“Okay, slightly under resourced, no additional people until the prior month, and no budget...but that’s retail and if we build it they will come, right?”
Those were the words of Jeanswest digital manager Sarah Hayden, as she divulged the company’s plan to launch a digital expansion into China at seminar Online Fashion Success recently.
“We did everything right.”
This meant integrating the four holy p’s of marketing – products, place, price and promotion. Hayden revealed that it wasn’t enough.
“It is dramatically different and requires validation of the brand proposition for the market.”
Jeanswest currently operates around 230 stores across Australia and New Zealand and in 2011, celebrated opening over 3000 throughout Asia, with the vast concentration in China. While bricks and mortar is a stronghold for the company, online was tougher.
On the launch day of its online store in China, Hayden and her team were eager to see where the influx of sales would peak to.
In fact, sales were dismal. For a country whose population is almost at 1.5 billion and a company whose presence in the region is not meagre, business could have been better.
Especially when, as Amblique executive Justus Wilde noted at the seminar, China will explode in digital sales.
“By 2020, China eCommerce will be greater than USA, UK, Japan, Germany and France combined.”
To Wilde, this means that if market predictions ring true, China’s annual online spending will jump from $3 billion in 2015 to $9 billion in 2020.
With marketplaces such as Alibaba’s Tmall, which takes a whopping 61.4 percent of the GMV market share having recently established a partnership with Australian platform Bigcommerce, this means that local retailers are missing out on a slice of the action.
According to Wilde, there are only a handful of brands that are utilising multiple eChannel strategies in the region: Esprit, Lacoste, Forever 21, ONLY, Gap, North Face and I.T and Nike.
Why is this be so important?
Wilde laid the facts out on the table. Some 91 per cent of China’s population have active social media IDs.
Pulled from a recent Alibaba IPO prospectus, one of these is Weibo, where reportedly 50 percent of users would visit an eCommerce site after engaging with product information.
Consistency of this traffic would be regular too, considering that internet users in China spend an average of 46 minutes online per day, compared with just seven minutes in Japan.
So whilst Tmall seems to be the overarching entity reeling in booming sales revenue, taking up space across a number of online channels can act as numerous portals for consumer engagement.
As Wilde noted however, Jeanswest Australia is only one of two international brands alongside womenswear chain Karen Millen integrated into Tmall global.
Hayden revealed what the company has learnt from breaking into China.
According to the company’s sales the big learning curve – or surge – lies in catering to 11/11, Tmall’s major annual eCommerce sale.
In 2014, Jeanswest made 12 per cent of its annual online sales in China on the day on 11/11.
Sales jumped five times up from 2013 and 81 per cent of customers were unique visitors to the site.
The opportunity for retailers cashing in on 11/11 gets more exciting, as Wilde revealed the figures rolling in throughout the 24 hours that shoppers hopped online to buy goods on 11/11.
After one minute, sales exceeded $100 million. After seven hours, sales exceeded $20 billion and smashed the total amount of sales in 2012. At 13 hours, it reached 36.2 billion, surpassing the total of 2013. At 24 hours? $57.1 billion, or 11.8 billion Australian dollars.
The consumption isn’t domestic either. Behind Hong Kong, Russia, the US and Taipei, Australia was the fifth largest overseas market to spend on 11/11 last year.
Additionally, engaging with a local partner to understand how markets operate in different regions is crucial, according to Hayden who said, “cultural differences which might not sit well with many Western brands and business values are accepted as normal behaviour.”
Jeanswest is expected to provide up to 15 product shots per item, focusing on every aspect from the label, to stitching to the delivery packaging.
“Be prepared for customers to get very involved in the buying process, questions and feedback all come in via the social channels, more images are expected with more content detail around the product than in Australia.”
It seems to be China’s burgeoning middle class and its focus on quality, which Wilde believes, “is about to overtake Japan as the World’s largest consumer of luxury goods.”
Although a vastly different landscape to marketing in the West, the sheer force of China’s online consumers along with advanced digital channels to utilise could mean big bucks for Australian retailers who see the door to growth potential in China, but haven’t found the key.