Alibaba’s Taobao Live reveals it did $60B in GMV last year, putting its nose ahead of Kuaishou (~$58B). While it didn’t set a GMV target, it aims to help 2,000 channels and 200 merchants reach sales of CNY 100M this year.
Jacco
Labor Day Holiday Spurs Whitegoods Purchases
According to a white paper from JD, a number of Chinese consumers are considering replacing their home appliances during the upcoming 5-day May Day Holiday (May 1-5).
AgencyChina Experts Interviewed by SCMP
AgencyChina’s Research & Strategy Manager, Michael Norris, was quoted in this piece on Douyin’s e-commerce push. Douyin has set the ambitious goal of tripling the amount it transacts through its platform this year.
Douyin Offers Flagship Stores For Brands
Douyin continues to build-out its e-commerce capabilities by launching flagship stores for brand accounts. The feature, made available on March 29, includes a campaign banner, brand recommendations, vouchers, product recommendations, and offline store information.
Local Challenger Takes On Foreign Brands In China’s Supplement Market
In April, we wrote a popular post on how China’s Saturnbird Coffee is taking on Nestle in China’s instant coffee market. Given we love innovative products that unlock new growth, here’s a new example in China’s Supplement Market: BUFFX.
BUFFX is a vitamin and supplement start-up that launched in April this year, not long after China returned to work after a pandemic-induced lockdown. BUFFX attracted two sets of seed investment before its products launched online in September. In its first two weeks, BUFFX accrued CNY 1 million in sales. To us, this is a signal that the brand is doing something right. We think they’ve got plenty of success ahead of them.
Below, we outline what BUFFX did to secure early success in the China Supplement Market:
- Solve a consumer pain point
- Go where others are reluctant to go
- Be bold and distinctive
- Get investors to support launch
Let’s look at each of these in turn. If you work in FMCG, you’ll find the learnings practical and relevant.
BUFFX Solves A Consumer Pain Point In Vitamins And Supplements
Vitamins and supplements are a fast-growing category, posting a CAGR of 10% between 2013 and 2019 – much faster than the FMCG category average.
Vitamins and supplements are traditionally an area where imported brands, such as Swisse and Blackmores, have performed well. Given concerns around the quality and efficacy of domestic vitamins and supplements, the category is highly conducive to cross-border e-commerce.
However, there’s a consumer pain point which has long been overlooked by imported brands – consumers are daunted by imported vitamin and supplement pill sizes. If you compare pills and caplets in China to overseas, you’ll find there is a demonstrable size difference. Through in-home interviews, our research team has found that difficulty swallowing a supplement is one of the top reasons Chinese consumers stop taking supplements.
BUFFX understood this and designed a gummy supplement – the type that you might typically find for children. This has a taste and texture profile which is far more palatable to local consumers, which increases the chance consumers will make purchasing BUFFX a consistent habit, rather than a once-off.
BUFFX Goes Where Others Are Reluctant To Go
Common supplements in China include Vitamin C and E.
BUFFX wasn’t content with making a gummy version of Vitamin C and E supplements. Instead, it looked at specific niches. Skin, sleep, eye care and digestion are commonly-reported ailments among young Chinese consumers. That’s exactly where BUFFX went. Its initial SKUs include formulations for sleep, eye care, digestion and virility. In the category, eye care and virility had been overlooked in recent years and hadn’t seen much new product development.
We can’t stress how important this type of research is – looking for mismatches between consumer needs, existing propositions and new product development.
BUFFX Is Bold And Distinctive
A quick look at BUFFX’s packaging shows how bold and distinctive they want to be.
BUFFX have a clear ambition to be the most distinctive vitamin and supplement brand in-market. This marks a break from the minimalist design features which have defined consumer goods in recent years.
We also think the name BUFFX is important. First, it’s easily searched online. Second, it’s memorable. Third, the term ‘BUFF’ is understood by China’s gamer generation as a term which means an enhancement. That flips traditional impressions of supplements on their head – instead of fixing a deficiency, BUFFX augments and empowers.
This sort of branding and positioning work is essential if you’re looking to build a lasting brand in-market.
BUFFX Used Investor Support To Launch
Launching and succeeding in China isn’t for the faint of heart. You need to play to win. One of the first questions we ask brand partners is what resources they can commit to their expansion in China. That’s because we know that China is a commitment. Even n iterative, test-and-learn approach needs to be adequately supported.
As a start-up, BUFFX didn’t have the resources of category leaders like Swisse or GNC. So, it went to investors and pitched the idea – gummy supplements with distinctive packaging, targeting graduates who want to work and play hard. These investors are no doubt pleased with BUFFX’s launch in September – expertly timed for traction and a pop over this year’s Single’s Day.
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Now’s your chance!
Alibaba wants to bring 1,000 overseas brands to China. Last year, Tmall Global piloted the incubation program with brands like Fenty Beauty, DPC and Brandfree. However, to get backed by Alibaba, brands need to put in the work. We think BUFFX is a good example.
If you like the sound of BUFFX’s approach to market, our team has the requisite skills across research, marketing and commerce to launch a product from scratch, or adjust your product and business model to the needs of China’s consumers. Get in touch to find out more.
China Market Entry Checklist For Foreign Brands
So, you’ve read our market updates and would like to see if your brand has any potential in China. But where to start? No worries! We are here to help.
We’ve come up with a short checklist to help you put together the most relevant details to decide if the Chinese market is right for your brand.
TIP: Have this guide ready as you navigate your first consultation with one of our experts.
China Market Entry Checklist
(click here to download the Chinese market entry checklist as pdf)
Next Step in your China Market Entry
Once you’ve tried to answers the questions on the Chinese market entry checklist, you’re in a better position to take up your free consultation with us. But if you are not able to answer all of the questions yet, don’t worry! Our China Experts are ready to help you complete the list during your first session.
At this point you may wonder what the first stages of a route to market would entail. To give you an idea of a typical China market entry engagement with AgencyChina we made the overview below:
We hope this gives you a little more clarity about what you can expect from us, and what we hope we can expect from you as a potential partner. If you’re looking for services other than market entry, then you’re still in the right place – we do everything from consumer surveys, to social media audits, to marketing & e-commerce operations.
The future of e-commerce on Douyin and 5 tips how to prepare
Douyin is TikTok’s namesake in China. It’s a wildly popular short video app with over 600 million active daily users. That’s half of China’s population.
Unlike TikTok, Douyin has clear e-commerce integration. Douyin users can click links within each short video and complete purchases inside the app. This makes Douyin a potential sales channel, well suited to impulse purchases.
Source: Walk The Chat.
This feature is also complemented by livestream e-commerce, which we’ve covered extensively here.
Douyin’s owner, Bytedance, has formed an e-commerce business unit to oversee its e-commerce businesses unit. This is perhaps the sign of some important changes to e-commerce on Douyin.
So, what might be in store for e-commerce on Douyin? What should you do now to capitalize on the opportunity? Read on to find out!
Douyin Future E-commerce Moves
We predict Douyin’s future e-commerce direction looks something like this:
- A virtual mall built housed within a Douyin mini-program. Mini-programs allow users to access various services without leaving the app. As we imagine it, a virtual mall Douyin would contain various lists and product recommendations. Think of it as a miniature Tmall, housed within Douyin.
- Brand Zones that appear in Douyin’s search results, similar to WeChat and Tmall. Brand zones give brands the opportunity to directly display products and services to consumers that have searched for the brand.
- Official account pages that have “Must Buy” or “Hot Recommendation” lists. This has important implications for branded accounts, as well as Douyin KOL accounts. We think brands and influencers will be able to display “hot products” on their home page well after they post a video containing the product.
- Advanced video-based product recommendations, which were trialed late last year. We expect to see these back with more accurate recommendations and more appealing presentation. This will be complemented by powerful video-based search, another feature trialed last year.
Should you take your brand online on Douyin?
If you’re not on Douyin now, use our below framework to work out whether it’s the right think for your brand at this point in time. You can even get in touch for us to walk you through everything.
What do you do when you are already on Douyin?
If you are on Douyin now, then assess your Douyin game:
- How is your content performing?
- Have you run sales campaigns through the platforms?
- What type of influencers are you working with?
- How do your efforts compare with dairy brands Yili and Mengniu, beverage giants Pepsi and Wang Lao Ji, brewers like Snow and Harbin, conglomerates like Nestle and convenience food brand Kang Shifu?
- Can you learn anything from the efforts of these brands?
The best way to prepare for future of e-commerce on Douyin’s e-commerce future:
- Experiment with livestream e-commerce: Increase livestream frequency with brand-owned accounts or influencers, to test how many fans you can attract to watch your livestream and get a better sense of conversion rates.
- Try e-commerce integrations: Get a sense of whether your short video game is good enough to entice immediate purchase by setting up e-commerce integration on Douyin.
- Increase content output: Douyin’s recommendation algorithm values viral hits, and brands need to balance quality with quantity.
- Learn to partner with small and medium KOLs: instead of aiming for partnering with megastars, brands can work with many small influencers, giving you broader access to fan bases across the country.
- And last but not least… Subscribe to AgencyChina’s newsletter, to learn about the latest developments in Douyin e-commerce.
China Includes Physical Education In Exams
China recently announced that sports are set to become a core part of school exams.
China’s Authorities Consider Scrapping Birth Limits
China’s top population control authority may be moving toward loosening birth restrictions imposed under the country’s current two-child policy.
CNY Spending Trends Upwards
Chinese consumers spent about 821 billion yuan (US$127 billion) on shopping and dining during this year’s Spring Festival holiday, an increase from 2020 but still below the amount in 2019, which was over 1 trillion yuan, according to government data.