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China’s data-rich online platforms offer opportunities

Anna Hamill
Source: Event Reports, APAC eCommerce Accelerator Summit, October
2018
Downloaded from WARC

China is one of the most digitally advanced markets in the world, and a rich trove of consumer data
offers exciting marketing opportunities for brands both online and offline.

Most consumer-facing advertisers in China can now create massive CRM databases which allow
sophisticated consumer modelling, deeper insights and more effective marketing – more than 70%
of purchases can be captured by CRM, with data elements such as ID activatable directly by
publishers.
The end-to-end ecosystem in China is complex to navigate, particularly as data sharing is
restricted and involves different data structures /systems.
A significant share of the data is deterministic (device ID, publisher ID) and not merely cookies.
While e-commerce is opening up new opportunities for brands, offline and traditional retail
remains critically important and still make up a large majority of consumer purchases.
BCG’s analysis for the consumer purchase pathway in the apparel category shows that 93% of
purchase behaviours are digitally influenced.

Today China is one of the most digitally advanced markets in the world and has some of the most highly
digitalised consumers, according to Josh Ding, from The Boston Consulting Group.

Chinese consumers are reliant on the internet: they spend up to 161 minutes each day on laptops versus the
global average of 108 minutes, and up to 170 minutes on smartphones per day against a global average of 147
minutes, Ding revealed at the APAC eCommerce Accelerator Summit run by e-commerce analytics provider
Edge, an Ascential company, in Shanghai recently.

China is a data rich market


E-commerce continues to deliver strong growth. According to BCG, e-commerce will increase from 23% to 31%
of purchases in 2020 and is expected to touch over 15 trillion RMB in sales by 2022. In China, e-commerce has
seen a fast rise and now contributes up to 16% of retail sales versus a US share of 10%.

China is now extremely data-rich. Social media has made deep in-roads among Chinese netizens, with Chinese
players Toutiao, Weibo and WeChat offering a wealth of consumer insights. There is richer data available
across all first, second and third party sources. According to the BCG research that Ding presented, a significant
share of the data is deterministic (device ID, publisher ID) and not merely cookies.

In effect, most consumer-facing advertisers in China can now create massive CRM databases which allow
sophisticated consumer modelling, deeper insights and more effective marketing. More than 70% of purchases
can be captured by CRM, with data elements such as ID activatable directly by publishers. The retailer and
other qualified data owners are open to data sharing; indeed, platforms monetise deterministic data on age,
gender, education, and socio-demographics to build consumer personas and make targeting more effective.

While e-commerce is opening up new opportunities for brands, the reality is that offline and traditional retail
remains critically important and make up a large majority of consumer purchases. This is the case not only in
China, but across many of Asia’s emerging markets. BCG’s research indicates that non-chain medium and small
grocery retailers will remain the most important channels in 2020.

For FMCG brands still heavily reliant on traditional retail, bridging the gap will be critical.

Key performance indicators, or KPIs, are not be easily traceable in these small physical retailers, with sales
operations more difficult to trace and manage for quality and consistency. These will continue to pose
challenges in terms of low visibility of landscape, competitor and shopper dynamics.

Consumer purchase pathways


The consumer purchase journey in China – involving discovery, research, purchase, payment, delivery and
after-sales – is increasingly intertwined across offline and online activities, now more than ever. The average
consumer typically hits seven different touch points before the final decision is made, which is forcing brands to
pay more attention to omnichannel brand experiences to capture consumers with a huge number of shopping
options.

This is particularly the case for the retail category, which customers bounce between online and offline platforms
at all points of the customer journey. BCG’s consumer survey and analysis for consumer’s purchase pathway for
apparel, for example, shows that 93% of purchase behaviours are digitally influenced, making digital platforms
more critical than ever for brands operating within the category.

More than a third of consumers surveyed – 35% – searched online and purchased offline and 25 per cent
searched both online and offline, but ended up purchasing offline. Only 7 per cent searched and purchased
offline. In fact, 60% of advertising spend is now on digital, with e-commerce accounting for 20% of total retail
sales. As China’s online revolution continues, this figure will only continue to grow.

Learning from China’s digital experience


Tencent and Alipay – which between them own most of China’s biggest and most influential e-commerce,
payments and social media platforms – are the two most dominant forces in the market. But these “walled
gardens” companies, according the report, limit the usage of data and have a “black box” approach to data
tracking.

Importantly, there is no connectivity across the “walled gardens” which makes it difficult to shape consumer
journey across media, with multiple ad tech vendors often managing brand campaigns. In effect, the end-to-end
ecosystem in China is complex to navigate, particularly as data sharing is restricted and involves different data
structures /systems.

According to Ding, emerging markets – particularly in South East Asia – can learn from China’s approach to e-
commerce and using data more effectively in the customer journey. However, consistency, capabilities and
knowledge will be needed.

In summing up, the report raises a few key points for managers of digital channels in China. According to it,
upward communication is key: “Articulate well in where China leads and where it is different, and why additional
resources are required,” Ding said.

Cross-border knowledge sharing requires the ability to showcase capability leadership and in identifying areas
that require rolling out. It would also involve, the BCG report states, an ability to manage the “less useful
support” from the head-quarters. Hence, more conversations will need to be led by a cross-function team, not
merely by the IT department. And, finally, within China the players need to continue to build a true-digital
organisation realign roles and KPIs.

About the author


Anna Hamill
Asia Editor, WARC

© Copyright WARC 2018


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