Several weeks ago, we dubbed 2020 as the year of Tmall Global. The platform is undoubtedly the cream of the crop as far as China’s cross-border platforms go. That said, it is important to understand the role of other major platforms in consumer journeys.
Those who have been working in China for some time now will remember 2017 as marking the rise of the social commerce business model. In January of that year, WeChat launched mini programs enabling businesses to develop personalised shopfronts for the first time. Importantly, mini programs also provide merchants with greater visibility and control of their customers and sales data. Western social platforms are now finally following suit. We’re seeing eCommerce functionality growing on platforms such as Instagram, WhatsApp and most recently, Facebook.
Similarly to mini-programs, 2017 also saw a massive uptake in the popularity of Xiaohongshu, or Little Red Book (LRB). Though LRB had grown gradually as a travel-blog platform since its founding in 2013, the addition of Cross-Border functionality in 2015 led to a surge in uptake to 100M users by 2018.
The platform stood out for several reasons:
At the time, this approach to eCommerce was largely unprecedented. As a result, LRB enjoyed conversion rates of up to 4% – the likes of which we had never seen on JD, VIP and Tmall. Even more unprecedented was the encouragement we were receiving from our contacts at both JD and Tmall to ‘become active’ on LRB.
Unlike other platforms, LRB’s algorithms do not give content ranking priority to more popular brands or influencers per se. All content is effectively treated equally. When you post something on LRB, it is initially trialled on a small audience and tested for engagement. If it performs well, LRB organically boosts your post to a wider audience. Engaging posts can even reach audiences who are not subscribed to your account. For important campaigns, you can also pay to boost your post to an even larger audience.
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In the past year, there has been a lot of hype surrounding the emergence of KOCs. The theoretical distinction to Key Opinion Leaders (KOLs) is straightforward:
On paper, KOCs fill the rapidly growing void in consumer trust for KOLs; instilled by the increasingly commercialised nature of the industry. However, the reality is that to the everyday consumer, there is little distinction. Our experience here at RooLife is that KOLs still generally boast greater reach, engagement, and conversion rates. The major difference is purely financial. In fact, there is a recurring saying across Chinese social media:
“People invented KOCs because they could not afford KOLs”
There are four ways to find and engage with influencers for your brand:
Once you have found an influencer who is right for your brand, it is a relatively straightforward process.
For brands launching in China for the first time, LRB provides a quick and affordable eCommerce proposition. You can open an LRB POP-Store once your official account has roughly 1000-2000 followers. The store sits within China’s cross-border eCommerce realm making registration cheap, quick, and ethical.
However, despite LRB’s successes in 2017-18, their eCommerce business is gradually dwindling. In our experience, LRB Pop stores tend to only hit sales volumes reaching 1-3% of an equivalent Tmall Global store. We believe this is largely due to the phenomenon of audiences using LRB for a price reference; before shifting off-platform to Tmall/Taobao for final purchase. Simultaneously, LRB’s direct-purchase activities have been gradually declining in recent years.
Despite this, LRB have managed to cement a fundamentally important role in the consumer journey, particularly in the earlier phases. It is one of the premier channels a brand can use for raising brand and product exposure to younger, female audiences.
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Little Red Book is also a vital channel for gaining ‘buy-in’ from B2B distributors and direct-purchase eCommerce companies. These businesses are generally apprehensive to take on ‘unestablished brands’ for intuitive reasons. As such, they tend to scout Tmall and Taobao to get a read on an unfamiliar brand’s sales penetration. More often than not, they will then take to LRB to get a read on audience exposure and engagement. This is because, unlike WeChat, LRB publishes all relevant engagement rates: including account followers, post views, likes, comments, shares etc.
LRB is unlikely to become your primary China sales channel. It must be viewed as a long-term strategic marketing channel. It is the perfect marketing aid to support your customer’s journey, as well as to facilitate your B2B business. We hope you enjoyed this week’s article.