Kuaishou, another short-form video platform similar to Tik Tok, is the second most popular short video app in China with over 300 million DAU, following Douyin. After growing mostly from popularity in China’s rural areas and lower-tier cities, Kuaishou moved into live streaming, e-commerce, and long-form videos in the face of more competition. Before 2019, both Kuaishou and Douyin are mostly used for entertainment and time-killing purposes, but 2019 was a major turning point as there was an apparent shift to being a significant battlefield to market and sell products. Demographics: ~70% of the short video app users are from tier-two and lower cities. The breakdown is more geared towards lower-tier cities for Kuaishou with only ~15% of its users from tier-one cities. With competition increasing in the short video space, Kuaishou eventually grew to include elements of social media, e-commerce and live-streaming. In 2018, Kuaishou started allowing certain users to open up “little shops,” allowing users and merchants to link to products from Alibaba’s Taobao and other e-commerce platforms. The bet on e-commerce turns out to have been a good one and a boon for people with a large number of followers. In one case, the platform’s top influencer, who has more than 40 million followers, sold ~US$7.2 million worth of goods in 3 hours during Kuaishou’s e-commerce festival. To encourage people to spend more time on the platform, Kuaishou has also started allowing longer videos. The company is starting to depart from its 57-second limit, allowing some users to upload videos as long as 10 minutes. Kuaishou has also been seeing success in live streaming, especially streaming video game content. By July 2019, Kuaishou said its Twitch-like live-streaming service for games had 35 million daily active users (DAUs), which is more DAUs than rivals Huya and Douyu. As Kuaishou continue its monetization initiatives, it also made some strategic updates. Recently, it has announced a strategic partnership with Jing Dong (JD.com), another e-commerce giant, and a direct rival of Alibaba. With this partnership, Kuaishou users can complete the purchase on JD.com without leaving the Kuaishou app during livestreaming sessions. This aligns with the strategic goal of Jing Dong to develop more users in lower-tier companies as they present the most significant growth opportunity in e-commerce. Many overseas brands should probably consider this while making decisions on the platform to work with to promote and sell products. Differences between Kuaishou & Douyin Relationship-based vs. algorithm-driven content distribution According to Huang Hai, from the VC firm Frees Fund, Kuaishou’s main “Discover” section distributes 40-50% of the content from accounts that the user already follows. In contrast, Douyin will show 80 to 90% of the content from new accounts, which are popular among other users.Douyin has more users living in tier 1 and tier 2 cities. These users are more likely attracted to high-quality content. Thus Douyin will display the best and most viral content to entertain urban users. This emphasis on beauty translates to professional content with viral nature created often by top KOLs. Kuaishou has more followers living in villages, with a tighter social circle. Mundane content created by someone who they might know offline is still interesting. Engagement Since Kuaishou users live in smaller communities, Kuaishou content is distributed based on users’ social relationships. The content on Kuaishou, therefore, has a higher engagement rate compared to Douyin. More live-streaming on Kuaishou Kuaishou has 50% live-streaming content in its Local Content section, Douyin only has 25%. Kuaishou users are more likely to start or watch a live-stream. The top-ranking live-streaming is often not the most popular one, and often only has less than 5 viewers. The viewers can thus engage with live-stream hosts on a more personal level. Kuaishou’s live-streaming has quite a lot of features. For example, you can sing Karaoke with the audience from your city listening-in. Many live-streaming hosts allow call-in to a chat room. Some live-streaming thus become a casual chatroom of 2 strangers. Kuaishou even provides a chatroom for up to 6 users to co-host the live-streaming. Each chatroom has its own rule, often sending specific gifts in exchange for asking the host to give a performance (such as singing a song, sharing their personal WeChat account, or private messaging). E-commerce conversion Kuaishou is a stronger relationship based platform, thus the e-commerce conversion rate on Kuaishou is higher than on Douyin. According to Kuaishou Report by Frees Fund, Kuaishou’s e-commerce conversion is 5 to 10 times higher compared to Douyin. The monthly sales via the Kuaishou platform in 2019 reached more than 10 billion RMB. For example, 9 out of 10 top-selling Taobao third-party live streaming during the Double 11 (excluding native live-stream from Taobao) last year were from Kuaishou. Only one of them was from Douyin.Many top-selling Kuaishou influencers are owners of small businesses or factories. They often create content related to their day to day business. For example, the production steps for packing a product. This type of content creates trust from the users, thus is more likely to convert into sales. Not all kinds of products sell well on Kuaishou. The top 3 categories of products sold on Kuaishou are low-price cosmetics, clothing, and food.
What we can learn from brands in China on marketing during the pandemic?
While governments around the world are trying to contain COVID-19, it takes longer than people hope to contain and control the pandemic. We have received numerous requests from overseas brands over the past couple of weeks to share how brands should do marketing during the pandemic and what we can learn from the brands in China. Should brands stop marketing altogether during the pandemic? The short answer is no. The pneumonia epidemic is unfortunately nowhere close to the downswing for most of the world. As a result, the global economy is languishing, with China leading its way to economic recovery. We have had conversations with business owners who expressed their concerns and worries. The goal of 2020 suddenly became how to survive instead of how to grow. With massive furloughs and layoffs and business closing down, most companies' most significant contribution to society is to survive to keep their staff employed. Therefore, the purpose of marketing has since shifted to helping companies survive better during and after this period. Many people today think of marketing as if it were a derogatory term, but it is not. What exactly is marketing? As mentioned in a previous article, the essence of marketing is to establish a connection between product value and user needs. Good marketing should help society exchange value and make it easier for consumers to find those products or services that meet their needs. In special circumstances such as now, we still need products to serve us, and we need to do marketing to let users know that what they need exist and what can help them during this tough period. Marketing well in a special downtime like this is especially tricky as it is susceptible. However, it is achievable. Marketing plays a significant role in bringing growth to companies but also establishing a sense of social responsibility for them. Therefore, branding and public relations complement each other to the extent to bring value to both society and individual consumers. Therefore, marketing during the pandemic is for the only purpose to serve the needs of consumers. How should companies do marketing in a special period? Our recommendation to the companies at this rough time is to target three things in their marketing: 1)get the consumer insights on what consumers need at this time 2)provide value to their customers 3)give away some benefits for public welfare within companies' capability. We can also provide additional recommendations based on the categories of the companies. Category A: companies in the high-demand industries What are some high-demand industries? These are the needs that people spawn when they are isolated at home. Some of the examples include online education and software for remote office/working. For these companies, the best way to do marketing is through giving up their short-term gains, satisfying the needs of different groups of people, and highlighting the various forms of public welfare to provide users. For example, having a long staycation without schooling is a huge pain point for students and parents. In particular, it is worrying that many primary and secondary school students are under pressure to have standard exams to further their education. As a result, online education providers became popular. One led by NetEase Youdao proposed free courses for Wuhan students who were most affected by the pandemic. Institutions such as Ape Tutor and Xueersi.com also followed closely and added benefits to increase the scope of free learning courses to elementary and middle school students nationwide. NetEase Youdao and Ape Tutor also provide free classes for working adults who are bored at home; it is one of their prime time to take advantage of the unexpected downtime to improve themselves. Mantou Business School, a paying education institute, also seized this window and started a series of public welfare live classes, which not only gained word of mouth reputation but also received consumer attention. Not only did users not criticize this type of marketing, but they embraced it. Because it does solve users' problems. Before the pandemic, online education has reached a point where the cost of acquiring customers is exceptionally high, and the competition is so fierce that many smaller players cannot afford it. During this time, they have become the best products to solve people's needs. Similarly, because of the epidemic, everyone can't go out to work, and remote office software has become a rigid need for various organizations. For instance, Shimo, a remote collaboration software, proposed to provide a free version software for Wuhan's non-profit organizations. During the epidemic, the personal version of the software was also automatically upgraded to the remote version, which is more in line with the office needs of many companies. New types of remote office service providers in the vertical field, such as video conferencing expert Zoom and Xiaoyu Yilian, have also launched free services. Category B: Other online businesses that have a smaller impact under the pandemic These types of online businesses have a strong demand during the pandemic. For example, we are all familiar with the content industry. These companies that originally focused on online business can use this time to combine their professional capabilities to see if they can solve users' problems during this difficult period. It not only helps the companies to expand the audience, enhances their influence, but also provides actual value for readers or viewers. For example, Paper Clips has been doing science knowledge videos. Recently, a video of "Everything about the New Corona Virus" came out. Naturally, it achieved over 30 million views, hundreds of thousands of fans, momentarily. Li Jiaqi, one of the top two live streaming KOLs in China who specializes in selling products through livestreaming, also leveraged his own credibility and influence for public welfare. On the Taobao live broadcast platform on Chinese New Year's Eve, he called on his followers to donate to the Wuhan pandemic through a fundraising project initiated by Alibaba. As of 1:30 am on the first day of the Chinese New Year, he raised a total of 71.4 million RMB. During this time, the demand for content consumption has increased substantially. After this epidemic, companies should think more about how to improve their content production capabilities and talent construction in content marketing. Category C: Businesses that have been hard hit by the epidemic: including catering, offline stores, consumption, retail, etc. For these businesses, the reform is not just about marketing, but more about the business model, as the battlefield has migrated from offline to online, and marketing is used to promote online products and services. For example, Xibei Catering has set a model for the general catering industry in this regard. Because of the severe losses the chain restaurants have incurred, Xi Guobei Chairman Jia Guolong had to reach for help. He mentioned in February that his company's cash flow could only last for 3 months. The news was explosive, and Xibei immediately promoted the takeaway business, transformed the in-restaurant dining into the takeaway, and donated many takeaways to the front line medical workers in Wuhan. Traditional real estate companies have also seized the opportunity to transform. VR house viewing was once an aspirational project of Shell, a real estate company, and it was quickly adopted by many real estate companies during the epidemic, becoming an important step in the transformation of online marketing for realtor companies. In the offline gym space, Super Orangutan tried online live classes for the first time during the pandemic and achieved unexpected results. In the first live broadcast, more than 170,000 people were online at the same time, making it a Top one in the category. In addition to these platforms, we have also paid close attention to the dynamics of the consumer industry. Almost every company in the consumer industry has a long supply chain, involving not only factories, logistics, but also e-commerce and online marketing. The epidemic has affected almost every aspect of the consumer industry. So the consumer industry need to act. The food industry actively participates in the rescue of the hungry through public welfare. For example, Sandunpan, a young innovative brand in the coffee industry, announced that they will send coffee and vacuum cups to the medical staff in the Wuhan front line, which was well-received by the public. In the face of disaster, do what you can and do what you are good at. In addition to the food industry, people asks what about those companies that are difficult to ship or most of their businesses are offline? Our advice is to think about what value you can provide as a brand. These values can be sold to consumers through marketing methods, such as discounts and promotions, to prepare for the sales period after logistics is smooth. It is also possible to convey spiritual satisfaction through content or make people gain awareness. For instance, some beauty brands can do online makeup tutorials. In addition, during this "not so busy" time, in fact, marketing or operations departments can choose to run their own private domain traffic during this period to achieve online promotion. For example, Perfect Diary launched a Valentine ’s Day-themed game in advance, allowing users to both passed the time and got exclusive coupons when playing, to find the fun of buying and buying. Is marketing trying to help companies make money? Many people think that marketing is about helping companies make money. In reality, marketing is about managing the growth and traffic, branding, and the power and social responsibility behind the brand. Marketing is not just about attracting new customers; it should also help companies build soft power, shape corporate values, and enhance corporate social responsibility. If you are a business owner, it's time for you to reflect your business and the brand power, trust, and social responsibility your business holds. This epidemic is not only a disaster but also a mirror. The long-lasting businesses are usually the ones with good reputation. For example, if you order takeaway now, will you care more about safety and only order large brand chain stores? In the face of the epidemic, people's trust in any brand has dropped sharply, and the need for safety is even worse. What marketing can do at this time is to help companies practice social responsibility and build long-term brand power. Internet celebrity Xin Youzhi went on a hot search because he donated 100 million yuan. When most netizens did not know who he was and doubted whether it was a fraudulent donation, the other person's 100 million yuan in cash had already arrived. Simba and Meituan's actions during the epidemic Other stars who donated to Wuhan may not remember it, but netizens have recognized the responsible post-90s celebrity. At this time, corporate marketing may refer to Meituan. Affected by the epidemic, Meituan's takeaway orders fell. Instead of trying to make money, Meituan chose an opposite path and spread money out. Of course, donating this kind of cash requires extra effort. Enterprises should use their own conditions as a benchmark to measure their capabilities and ensure that they have sufficient operating reserve funds before considering whether to donate. Externally, the enterprise has social responsibility; internally, the enterprise has a more social responsibility towards their employees. Haidilao, a catering and chain restaurant in China, was fast in its response to the pandemic. It quickly made detailed work and rest schedule for employees, and filled it with various learning courses. It not only meets the needs of employees to improve themselves but also improves the competitiveness of employees in the entire industry, thereby enhancing the entire enterprise's effectiveness. Finally, marketing under the epidemic situation is a true test of the company's ability to respond. Companies should do marketing for the long-term benefits of the enterprise and for people to get some value and comfort from this disaster. At the same time, during this period, companies can better reflect on their business models, polish their products, and improve their organizations.
Written by Rita Liao Bilibili, a Chinese video streaming website that was once regarded as a haven for youth subculture, has been steadily making its way into the mainstream as users age up and content diversifies. The NASDAQ-traded company recorded a 70% year-over-year growth to reach 172 million monthly active users by the first quarter, placing it in the same rank as video services operated by Tencent and Baidu’s iQiyi. Daily time spent per user soared to a record of 87 minutes, which is likely linked to the extended stay-at-home order imposed on students during COVID-19. In the same period, Tencent Video reported 112 million subscribers, while iQiyi commanded 118.9 million, almost all of whom are paying. Bilibili, by contrast, saw only about 8% of its MAU paying. Bilibili’s growth engine is fundamentally different from the two giants though. While Tencent Video and iQiyi bet on Netflix -style, professionally produced programs, Bilibili relies on a wide array of user-generated content in the style of Youtube. The number of monthly creators grew 146% to 1.8 million, who collectively submitted 4.9 million pieces per month. Among its top creators is, lo and behold, the Communist Youth League of China. You might know Bilibili as a forum for gaming and anime geeks, or China's newest YouTube.
But the video site -- backed by both Alibaba and Tencent -- has begun serving its 130mln young users increasingly patriotic fare. My latest for @BW
The Youth League is among Bilibili's top 7 creators, and it gets the most likes of any contributor. It and other state-sanctioned influencers have been flooding the site with virus-related conspiracy theories and fanning anti-American sentiment. The site also has an unconventional way of monetizing its audience. It doubles as a mobile gaming platform — to be expected given its young user base — and earned half of its revenue from video games in Q1. Other avenues of revenue generation come from virtual item sales during live broadcasting, advertising, and sales from content creators who operate online shops via Bilibili. Despite healthy user growth, Bilibili widened net loss to 538.6 million yuan or US$76.1 million in the first quarter, a steep increase from 195.6 million yuan from the year before. It cites COVID-19 in causing delays in merchandise deliveries through its platform. Nonetheless, the company bolstered its cash reserve to 10 billion yuan or $1.14 billion after Sony’s outsized $400 million strategic investment, which would explore synergies in animation and games between the partners. The online entertainment upstart is among a small crop of companies that have attracted financing from both Alibaba and Tencent, which are long-time archrivals. “In Q1, we still generate positive operating cash flow, and our actual cash burn in Q1 was 200 million yuan, which is much less than loss in our P&L,” Bilibili chief financial officer Fan Xin asserted during the company earnings call. The article was updated on May 19, 2020 to reflect a corrected statement from Bilibili on the company’s cash reserve.
Written by David Henriques With the explosion of recent digital success from trending platforms such as Douyin, Toutiao and WeChat mini programs, it can be easy to forget the power and relevance of Weibo. However, don’t be quick to dismiss the influence of Weibo as it is still arguably one of the most influential social media platforms in China. With its user base getting closer to the 500 million mark, the marketing potential of this platform is quite vast. Launched in 2009, Weibo was referred to the Chinese Twitter with its 140 character limit and eventually took a backseat in the limelight when WeChat made its debut. Since then, Weibo has morphed itself into something completely different and is now more of a Twitter hybrid with a mix of Facebook and Instagram. The platform still holds huge marketing potential for foreign brands that have yet to utilize it. what is weibo? what is sina weibo? it often simply called Weibo, literally translates to micro-blog. Weibo blog is an open network platform that focuses more on content sharing, visibility and community building. The platform has developed several new functions and features, which has allowed it to stay in the competition of digital dominance and provide a diverse range of opportunities for brand promotion in China. Articles Most people think that on Weibo, you can only post 140 words with a max of 9 pictures and one video. However, you can post up to 2,000 words and also share articles on the platform. Brands can hyperlink articles with promotions and discounts as a tag, enticing users to click on the link. Many brands that are doing well on Weibo have required users to follow their account before being able to access articles. Once articles are read by a certain number of users, they can gain popularity on the hot-topic or super-topic community forums. Videos & Live-steaming Weibo has made a massive push into video content and live-streaming. With the rising popularity of short video platforms in China, this has increasingly become one of the most effective ways to market on the platform. Weibo has its own live stream brand, called Yizhibo live, which quickly rose to popularity after its release. It has attracted KOLs and celebrities of all types, making it a great pathway for KOL product and service promotions. Taobao is also integrated into the live-streams, allowing viewers to make purchases while simultaneously watching their favorite influencer. E-commerce Integration Weibo has a seamless integration with Taobao, which is no surprise since Alibaba owns a 32% stake in the platform. Brands can use KOLs to link Taobao stores and products in their posts. With many users already having Alipay linked to their Weibo accounts, they can purchase featured products with just one click of a button. This is a practical and effective way to guide traffic to e-commerce platforms, increase followers and promote sales, which has been a proven tactic by many Weibo influencers. Weibo Stories One of the most recent features on Weibo is the stories feature. It’s very similar to Instagram stories but has fewer features. Stories can be viewed by all current Weibo users, but as of now only KOL and official accounts that are verified can post a story. Weibo stories are located at the top of the homepage and when a user comments on a Weibo story, their comment appears on-screen, similar to the live-streaming function. This creates a more personalized sense of user engagement, which is very beneficial for brand promotion. Weibo is Still Evolving Even though Weibo hasn’t experienced much internet noise recently, Weibo’s growth is more sustainable than the market gives it credit for. Since 2014 Weibo has seen solid growth in terms of its revenue and user base. In 2017 the platform had a year-on-year growth of 76% and income alone skyrocketed by 75% in comparison to 2016. Weibo’s daily video production also doubled, creating more user-centric content that has led to a significant increase in daily posts and monthly views. Weibo has developed a unique content ecosystem where valuable and personalized content is highly encouraged. Users gravitate towards the platform though authentic content, which is steadily increasing Weibo’s ability to monetize users. Weibo also plays a very crucial role in public discussion and continues to expand in areas of food, education, sports and entertainment. Weibo might be the most influential Chinese social media platform for brand promotion and influencer collaborations. There are no signs of the platform losing relevancy anytime soon. Many Chinese users, especially Gen-Z users, use Weibo to follow their favorite celebrities and social media influencers. They engage with the platform to be entertained, whether it’s through live-streams, browsing through videos and pictures, or discovering the latest brands and services from KOL promotions. The continued creative growth of how Weibo connects users to trends, news and public debates will allow it to stay on top of its niche. Weibo may not be making headline news these days, but the platform is still very relevant for brands to achieve market awareness and gain their own relevancy with Chinese consumers. References: 300597750.html
What is Little Red Book and Why Should Global Brands Jump on it?
For global retail brands, China and its 1.39 billion people is the holy grail. China’s e-commerce industry is predicted to be worth ¥1.8 trillion (~$258 million) by 2022, and a large chunk of this growth is expected to come from the fashion and luxury goods market. What is Little Red Book? Little Red Book or "LRB", one of China’s most trusted social platforms, is known for user-generated content (UGC) of sharing and discussion of products purchased overseas. Based in Shanghai, it helps over 100 million users - mostly younger women - to discover and review beauty and fashion products that can be hard to find in China. This represents a fantastic opportunity for global brands to build their market presence in China, which is also why big players like Chanel and Dior are paying so much attention to the platform. Instead of a shopping platform, LRB is rather a content-sharing site, where users can either post product photos or videos with reviews and tips for other users to read, comment, and save to their boards - like Pinterest, or do the same during a live-streaming session. Therefore, many perceive LRB as a product search and recommendation engine or Instagram and Pinterest sprinkled with a dose of Taobao. In contrast with other e-commerce platforms, LRB focuses on a unique blend of trusted UGC, word of mouth advertising, and online community-building. So far the data has proven it to be a huge hit with young urban Chinese women, who often struggle to find trusted sources of product information. Essentially, 90% of these users are middle or upper-class women with higher degrees of disposable income. This is an incredibly lucrative market for global fashion and cosmetics brands. Which industries are LRB best suited for? With its strong focus on the beauty and fashion markets, Little Red Book has set itself aside from other Chinese social media and e-commerce platforms such as WeChat and Weibo. This content focus, plus the unique demographics of LRB's user base, make it a great fit for luxury beauty brands like Dior and Chanel, as well as high-end cosmetic brands like Fenty and Lancôme. However, LRB also features a lot of content about lifestyle products such as nutritional supplements. Posts concerning tourism and overseas destinations are also popular, with a lot of travel bloggers getting in on the action. Helpfully, LRB also features an “explore” section, letting viewers explore other users’ content on topics like fashion, food, and travel. These features help show the versatility of the platform, with huge opportunities for global brands throughout the lifestyle and beauty industries, including cosmetics, clothing, and travel products. Next, we’ll take a look at how global brands are using LRB to drive sales. How are global brands using LRB? Currently, there are around 8,000 verified brands featuring products on LRB, including many major global brands. Even Kim Kardashian is getting in on the action, creating an official account in late 2018 to help promote her makeup line, KKW. In an effort to appeal to the local audience, a lot of global brands are translating their packaging into Mandarin, and are partnering with Chinese KOLs. This includes Chanel, Gucci and Dior, all of whom have all enlisted Chinese celebrities for their ads. In late 2018, Little Red Book also opened a “brand partner platform”, a fea ture aimed at connecting brands with influencers and KOLs to arrange for sponsored content. If you’re a global luxury or lifestyle brand looking to boost your presence in the Chinese market, it pays to take the time and effort to build your familiarity with this unique platform. Need more help on marketing to Chinese audience? Join our subcriber list for more posts like this.
7 Platforms You Need to Know Before Your China Digital Strategy Planning
As consumers are increasingly dependent on mobile applications, especially social platforms, social media is playing an irreplaceable role in the e-commerce era. In China, there are a couple of social media platforms that are of similar popularity as Instagram, Youtube, and Twitter, however, these platforms are quite distinctive as social dynamics have significantly changed. Additionally, how brands leverage these platforms is drastically different from each other. Mastering the right social media platform is essential to the success of brands. Estee Lauder, for example, made a newly launched product, "Sakura Micro-Essence," to a best seller in just two weeks using Weibo, a microblogging site known for exposure to the mass audience and hot topics that go viral using hashtags. During the Double 11 shopping festival on Tmall, a Chinese equivalent of Amazon, Jack Jones achieved sales exceeding ¥100 million (~$14 million) within 15 minutes. In this article, we will cover the seven most popular platforms that all brands need to be familiar with before making any digital marketing strategy in China. WEIBO What is it? Twitter + multi-format media including livestreaming Weibo, one of the most popular social media platforms with extended history in China, is where all the hot topics and trending news originate. Famous for its hashtag virality, Weibo is a launchpad of viral content and the place where online influencers go to amass a following. Stats: Data shows that as of the end of 2019, Weibo monthly active users (MAU) reached 516 million, a net increase of about 54 million compared to the end of 2018. Its daily active users (DAU) during the COVID-19 lockdown reached 40 million. Audience: categories of Weibo followers interaction volume covering celebrities, variety shows, news, finance, beauty, sports, government affairs, etc., comprising all aspects of people's work and life. Fans of celebrities accounted for nearly 30% of the Weibo users, while the coverage of stars exceeds other platforms remarkably. Brand example: With the expansion of the social media network effect and the improvement of service capabilities, Weibo has become a standard marketing tool for brand customers. Through the deep integration of KOL, celebrities, and multi-format content on the platform, brands in FMCG, luxury goods, automobiles, and consumer electronics (especially mobile phones) heavily use Weibo for marketing purposes. Ye Si, better known as Gogoboi on Weibo, is a famous fashion KOL with 9.3 million followers on Weibo. Victoria Secret, live-streamed one-hour backstage of its famous show with him on Weibo, and reached 2.5 million views within two days. WECHAT What is it? - Messenger + Long articles (official accounts) + mini programs (third-party apps) + communities WeChat is regarded by many as the "super app" or "China's app for everything", with which many brands are familiar. However, there are several new and important uses that brands need to know about and consider for their marketing strategy. Stats：As the "Super App" of China, WeChat has over 1.1 Billion MAU and its mini programs with DAU of over 300 million. Private Domain Traffic: This has been a buzzword since 2019 due to several huge successes some brands were able to realize. The most notable one is "Perfect Diary," a cosmetic brand that just announced IPO with only a little over three years of history. The key to the swift success that 3-year-old startup brand experience, without a doubt, is its private domain traffic tactics. Private domain traffic is a recent but fast-growing trend in the Chinese marketing, advertising, and e-commerce industries. While the public domain traffic is getting more and more expensive, Chinese companies began fearing its customer base increase was nearing its limit and began tapping into existing customers. In China, brands can obtain what is known as private domain traffic from big platforms like Taobao (similar to Amazon), Baidu (similar to Google), Douyin (Chinese version of TikTok), Weibo through WeChat private chats and group chats or company applications where users with similar buying habits or interests are grouped together. Private-controlled flow refers to the acquired users that can be directly contacted, at any time, and without frequency limits by the brand. However, private domain traffic is not suitable for all brands. To answer the question of what kind of products are ideal for private domain traffic pools, please subscribe to our newsletter, and we will take a deep dive into it in the following articles. Brand examples: Perfect Diary, a domestic cosmetic brand, increased sales by 50 times within eight months through private traffic pools. Brands can interact with consumers on a personalized level in different ways on Wechat. Mini Programs, for example, allow third-party "apps" to run in WeChat without requiring downloads, are used by brands like Burberry, H&M, Dior. Mr. Bags, a luxury bag KOL, with over a million followers on his WeChat public account, collaborated with the likes of Montblanc and Givenchy. He once sold out a limited edition bag, co-created with Tod's, within six minutes. BILIBILI - long videos with user added subtitles (comments) especially popular among Gen Z What is it? Bilibili, aka B site, is a Chinese video-sharing application that started out in 2009 as a website specialized in sharing anime pictures and videos. Over the past eleven years, the company expanded into a lot of new categories, including advertising, mobile gaming, and e-commerce. Bilibili also launched a premium membership enabling access to special shows, e-commerce deals, and HQ video streaming. Stats: B site experienced a rapid expansion of the user base and, as of the end of 2019, reached 128 million MAUs. At the same time, the users are generally more loyal and active on B site. For example, Bilibili is known for its video commenting feature, Danmu (弹幕, directly translated to bullet screen comment). Users can make a quick comment at a particular moment during the video and those comments can be seen by other real-time or following viewers. Audience: Due to B site's history, the platform has accumulated the biggest group of Generation Z at 82% of total users with an average daily viewing time of 85 minutes. That's one in four of Generation Z. Uploaders: UP master, also known as the content creators or video uploaders, usually accumulated a group of loyal fans on B site. After two years of rapid commercialization, B site has formed a unique culture, which can be interpreted as a fans' inclusive attitude towards the cooperation between the UP master and the brand. However, at the same time, the fans of B site are critical and harsh sometimes. They care more about whether the UP master and the brand are honest and authentic in their reviews and promotions. Brand example: From previous data, international niche brands, make-up brands, and affordable price brands have inherent advantages in launching campaigns or advertising on B site. However, in 2020, the content ecology of the B site has undergone significant changes. In addition to games, lifestyle, entertainment, film and television, technology, and other content that are native to Generation Z were added, which presents excellent opportunities for brands in these sectors. For instance, KFC created a catchy song "The Song of Fried Chicken" in collaboration with B site, which received full screen of Danmu saying "I want to eat fried chicken" throughout the whole song. Little Red Book What is it? - Foreign product reviews & Discussions + UGC As a lifestyle sharing platform, the Little Red Book (LRB) is known for its beauty and fashion related content mostly about products purchased overseasand celebrities, KOLs and KOCs in these categories, with hundreds of millions of monthly active users. Fans follow the daily life shared by celebrities & KOLs through LRB, and they are keen to interact with these celebrities & KOLs by providing their comments or sharing their experiences by creating their own content. Stats: According to the LRB's own data, as of July 2019, the number of users has exceeded 300 million while, the number of monthly active users of Xiaohongshu has exceeded 100 million in October 2019, of which 70% of new users were born post-90s. The LRB claims that the community generates 3 billion daily views of graphics, short video content, and UGC content accounted for 70% of them. Audience: The audience of LRB is considered to be the most fashionable among all platforms. Users are concentrated in first- and second-tier cities, with strong stickiness, high content penetration rate, and relatively strong purchasing power. It was also notable that the users on LRB reflected some characteristics of Generation Z - who are more active when interacting with KOLs and celebrities and their willingness to share their favorite content and products. Brand examples: As a Bain report showed that Chiense shoppers made three-quarters of their luxury purchases overseas, therefore, LRB has been very popular for all its relevant content regarding products purchased abroard. Luxury brands such as Louis Vuitton, Dior are, therefore, on the platform for their target customers. In March this year, Louis Vuitton started its first ever livestreaming on LRB, which also marked the first time ever this luxury brand doing livestreaming using its official account across all platforms. It reached No. 1 in the first 30 minutes in Livestreaming ranking and achived 33% interaction throughout the whole session. DOUYIN What is it? short-form videos + live-streaming TikTok, a short-form video app many are faimiliar with, has gone viral around the world. Douyin, the Chinese equivalent of TikTok, was launched a year before TikTok by Bytedance. Since Douyin was launched before TikTok and in China, there are many differences and early success of commercialization that brands should be aware of before committing to investing on the platform. Audience: Similar to TikTok, Douyin is extremely popular in China, with over 400 million daily active users. Douyin has a much wider user demographic than Tiktok, most of which are people under the age of 35. Tiktok, however, is more popular among teens. Global web index shows that, in 2019, 41% of TikTok users are between 16 and 24. The users of Douyin are evenly split between first-two-tier cities and the lower-tier cities. Brand examples: Douyin's monetization is more mature than Tiktok. For instance, users can make purchases through Taobao, JD, and Douyin's platform with one click of the shopping cart button on some Douyin videos. Currently, brands are investing heavily in TikTok on advertising, livestreaming, and e-commerce. Tiktok, however, is still an entertainment-oriented app, rarely being used to include Amazon links to promote goods except for some ads. Christian Dior introduced the Dioramour bag with five Douyin videos and acquired more than 300k followers. KUAISHOU What is it? Short-form video app Kuaishou (KS), another popular short-form video app featuring PUGC and UGC, has over 300 million daily active users. Even though KS is similar to Douyin in terms of format, it is distinctively different from its viral in other aspects. The content recommendation algorithms on KS are decentralized, meaning the user base plays an essential role in the determination of the popularity of the content and account. On the other hand, Douyin's algorithm is centralized, and it determines which content and accounts should be promoted. KS's commercialization is more gear towards livestreaming versus advertising and e-commerce. Instead of Douyin's scrolling up and down to browse more videos, KS offers multiple video options for users to choose from by clicking on the videos that the users want to watch. Stats: KS's DAU is close to 300 million with livestreaming revenue accounts for 60%+ while Douyin's advertising revenue accounts for 80%+ of its revenue. Audience: 70% of the users of KS are from lower-tier cities who perceive KS more as a community than media. 70% of the users are under 30 years old. How Brands can leverage it: As mentioned previously, KS's revenue mostly comes from livestreaming. Therefore, it might be suitable for brands who are interested in livestreaming. Metersbonwe, a well-known apparel brand, achieved sales of over $6.5 million and gained 300k newly-added followers in its first live-streaming session on KS . Livestreaming Please click here for a previous article on livestreaming on Taobao. What's Next: In future articles, we will dive deep into each of these seven platforms and how brands can navigate the nuances of each and leverage them to realize marketing goals.
A New Type of Influencer Marketing for Brands Who Have An Eye For China
While many brands are partnering with influencers on platforms such as Youtube, Instagram, Facebook, e-commerce live streaming, a new type of influencer marketing has taken off in China. Many well-known beauty brands have already taken advantage of this new type of influencer marketing. For instance, YSL sold 30,000 lipsticks during a live streaming session during the double 11 shopping festival (similar to Black Friday), and Kim Kardashian appeared in a session hosted by Viya, a top livestreaming KOL, and sold out 150,000 bottles of KKW perfumes in 1 minute few days before that. Additionally, Estee Lauder sold $58,000 worth of liquid foundations in 10 minutes in another session. The top e-commerce livestreaming KOLs can sell anything, from skincare products to luxury bags and even real estate. As people were quarantined at home over the past couple of months due to the pandemic, more celebrities and influencers have joined forces to be a livestreamer selling products on e-commerce platforms, while livestreaming has become a staple on Tmall (Chinese Amazon) where you can see it on many product page. This marked the dawn of a new era in influencer marketing in China - the livestreaming e-commerce era. What is livestreaming e-commerce? E-commerce live streaming, similar to a live QVC to some people, is a combination of Instagram Live + Amazon. But there's also more to it. A successful livestreaming session usually encloses three parts: warm-up, show-time, and aftereffect. During the warm-up period, a livestreamer and associated brands advertise or notify the consumers numerous about the upcoming livestreaming sessions, sometimes with a sneak peek of the products or discounts. During the session, livestreamer would introduce, demonstrate, and test the products (if possible), leaving viewers a direct impression of the products. Next, the livestreamer employs a form of hunger marketing, including limited time, limited stock, a special discount, or any combination of them to provoke the urgency to purchase on the spot, usually involves a countdown. Afterward, livestreamer or brands would market again about the result and summary of the session so that some regretful customers who missed the opportunity to buy will buy something else from the brand or participate in another livestreaming session. Nonetheless, brands typically achieve both brand-marketing and product-selling goals through a successful livestreaming session. The reasons behind the e-commerce livestreaming? Audience & bargain mentality: Tmall is the first e-commerce website which launched the livestreaming function. The initial audience who watch livestreaming sessions are people from lower-tier cities who care about discounts and have plenty of time to view the livestreaming for the special discounts. As mentioned previously, hunger marketing is utilized heavily where the KOLs will announce some sort of "flash sale" during live streaming. However, as more and more KOLs, celebrities, and platforms such as Douyin (Chinese version of TikTok), Kuaishou (short-form video app similar to TikTok) took part in the livestreaming e-commerce business, the audience has expanded to fans and later to almost everyone. Time Confetti: efficiency is another factor that drives consumers to shop through livestreaming e-commerce. They can discover and learn about a product quickly and directly, get their questions and concerns answered right away, and save the time that's required to research the reviews and search for the best price. Video and livestreaming formats not only allow consumers to experience the product almost first-hand instantly but also provide the visual stimulation and interactions with livestreaming KOLs, accelerating the decision-making process for consumers. Building credibility among the viewers is another crucial factor to a livestreamer's success in selling products. The livestreamer who already established a credible image among the consumers usually eliminates the need to search for reviews. Evolution: To meet consumers' needs for a more direct and interactive shopping experience, livestreaming e-commerce, is a product of the booming e-commerce sector and the thriving short-form video apps. Influencer livestreaming e-commerce ecosystem in China equals a combination of Instagram, Amazon, and Paypal all-in-one experience, where the viewer can follow KOLs, shop the products the KOLs recommend and, pay for them on the spot. This has already transformed the economy into an experiencing one, where it broke the barrier between products/brands and consumers. Consumers can efficiently experience the products while the brands/sellers benefit from it with instant feedback and selling much faster. Livestreaming has become a staple on Tmall like the video demonstration of product on Amazon. For example, if you go to a product page, many products have a sign of livestreaming where you can check out someone demonstrating the product. More platforms are following suit to offer livestreaming option to sell products like Tmall as the market is thriving, and the trend is continuing. As 5G technology further matures and spreads, livestreaming will be even more eminent for selling products. How can brands benefit from this trend? Every brand can benefit from this trend to sell more and sell faster. As mentioned earlier, livestreaming becomes a staple in e-commerce and people are embracing the format, hence no brand is too big or too small for it. From apparel to the luxury product, brands can target differently according to their brand image. For example, the livestreaming session might be a window for brand awareness for a Louis Vuitton purse. Even though it probably won't sell as much as any cosmetics products, there will be some positive spillover effect that increases both brand awareness and search for other products in that brand. Through livestreaming, brands can also leverage the opportunity to communicate more efficiently with consumers, where they can receive live feedback and questions during the sessions and offer answers. This not only shortens the consumers' decision-making process substantially but also improves the selling efficiency for brands. As Instagram pushes its Live function, and Amazon also launched the Livestream function for US sellers, the livestreaming era might already be upon us in the US as well. In the following articles, we will introduce the top e-commerce livestreaming KOLs and share more about China-specific digital marketing insights and analysis.
The Cosmetics Boom Is Not Over Yet - It's Happening Somewhere Else
While governments around the globe continue their work to contain COVID-19, many brands are facing unprecedented challenges as consumer sentiment and spending are changing drastically due to the record unemployment number (at almost 22 million) and quarantine. The impact on the color cosmetics market is immediately felt. Kylie Cosmetics, for example, has closed its fulfillment center and loosened its refund policy for orders placed on or after March 16th. While Glossier has closed all the stores temporarily and shifted its sales to entirely online. With layoffs and furloughs are happening across the board, the impact might be long-lasting for the sector. Fortunately, there are still pockets of opportunity during this challenging time. Read more to find out. The tremendous and growing market Over the past few years, the global color cosmetics industry has seen healthy growth at a CAGR of 5.4%, reaching $73.5 billion in market size last year. China, the second biggest color cosmetics market, surpassed the rest of the world in terms of growth. It achieved a CAGR of 15% in the past five years, and reached ¥45 billion (~$6.4 billion) in market size and 17% growth in 2019, outpacing other beauty and personal care categories, including skincare and fragrances. Brands such as Huda Beauty, Charlotte Tilbury, and Anastasia Beverly Hills (Anastasia) have already experienced the immense growth that may even exceed their expectations. Huda Beauty, launched on Tmall.com on March 25th, sold out their signature eyeshadow palette 'Mercury Retrograde Palette' in one second (yes, the measurement is correct). From January to March this year, compared to the same period last year, Charlotte Tilbury's sales increased by 900% while Anastasia grew 30 times in sales during the same period. Yet, there is still an enormous opportunity for growth in China, as both the average revenue per capita (ARPC) and the ratio of color cosmetics spending in the overall beauty spending still lag other countries such as the US, UK, Japan, and Germany substantially. What is behind the growth? Surge in demand Demographics: Consumers with growing purchasing power and needs for beauty products have emerged in the past few years. Consumers born after 1990 have outnumbered the ones born in the 1980s. Gen Z consumers, who were born after 1995 and grew up with social media, shop mostly online, care about being trendy, sense of belonging, beauty (over 55% of men would buy beauty and skincare products), and personalization and value of the products more than any previous generations. They have been driving the considerable growth in the color cosmetics market, and this trend will continue. A new segment of consumers: Formerly, brands typically focused on the consumers in the first and sometimes second-tier cities in China. However, as the market in these cities became oversaturated, the growth has slowed. Brands have since shifted their marketing efforts toward lower-tier cities, which accounts for half of China’s population. With the penetration of smartphones, along with the e-commerce platforms and social media apps, the consumers in these cities became the new waves that drove the growth in demand. E-commerce live-streaming, for instance, is an example of marketing that is hugely appealing to consumers in this segment as they usually like products that are more relatable to them, hence the emergence of KOCs (key opinion customers). Even though the income of lower-tier cities is generally lower than the first and second-tier ones, their cost of living is also significantly lower. Therefore, their purchasing power is not necessarily lower than the first and second-tier cities. Evolving Trends In the past couple of years, we have seen the increased penetration of e-commerce platforms like Tmall, JD.com, etc. and the growing popularity of social media applications for brand marketing and selling product purposes. E-commerce and social media platforms such as Tmall and Douyin (Chinese version of TikTok) played an essential role for brands to grow through facilitating marketing and promotional campaigns specific to the Chinese audience, including live-streaming, promotions by celebrities/KOLs/KOCs. Brands expanded their marketing efforts from traditional advertising to short-form videos and live-streaming services like Douyin, Kuaishou, Tmall to accommodate the changes in the purchasing behaviors of the consumers and improve the marketing coverage and conversion. Perfect Diary, a homegrown color cosmetics brand that experienced enormous success in the past few years, achieved ¥100 million (~$14.3million) in 28 minutes during the famous Tmall double 11 shopping festival. Improvement on the supply side Supply chain improvements: Another vital factor that is behind the growth in the color cosmetics market in China is high-quality and rapidly-developed new products. World-leading OEM/ODMs have empowered the high-quality product development in the past years. For example, to compete with leading international brands, Perfect Diary not only focused on products that are appealing to consumers but also partnered with the world's leading OEMs who also provide products to leading global brands such as YSL and Dior. Will the trends continue? Market growth: The market is expected to grow further at a high CAGR of 12.2% in 2020 and 9% for the next three years. From recent sales report from Tmall, we could see that the lip product sales might have been negatively impacted by the coronavirus in the past few months, yet the drop was offset by an uptick in the growth of the eye makeup sales. As mentioned above, the ARPC of color cosmetics in China, at $5, is still much lower than the range of $26-56 we have seen in countries like the US, Japan, the UK, and Korea. If we use these countries' ARPC range as a benchmark for spending ceiling, China still has the capacity to grow at least six-fold. Preference for foreign brands: Chinese consumers' preference for foreign cultures and brands is still growing. Among the top 15 brands in the Chinese color cosmetics market, over 60% of the market share belongs to international brands. On the other side, some homegrown brands succeeded in introducing new products developed in collaboration with foreign brands and cultural influences. New trends: With coronavirus, the clean beauty trend, which is already popular in other regions of the world, has become trendy among Chinese consumers. Farmacy, for instance, has already launched the Tmall store in China. We would expect more brands to enter and succeed in the space as we see a growing demand for products with natural and simple ingredients. Luxury & mass-market brands: Currently, the mass cosmetics brands account for roughly 70% of the market in China, which presents great opportunities for brands such as Urban Decay, Nyx, Fenty Beauty, Anastasia, and even Jeffree Star. However, luxury brands still can expand in China as growing purchasing power unfolds in Gen Z and future generations, along with consumers from lower-tier cities. Maybe now is the time to get a piece of this pie while it still lasts. What we can offer to help brands to get this pie? While Chinese consumer groups’ preferences and behaviors might be hard for international businesses to tap into, as there are many China market-specific know-hows brands need to understand before entering the market, we are here to help. For access to more analysis, insights, case studies, and to learn more about the risks and opportunities in China, Chinese KOLs/KOCs, and buzzwords such as private traffic, please subscribe to our newsletter. We will cover all consumer spending sectors and offer consulting services for brands to enter the China market. Sources: Euromonitor, Tmall.com, www. m.cbndata.com, #beauty #china #cosmetics #growth #brand #luxury #mass-market