Brands selling products online needs to carefully consider how to position their products in the online marketplace to secure and defend the loyalty of Chinese consumers as they are most loyal to e-commerce players, a new study suggests.
Marketing company Epsilon did a survey on the habits of Chinese consumers and finds out that 61 percent of respondents are loyal to e-commerce players like Taobao, JD and Tmall, the highest across all sectors surveyed.
This year’s results were consistent with many of the key trends cited in Epsilon’s past China loyalty studies – vibrant Chinese consumer spending despite overall economic slowdown and higher trust in foreign brands over local brands.
With USD540 billion spent in China’s online shops in 2014, e-commerce is by now so ubiquitous that Chinese online platforms have successfully inserted themselves as a formidable layer between consumers and product brands. They have restructured the value chain, sending consumer brands scrambling to create a sustainable competitive advantage in an increasingly dynamic marketplace. By capturing targeted awareness through data insights and by standing at the forefront of online customer service, e-commerce platforms are fortifying their position for years to come.
Survey respondents said they are happy to engage with e-commerce players across channels, more so than with any other sector. 35 percent of respondents who have purchased online stated they are open to receiving promotions from e-commerce brands by e-mail, 34 percent by WeChat and 27 percent by Weibo. Respondents were also more open to receiving information from e-commerce brands via mobile apps, QQ, video sites and product review sites than any from any other sector.
"The migration of consumer commerce to the digital realm is unfolding at lightning speed in China, disrupting marketing strategies for players across the marketplace," said Dominic Powers, Executive Vice President and Managing Director, International, Epsilon. "A new paradigm is emerging whereby retailers need to simultaneously build brand equity while striking the right partnerships and positioning with e-commerce players."
Other China loyalty trends revealed by Epsilon’s research include:
Those companies most adept at integrating online and offline touch points to deliver a seamless customer service experience are now commanding the loyalty of Chinese consumers. Apple received the highest score for loyalty of any brand cited, registering 17 percent of brands respondents and cited across all categories. Lifestyle brands directly impacting consumer health, including grocery chains and restaurants, and financial services, also received high loyalty scores.
Now that the vast majority of Chinese digital users have migrated from micro-blog Weibo to the more private, group-based social media platform WeChat, Chinese consumers are openly welcoming social media-based loyalty communications with their preferred brands like never before. 26 percent of survey respondents said they prefer to interact with brands via WeChat, with email and mobile messaging falling in popularity.
Especially in China, the return on loyalty investment is high. Loyal customers are increasingly standing by their brands through wavering market conditions, providing a bulwark to fend off competition. The Epsilon survey showed that loyalists across sectors were 19 percent more likely to visit their preferred brands more often and spend more on their favourite brands. Loyalists were more generous with their private information and more likely to refer products and services to friends.