Destination China: Leveraging Brand E-Commerce in the Middle Kingdom
China is a premier expansion destination for U.S. retailers. The meteoric rise of the Chinese middle class is estimated to produce a national disposable income in excess of $2.7 trillion over the next decade and a consumer base eager to burn yuan on U.S. products. Breaking into Chinese markets isn't easy, however. Like other global markets, China presents some significant expansion challenges, especially for retailers with a limited or nonexistent presence in Asian markets.
For many U.S. retailers, the most direct route to China is through brand e-commerce, a retail approach that combines branding and multichannel commerce to achieve growth in international and domestic markets.
Creating a Brand E-Commerce Strategy in China
Brand e-commerce offers a proven expansion vehicle for global retailers. In some instances, foreign retailers have even started to leverage brand e-commerce strategies to compete for U.S. consumers.
For example, Chinese sports apparel and footwear retailer Li-Ning is using a brand e-commerce approach by introducing products to American consumers via its Digital Li-Ning brand. Rather than relying on a traditional brick-and-mortar approach in the U.S., Digital Li-Ning has crafted a multifaceted digital strategy with Acquity Group that focuses on e-commerce, social media and other digital channels.
This strategy is designed to introduce the company's products and branded content to young American consumers. A three-time Olympic gold medalist in gymnastics and a national hero, Li Ning founded the second largest sports apparel and footwear business in China with 8,000 domestic stores. That said, the brand had gone virtually unnoticed outside Chinese borders.
U.S. retailers can capitalize on a similar strategy as Digital Li-Ning by targeting several strategic benchmarks to effectively penetrate the Chinese e-commerce market:
- Exceptional customer experiences. Brand e-commerce hinges on the recognition that it's not about the channel but rather the consumer. Mobile channel investments, cutting-edge apps and other technologies have no value unless they offer powerful, integrated experiences that deliver on your brand promise. When retailers successfully combine digital technology, branding and e-commerce, they create opportunities for engaging customer experiences and relationships in the Chinese marketplace.
- Brand consistency. Experienced cross-channel retailers understand consistent brand messaging tends to suffer when companies leverage digital strategies to achieve rapid growth or expansion. For U.S. retailers leveraging e-commerce in China, however, it's essential to target brand consistency as an expansion priority, particularly since e-commerce messaging represents most Chinese consumers first exposure to the brand's promise and value proposition.
- Back-end requirements. Failure to invest adequate attention and resources into back-end requirements can spell disaster for U.S. retailers using e-commerce to gain traction in China. Marketing is only one aspect of a successful Chinese expansion agenda. To succeed, U.S. retailers also need to address online payment options, fulfillment capabilities and governmental peculiarities associated with doing business in China.
Finally, using a brand e-commerce strategy in China is most effective when supported by a long-term brand commitment. Unlike "quick win" marketing tactics, retailers need to embrace the fact that brand e-commerce is a comprehensive, long-term strategy focused on delivering Chinese market share through branded, multichannel deployments.