The China market is of a magnitude brands cannot ignore, although some of the foreign brands still take this major consumer market not serious, says China veteran and marketing expert Ashley Dudarenok to Euromonitor. “It’s mostly European and American brands that have organizational challenges,” she adds.
Do brands need to be on marketplaces in China? Why?
Yes. Tmall and JD are too large to ignore, but there are other, specialty marketplaces that may be a better fit for your brand. Chinese consumers prefer these websites to the official direct to consumer website for most brands.
What are the benefits of working with a marketplace?
You have access to a large consumer base. Being exposed to a large consumer base helps brands to gain more attention than was previously possible.
What are the challenges of being on a marketplace? How do you overcome them?
It is extremely competitive on the big marketplaces so there is no organic traffic. You’ll need to spend about 20-30% of your revenue on advertising. It is extremely competitive on the marketplaces. It’s important to test to make sure that you will have the volumes to justify the cost. Experiment with social media and collaborate with key opinion leaders to see if there is demand for your product. Start with a small marketplace to see how volumes are growing enough to justify a presence on the larger marketplaces.
What are your metrics for gauging success on Chinese marketplaces?
There are two categories for metrics:
Success: usage, bounce rate, transaction metrics (products sold, number of customers) and business metrics (gross merchandise value, customer acquisition costs, and customer lifetime value).
User satisfaction: The marketplaces are strict about ensuring a good customer experience. You need to be under a 7% refund rate and a 4% dispute rate.
What are the organizational challenges brands face?
It’s mostly European and American brands that have organizational challenges. The brands think that they can sell the same way in China as they do in their home markets. It’s not true. You need to adjust product lines, brand positioning, and customer activation strategies appropriately. It’s also important to provide customer service around the clock. As a result, many brands are underfunded on Chinese marketplaces.
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