An overview of China's ecommerce landscape with details on how the market works, who the key players are and case studies from brands who have been successful.

1. B2C
B
brand to china
by totem media

2. $consumer spending
6.18 in china to triple, to
trillion
*2010: $2.03 trillion
by 2020

3. The problem to be solved.
but
ecommerce
rules in china

4. “Bricks-and-mortar retailing is a mature business in
the US, where consumers have been shopping in
malls for decades and continue to do so,
augmenting their purchases with occasional forays
on the web. Online shopping is dessert in the US,
but in China, it is the main course.”
Jack Ma, Group founder and Chairman, Alibaba

5. Scaling up China
over 1.0 million 170
Achieving national scale
in China is an imposing
effort if done via bricks-and-
mortar.
cities with POpulation

6. Singles Day Generated
US$5.75 billion in sales
(in just one day!)
11 . 11 .2013
Ecommerce has already
proven itself to be
effective in China ...at
national scale.
Scaling up China

7. OFFLINE ONLINE
Offline vs Online
RMB230.00 Price at Retail
Physical retail is
costly to set up.
Far too many
locations are empty.
RMB90.00 Price at Retail
Low setup costs,
big consumer base.
But brand management
is critical.
Product
pricing
comparison
based on
RMB36.00
base cost.
Retailer
challenges

8. China’s etail
industry posted
120
compound annual
growth since
2003
*US: 17%

9. $online
650 sales could reach
billion
by 2020

10. The problem to be solved.
china is overtaking the
u.s. as the number one
ecommerce market

11. usa china
1.25b
1.00b
750m
500m
317m 322m
250m
200m
189m
1.4b
Total Online Shoppers

12. usa china
317m 1.4b
$ 230 $
210billion
billion
Ecommerce Markets
2012 - Total Revenue

13. china
541
usa
Business Week, FT,
Forbes & Statista
Ecommerce Markets
2003 2007 2011 2015
500
400
300
200
100
339
2015 - Revenue (Projected)
230
210

14. usa china
$1,439 $1,028
Ecommerce Market (2012)
Annual Spend Per Buyer
which is incredible when you consider that
us per capita GDP is almost ten times
higher than in china.

15. digital
ecosystem

16. The problem to be solved.
china has a distinct
digital ecosystem
with sites that are
only rough
equivalents to the u.s.

17. buy
CONSIDER
EVALUATE
AWARENESS
ADVOCATE
ENJOY
BOND
Path to Purchase: USA
Source: Harvard Business Review, Dec 2010

18. buy
CONSIDER
EVALUATE
AWARENESS
ADVOCATE
ENJOY
BOND
Path to Purchase: China
Source: Harvard Business Review, Dec 2010

19. The problem to be solved.
and unique
characteristics for
ecommerce

20. china’s
ecommerce
market is
70
C2C
%
*US: <10%

21. Bain & Company “China’s Ecommerce Prize 2013
B2C vs C2C Ecommerce
2008 2009
100%
75%
50%
25%
C2c
B2c
2010 2011 2012 2013e 2014e 2015e 2016e
0%
B2C is catching up quickly with C2C as more
brands move onto Tmall and other platforms.
But C2C is still incredibly important in cHina.

22. Online Sales Channels
usa china
76% 90%
ecommerce sales in china are highly
concentrated into a few B2C platforms.
(namely Taobao, Jd.com)
independent
merchants
marketplaces

23. The Two Major Forces
Tencent + jd.com alibaba + Weibo
China’s biggest ecommerce
platforms and payment
system.
second most important social
media (weibo)
China’s second biggest
ecommerce platforms and
payment system.
most important social media
(Wechat & QQ)

24. B2C Platforms
tmall
jd.com
tmall and/or jd.com are almost essential to a
comprehensive ecommerce strategy.
but, costs of audiences are becoming very high
2013 - Market Share
Tmall
JD.com
Tencent
Suning
Amazon
VIPShop
Gome
DangDang
Yihaodian
Vancl
6.3%
5.7%
57.5%
19.3%
iResearch & Alibaba Group 2013

25. 3
beauty &
personal
2
apparel,
fashion
Most Popular Categories
Overall / From Overseas
1
electronics
& appliances
most popular categories of products from overseas;
clothing, beauty, baby/infant, digital, household, health

26. B2C Platforms
Horizontal x Vertical Sites
electronics
& appliances
- Sunning
- Gome
- JD.com
luxury
$
- VIPshop
- Ihaveu
- Xiu
apparel,
fashion
- Vancl
- FClub
- OKBuy
beauty &
Cosmetics
- Jumei
- Lefeng
- Lafaso
malls
General (All Categories)
tmall
Jd.com
amazon
it is important to evaluate b2c platforms based
on strength of categories.
and (possibly) use specialist shops + mall

27. Repeat Purchase - Top3
Highest rates of repurchase
59%
yihaodian
Food, General
68%
Okbuy
Fashion, Clothing
82%
vipshop
Fashion, Clothing
tmall has the highest percent of
consumers using only their site
49% of tmall consumers only use tmall

28. Device Preferences
81 %
mobile
70 %
desktops
44 %
laptops
55% of Chinese internet users have made a payment
by mobile. in the us, only 19% have.

29. NYC/London shanghai
1-2 per person 7-8 per person
KPMG 2014
Mobile Devices/Person
in germany,
its only 0.8
devices/person.

30. Key Points on Path to Purchase
Social Media:
Creative, brand focused content to build
awareness & WOM ...and do promotions
Ecommerce:
Search:
Key in converting
interest to sales
Branded shops on platforms to take
advantage of traffic (and intent to purchase).
most
transactions
take place on
branded shops
in Tmall.com or
Jd.com
stand-alone
ecommerce
shops for brands
are much less
productive.

31. Sources of Traffic
usa china
100% 100%
5% Other
Social Networks
Natural Search
Paid Search
Email
Referring Domains
Direct
2%
45%
7%
7%
6%
28%
4%
4%
14%
39%
16%
23%
Other
Social Networks
Natural Search
Paid Search
Referring Domains
Direct
52% Search 53%
search is the most trackable, measurable
channel (as last step to hitting a site)
but brand (social) contribute to the final click
Based on data provided
by “Benefit Cosmetics”
Sample composition

32. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)

33. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
First interest
Press Releases
Social product info
Viral videos (Ads)
Weibo

34. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
Info search
Search (SEO)
Wikis
Product reviews
Category infographic
Baidu Zhidao

35. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
Shortlist
Product infographics
Product features/photos
Promotions
Search (SEM)
Baidu/Taobao

36. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
Make Purchase
Customer support
Discounts/Promo
Tmall/JD.com

37. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
Show off
Customer support
CRM / Q&A
UGC Advocacy
WeChat

38. Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)

39. case studies
Marketing that works in China

40. Estee Lauder Case Study
To promote the store opening they offered free shipping during
first three days and big discounts on star products.
Estee Lauder announced the launch
of its Tmall Flagship Store on May
2014
Its the only authorized E-commerce
platform except it’s official website in
China
Day One sales were RMB2.69m.
Within 5days, the sales volume
reached nearly RMB7.0m (a record
for new launch on Tmall)
Sales trend from 21~23 May from
it’s official flagship store

41. La Roche-Posay Case Study
European beauty brand La Roche-Posay held a campaign over six weeks in 2013 offering free samples to
new customers
After signing up and answering a few questions, customers were able to go to nearby shops to pick-up
50mL samples of La Roche-Posay products
There were 80,000 participants, and the brand saw a jump in sales of RMB1.0m
WeChat ID: larocheposay1975

42. WeChat ID: xiaomijiedatuan
Products are available for
one day only at select
times (12:00 - 14:00 -
16:00...) with a quota at
each time
Play games to win
further discounts
Authorized ebooks for
free download -
Between 10am - 10pm
Accessories
Xiaomi Case Study
Xiaomi (China’s Apple) have built a brand which is very price competitive AND fashionable by
employing a set of games, incentive and sales - while becoming a brand almost 100% built online
Instead of starting with higher prices and gradually lowering them (at end of sales cycle), they launch
with what would be a final sales price (utilizing flash sales and games to sellout in days, rather than
months)

43. Xiaomi Case Study
Xiaomi held a “snap-up” campaign inside of
QZone on March, 2014 for its new RedMi
Note (Table) & phone
With 600m MAU, QZone is a large social
medium, and also allows for precise targeting
Following a detailed (& entertaining) process,
15 million participants signed up to
participate
419,000 secured “reservations” for the “snap-up”
event
100,000 RedMi Notes were sold, 200,000
RedMi phones (a sellout)
Mar 15: Signup on QZone
Mar 19: Play for a “reservation”
Mar 26: Play to “snap-up”

44. SmartCar Case Study
Proving that pricing/discount events can help drive awareness, there are a huge number of brands in
China doing flash sales events on TMall and JD.com

45. SmartCar Case Study
Smart created a “snap-up” campaign in WeChat for it’s special edition “Smart BoConcept”
Between April 14 and April 21st at 8am, 6,677 customers paid a deposit of RMB999 for the car
388 cars were then sold in 3 minutes after 10am on April 21st
1. Fill in personal info, and pay for a deposit
of 999RMB from 14~21, April, 2014.
2. Participate in
Snap-up on 21, April

46. KPMG - China’s Connected Consumers, Feb 2014
Online Purchase Drivers
Better Deals, Less Expensive
Its Quicker Than Store
Access to Global Products
Easier to Compare
Better Range, Variety
Uniqueness
Popular, Famous Brands
Recommended By Others
High Quality, Long Durability
Comfort of Shopping at Home
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
For Luxury Purchases

47. brand to china
Insights on market entry and success

48. Brand Entry Framework
TRIAL SALES INVEST SYSTEMS PRODUCT
CONSUMER INSIGHTS BRAND ADAPTATION
Regular container
shipments to China.
Investment into online
awareness building.
Enrollment of early adopters
and online influencers.
Fulfillment & logistics
systems installed.
PROMOTIONS
test invest

49. Brand Entry Framework
Trial sales
Small scale, promotional sales
Sold from overseas (HK)
Thru Woyola.com, Tmall.hk
Drop shipped
Observe existing sales
Already being sold thru Taobao (C2C)
Being sold thru global, vertical sites
Are you selling in China already?
Are you a highly social brand?
Do you have great stories/content?
- Which precede the brand entry?
Enroll early adopters as advocates?
consumer insights
Focus Groups, Surveys
Thru social media (WeChat)
Data/feedback from trial sales
Direct response to products already sold
Competitor evaluation (field study)
Outline of existing marketing, pricing
Consumer/competitor mix
Who are your customers?
What are they buying now?
Judging from trial sales, whats the job to
be done with your product?
brand adaptation
Find the right positioning
Fashionable vs Functional
Differentiated vs Commoditized
Premium vs Price
Market Leader vs Challenger vs Marginal
Merchandising & marketing plan
Brand, product naming
Product selection/mix
Strategy x creatives x channels
What kind of brand can/should you be in
China? Positioning, pricing?

50. Brand Entry Framework
systems
Fulfillment model
Home market - China - Local distribution
Customs, regulatory process
Taxes, repatriation ...
Labeling
Integrate customer service
Online service & CRM systems
Returns management
Ecommerce
Brand “own” site?
Detailed capabilities
Payment systems
products
Moving operation to scale
Larger scale shipments
Additional distribution (offline?)
Partnerships & resellers
Wider product mix
Including customized products for China
Based on user feedback
promotions
Implement marketing efforts/tactics
Social - search - display
Brand & promotional (sales)
Digital marketing assets
Create full set of local assets...
Social presence, Baidu Zhidao, Blogs
Content creation
What level of investment will you make?
- Opportunity for big share in category?
- Speed essential?
- Success with trial sales?

51. Decision Tree for Brands
Build - Sell - Retain
awareness acquisition loyalty
Search
Focused
Social
Focused
More of a Need
- Functional
Does your
product satisfy a
need or a want?
Is your product
fashionable or
functional?
More of a Want
- Fashionable
Price
Do you
compete on
price or brand?
Brand
Are you a
market leader,
challenger or
outside
competitor?
Platform
Ecommerce
(Tmall...)
Own
Ecom Site
Loyalty: by price
or product/
brand quality?
Can you
generate
“organic” word
of mouth?
Promos
Direct
Marketing
UGC
User-get
-user
Discounting
Rewards
Is the quality
gap between
your product
and local
significant?
Do you have
compelling,
related stories,
images to
share?
No investment
in brand =
price/promo
competition.

52. Brand vs Sales
Growth strategy - balance
Consistent with global approach?
Critical to have price, brand parity across markets
sales brand
Price/promotional focused
Need for short-term results
Strategic imperative to capture market share
Luxury/premium product
Can take a five-year perspective
Strategic imperative to maintain brand
BUT
The middle can be challenging
place to be in China.

53. The problem to be solved.
China is a difficult market to summarize. Its a
massive market ...but only pockets of it are
developed and huge sections are a work in
progress.
its a two-speed market with some of the
most advanced outcomes in the world ...and
some very early stage issues.
Its middle class is much less affluent and,
much more price sensitive than EU/US.
A two-speed market

54. There are pockets of incredible
advancement (where premium/
quality is prized) but the vast
majority of consumers in China
are behind (very price sensitive).
Beijing
Hangzhou Shanghai
Shenzhen
Chengdu
T3-4 City
T3-4 City
Advanced
Behind
Sources: BCG & CASS
Advanced vs Behind
Uneven consumer landscape

55. 28.7m
beijing
21.6m
10.7m
20.5m ChongQing
shanghai
10.9m
14.2m
shenzhen
11.9m
guangzhou
shandong
peninsula
xi’an
That’s
Bigger
Than
Portugal
That’s
Bigger Than
Australia
That’s
Bigger
Than Two
Sweden’s
Mega-cities in China are quickly
growing to be bigger than whole
countries (and not just small
countries!). The opportunities
long-term are incredible!
Source: EIU 2014
City Populations by 2020
Mega-city projections

56. Rising Spending Power
60-80,000
RMB/mo
40-60,000
RMB/mo
20-40,000
RMB/mo
10-20,000
0 1 2 3 4 5 6 7 8
60-80,000
40-60,000
20-40,000
10-20,000
RMB/mo
8 7 6 5 4 3 2 1 0 1 2 4 5 6 7 8 10 11 12
People Millions
Beijing
Shanghai
Chongqing
But brands must pick the right spots
2000 2011

57. Rules to Branding China
The problem to be solved.
There are no fixed rules, not yet.
Digital (social) media rule.
An informational approach goes a long way.
Apply a universal logic to user motivations (especially youth).
The average consumer is very, very adaptable.
“Face” does matter.
Public goods are more important than private goods.
Play the long-game (don’t rush success).

58. B2C
B
brand to china
by totem media

59. totem media
contact us
Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem

60. digital landscape
by totem media
Overview of Audiences x Media

61. only
45%
of china is online
That 618 is
million
people

62. that is
the whole e502 Millionu

63. Social
Media
Online
Video
3
elements
driving growth
Mobile

64. online
video 428
million
VIDEO USERS
Source：CNNIC, China Internet Development Report
(Jan 2014)

65. mobile 500
million
mobile internet
users
Source：CNNIC, China Internet Development Report
(Jan 2014)

66. million 550
Source：CNNIC, China Internet Development Report
(Jan 2014)
social
media
microblog
users

67. + 100m
Overseas
million 500
Source：CNNIC, China Internet Development Report
(Jan 2014)
mobile
social
wechat
users

68. Total social media users top 550m
2007-2014 social media (monthly) unique visitors
Source: iResearch
000,000
500
400
300
200
100
88% penetration
2007 2008 2009 2010 2011 2012 2013
2014
Us: 67%
600

69. Social Media is capturing audience attention
25
hours
online per week
5%
26%
28%
9%
8% 5%
18%
News
Other
Ecommerce
Games
Search
Online
Video
Social
Media
Source: iUsertracker, Mar 2012
78% mobile
69% Desktop
47% laptop

70. us vs China user time
100
75
50
25
0
Travel Booking
Shopping
Email
Search
Recruitment
Online Payments
Online Banking
Friends (SNS)
Selling
Forums
Blogging
Education
Gaming
Video
Messaging
Instant Music
News
% of Usage Source: eMarketer 2012

71. by totem media
cultural insights
For consideration in product/marketing adaptation

72. personality
west china
Adapted from work by Yang Liu -
Chinese born artist, living in Europe

73. personality
insight.
Identity more strongly linked to
west china
connections.
Group dynamics matter more
Adapted Chinese than from work by Yang Liu -
born “self artist, realization”
living in Europe

74. social function
insight.
Success of the group =
Success of the individual.
west china

75. group style
More likely to follow the group
brand

76. restaurant noise level
insight.
Baseline noise level is higher.
Energy, activity are really
west china
important.

77. more is more
More functions, more value, more fun.
brand

78. self confidence (ego)
insight.
Alter-egos online.
west china
There is a lot more at stake in
issues of “face” and status.

79. superiors
insight.
Influencers (Celebs, KOLs) are
relatively more important.
“High status” is amplified.
west china

80. appearances matter (more)
Some products matter a lot for status.
brand

81. social connections
insight.
More time goes into relationship
west china
management.
Defined by who they know.

82. work vs personal life
insight.
Not clear separation between
work and “personal” life.
Social circle from work.
west china

83. work matters more
Work at work + “after” work = little “me” time
brand

84. complexity of self expression
insight.
US/EU transparency.
west china
China maintaining harmony +
Saving face.

85. problem solving approach
insight.
Flexibility of approach to
west china
solutions.
Ends justify the means.

86. solutions not always straightforward
Sometimes an issue requires a more nuanced solution (below the surface).
brand

87. good fortune counts
Seeing a novel solution thru sometimes requires a bit of luck
brand

88. meet dennis zhang
Demographics
Name: Dennis Zhang Weiqiang
Marital Status: Single
Occupation: Multinational executive
Chinese National: Beijing born and raised
Emotional Center: to be
exceptional and standout.
Age: 36
Gender: Male
Education: Tsinghua
Monthly Inc: RMB40,000
Psychographics **
Considers himself as being successful, as someone who has emerged from the first
part of his life with little international exposure to have become pretty worldly, affluent and
informed. He is primarily motived by discovery, new experience and an insatiable interest
in learning more. His idols are therefore people who are self-made business
people ...people like Lei Jun.
Lifestyle
As a real adventurer, Dennis is involved with a host of related activities, including; skiing
& camping, international travel, international dining, reading global media, exploring
international hotspots, gadgets, architecture & design ...and a growing interest in wine &
high-end spirits. While he is single, Dennis has a long-term girlfriend who he might look
to marry in the next year when he buys his new townhouse in the city centre.
Technology
Dennis is digitally savvy and likes to have new gadgets to use and show his friends. He
is a real iPhone junky and spends a huge amount of time downloading new apps.
Dining & Entertainment
He works a lot during the week, so during the weekends, he likes to spend time with his
family and intimate friends - they dine out 3-4 nights per week.
Media
Reads both Chinese and international media cutting across a huge range of subjects.
His favorite media are:
Online: (SNS. Blogs, Video)
Other Media
> SNS: WeChat, Weibo
> Independent film festival flicks
> Video: Youku, Weishi
> PC Weekly, FHM, Gadgets/Gear
> Mobile: Papa, Nian, Jue, Breadtrip
> LinkedIn
Fashion
Dennis is well dressed, shops with his girlfriend at The Village and Shinkong Place. His favorite
brands are; Armani Exchange, ZARA, Diesel, Y3, Izzue, Adidas, Uniqlo...
lei jun
iphone
fhm
social
fashion
Sample consumer profile

89. totem media
contact us
Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem

90. tmall, jd shops

91. Uniqlo
Homepage of Tmall Flagship Store
Location-based flagship
store, which supports city
shifting to find your location.
Weather Forecast
Categories Go to Fitting Room
Showcase
Pre &After -
sales service

92. Uniqlo
Hot Searching Keywords
List by UT Themes
List by
Banners/Campaigns
Promotions
Homepage of Tmall Flagship Store
List of products

93. Uniqlo
Online Fitting Room
An online fitting room where you can match & mix from all kinds of
clothes, and share it to your social networks.
A list of all categories, like “Cute”,
“ Lady”, “Mature”, “Leisure”, etc.
Float window where you can
change model. shoes, T-shirts,
colour…You can share it to other
social networks as well.

94. l’oREAL
Homepage of JD Flagship Store
All Products/Categories
QR code
Banner/Promotion
Quick Navigation
Campaign is On

95. l’oREAL
Product Page
Other Similar Brands
Store Info
Product Combination
Detailed Display & Description

96. totem media
contact us
Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem