successes and failures, taking relevant inspiration from global influencers doing things well, observing consumer culture and where mobile industry investment is headed, will see UK retailers comfortably evolve.

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