The execution of eCommerce in China is in many cases not a “single channel” strategy. Of course, eCommerce platforms like Alibaba, JingDong, YiHaoDian, Amazon.cn are on “top-of-mind”, but an eCommerce road map in China embraces more – a strategy in how to create scale and achieve Return on Investment on marketing budgets – .

The Chinese market has an enormous size, many companies follow regional distribution strategies and different provinces are traditionally assigned to distributors, wholesalers and franchisees. Also online we observe this phenomenon as distribution and warehousing crucial in the delivery process – service quality. But where to set the base and how to start?

Brand eCommerce
Brands in China more and more follow a Brand eCommerce strategy, companies establish their own (mobile) Brand eCommerce website to work on their Digital IQ (level mobile, social media, digital marketing and website). The opportunity for an own Brand eCommerce is combining Corporate Website, eCommerce and Blog & Community features on 1 platform. By integrating all these functions your platform can create more own (social) content and higher customer interactions. Focusing on new continuous content creates higher activity on Search Engines, improves your Search Engine ranking and establishing “free traffic” to your website.

Long term any brand should consider its own Brand eCommerce website building sustainable organic traffic, far more valuable then spending high budgets on Search Engine Marketing or on Pay-Per-Click on Market Places.

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… Extension to Multi-channeling
If brands market on multiple eCommerce channels they can delegate prices and distribution product catalogs via Brand eCommerce to their wholesalers / distributors through “multi-channel” strategy. Distributors in their turn get the freedom to market the product catalog and to sell it via an eCommerce platform (Taobao, Jindong ..), the phenomena is called Business-to-Business-to-Consumer (B-to-B-to-C) eCommerce models. In many cases Brands do not prefer to offer the entire product catalog and “new seasonal products / new arrivals” are designated to be sold on their own Brand eCommerce website.

… O2O – Connecting to the Offline World
An emerging trend in the Chinese market is O2O (Online-to-Offline), many (local) companies see great potential in this business model. O2O goes bi-directional Online-to-Offline and Offline-to-Online. O2O has grown massively with the enhancement of 3G / 4G mobile Internet and the enormous growth of Internet-powered devices such as Smartphones / Tablets / Tablet PCs and terminal devices. The opportunities of implementing own Branded O2O business models are massive and can provide overall operational transparency and new CRM strategies to businesses. In other words knowing exactly what happened online as well as offline and exactly measuring Return of Investment. Successful examples in China include mobile payment, WeChat models, e-Coupons, hybrid distribution models and Omni Channel (activate online consumption over all channels – desktop – tablet – mobile – offline retail).

… New Ways for Distribution
The new trend that currently can be observed within the FMCG (Fast Moving Consumer Goods) – Retail industry is that big brands build O2O Commerce platforms that activate the entire distribution chain through “order management systems”. In this model the offline distributors/wholesalers receive incentive / revenue shares being part of the fulfilment cycle. Thereby the regular online orders are awarded to the network of distributors / wholesalers making them share in revenue. For example: an online sales order arrives in Shanghai and goes through the “order distribution system” directly sent to the wholesaler in Qingdao. Which in his turn the next day ships with minimum cost the package in Qingdao to the customer. At the end of the month the wholesaler will receive his revenue share and profiting in the overall eCommerce / Online strategy.

Engaging in eCommerce gives massive scalability and opportunities, but how to strategize your offline / online activities? It takes multiple areas to strategize:
– Branding Strategy (digital IQ – social media – mobile – digital marketing – technology)
– Distribution Strategy (number of distributors / wholesalers – rights and obligations)
– Price Strategy (auditing and supervision of price in the market)
– Trade Marketing Strategy (which product catalog to offer at which price level to which channel)

You want to be advised by one of our DigiDutch experts? Contact us at [email protected] to find your ideal eCommerce Strategy – Channel Development – Execution Plan.

Written by Dominiek Pouwer, Co-founder of DigiDutch and Director at TMO Group

 

 

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