China is projected to become one of the world’s largest consumer markets as consumption in the region continues to grow exponentially. According to a 2016 study conducted by McKinsey & Company, the majority of Chinese consumers are increasingly interested in buying premium quality products across categories, meaning they are willing to spend more money to ensure satisfaction with their purchases. Forty-eight percent of consumers responded that they would pay at the top of their price range for the best product in apparel, while 51 percent agreed with the statement in regards to fast moving consumer goods and 49 percent in regards to consumer electronics.
Across categories, western brands are realizing that the Chinese market is one of enormous potential and they must quickly familiarize themselves with the needs and wants of the consumers in the region. FashionUnited sat down with Christina Fontana, the head of fashion and luxury for Alibaba’s Tmall, during the National Retail Federation’s conference earlier this month to better understand the Chinese consumer.
FashionUnited: How would you sum up what the Chinese consumer is looking for?
Christina Fontana: Tmall has over 700 million Chinese consumers on our platform, and they are looking for everything from everyday products to cars to groceries to fashion. The biggest trend we’ve seen is the upgrading of Chinese consumption, meaning consumers are looking more and more for higher quality products. They are buying a lot of overseas and imported products as we’ve seen the size of the middle class grow.
What is the most surprising aspect of this consumer to American brands?
Chinese consumers are very sophisticated and very demanding, because they are well-informed. Most consumers come to our Tmall platform eight times a day because it allows them access to incredible content from the brands - brand stories, brand history, short videos, live streaming - that are telling everything about the brand. It’s also important to note that they're not only being informed by the brands, but they're also being informed by fellow consumers. This generates a retail culture in which consumers that are very aware, very well-informed and very demanding, and this is sometimes surprising to brands when they enter the Chinese market for the first time.
Does this make it more challenging for Western retailers to engage with these consumers in a way that makes the most sense for the consumer?
The biggest mistake that brands can make with the consumers in China is thinking the Tmall e-commerce platform simply involves selling products online. This isn’t what Tmall does; it is the biggest marketing platform in China, allowing brands to share their stories and content that educates consumers to empower them with the information that they want about brands before making retail decisions.
Are there any content marketing strategies that don't work with this consumer?
Email doesn't work because these customers don't use email - it's not even a data point that we track. People don’t communicate via email there.
What is the most successful way to reach them?
Consumers can follow brands they’re interested in on Tmall, and information about those brands will be automatically pushed to consumers. We generate heat maps to show brands how close their relationship is with a particular consumer based on how much time that consumer spends with a brand’s content. Using this information, brands can decide which demographics of consumers will see specific types of content or products, to be sure they show the right content to the right consumers.
This consumer seems to value personalized digital communication. Is that an accurate way to describe them?
Yes. We say that we have 1,000 pages for 1,000 faces on Tmall, which means that every person who opens Tmall has a personalized experience. Each consumer has his or her own shopping experience that allows them to discover exactly what they tend to shop.
Consumers like to feel close to their brands. As brands develop strategies through Tmall, they are able to consider ways in which to personalize that experience for their consumers, whether through inviting them to in-store events or providing early access to shop new products. As brands sell directly to their consumers, they know which of their consumers are most engaged, which are most interested in their brand and which will amplify their brand.
How would you describe the process of educating new Western brand partners to understand and best reach the Chinese consumer?
We spend a lot of time with Western brands before they join our platform to be sure that they have taken a good look at their market in China. We want to be sure they understand the local market scene, they understand their local competitors and they have developed an idea of who their target audience is. We have 700 million consumers on our platform, but brands usually don't want to talk to 700 million people - they want to talk to people that will resonate with their brand. So we help them to develop a strategy that will work on our platform. While we share insights with brands, it is always the brand that is running its own business on Tmall. We build technology, we help them access data, we give them the tools to be successful in our market and we are very happy to share insights. Yet in the end, the strategy is up to the brand. Each brand must develop a strategy that resonates its message and best communicates that message with Chinese consumers to succeed.