Chinese Retail Players are Doing These Things to Stay Alive through the Coronavirus Crisis

Fashion apparel retailers rely heavily on offline retail for sales – more so than any other category given that apparel consists of non-standardized SKUs, with many different fits, colours, fabrics, etc. People want to try on outfits in person before they want to make a purchase.

But due to the coronavirus crisis, the near-shutdown of offline retail in China has forced them to turn to innovative measures to keep their businesses alive. While China retail has focused on e-commerce for a while now, this is the first time when businesses have been forced to divert all of their resources towards online selling.

We take a look at what fashion retailers are doing and what players in the West can do to learn from them.

Livestreaming E-Commerce Keeps Customers Entertained and Engaged

Livestreaming refers to live video sessions in which hosts and influencers present and discuss products in front of online audiences. The sessions are often accompanied with raffles and games to keep the audience entertained, and viewers can engage in live, public chat with the hosts to ask questions about products. They can then pay with Alipay, Alibaba’s mobile payments ecosystem with a few taps of the finger.

The most common livestreaming e-commerce platform is Alibaba’s Taobao Live, a streaming section on the eBay-like C2C e-commerce marketplace, Taobao. Sellers can either host the session under their own store channel or work with a well-known influencer to do it on their Taobao channel, enabling them to target the influencer’s existing fan base.

Livestreaming has been around for years, but only over the last two years has it really taken off, given that other forms of advertising have gotten more expensive and e-commerce platforms in China have gotten more crowded.

Fashion retailers have been the main beneficiary of livestreaming e-commerce, given that many customers were reluctant to purchase apparel online. Livestreaming gives a better sense of what the product will look and feel like in real-life scenarios, and oftentimes helps customers get over the mental hurdle of making an online purchase without trying it on in person.

Which fashion players are using livestreaming to stay afloat amidst the coronavirus crisis?

Adidas used Taobao Live to launch its limited-edition Superstar sneaker line in March, drawing 2.23 million viewers and generating 200 million RMB in sales within ten hours.

Both Dior and LVMH are livestreaming the launch of their new fashion lines. Dior livestreamed their fashion show in Paris on Weibo for its Chinese fans, using celebrity brand ambassadors to help spread the word.

LVMH livestreamed the launch of its 2020 Spring/Summer line in March, on the social community platform Little Red Book. Over 6.25 million viewers tuned in to watch the hour-long broadcast.

Retailers are Using Store Employees to Create VIP WeChat Groups

Another recent phenomenon in China e-commerce is the use of private traffic. The concept of private traffic involves brands and retailers developing their own pools of user traffic, instead of spending money on advertising on social media and e-commerce platforms.

In China, retail players are encouraging store employees to create private WeChat groups for their most loyal VIP members. Such groups can be as large as 500 people, and store employees use them to notify customers of new products, discounts, promotions, and even interactive games to keep them entertained.

This trend took off last year as digital advertising became more expensive and brands sought a better way to keep in contact with their customers. Leveraging private WeChat groups is a way to better engage customers, especially in the upscale luxury and apparel categories where customers expect VIP service.

In the West it is more common to use e-mail marketing campaigns to reach customers, but this style of marketing is much less common in China, where e-mail is perceived as a slow and impersonal way of communication.

Anta Sports, one of China’s largest sportswear chains, has been using private WeChat groups to make up for the shortfall in offline retail sales. The company is incentivizing 30,000 retail store employees and distributors with sales commissions if they can sell sneakers and apparel on WeChat. Each person is given a customized WeChat Pay QR code so that the company can track sales and commissions.

Perfect Diary, China’s hottest new cosmetics brand, is also using private WeChat groups run by a virtual influencer, Abby. Different employees are given Abby avatars, through which they moderate Perfect Diary WeChat groups and dispense advice about makeup and skincare. Products can be purchased on Perfect Diary’s official WeChat mini-program store, where the company launches exclusive products that can’t be found on Tmall or JD.com.

Key Takeaways:

1. Retail players in China are turning to innovative methods such as livestreaming and private WeChat groups to boost online sales
2. Adidas, LVMH, and Dior are just some of the major brands that are using livestreaming to better engage customers and drive sales
3. Many offline retailers such as Anta Sports are encouraging store employees to use private WeChat groups to dispense information about new products and promotions. Customers can buy using WeChat Pay and store employees are typically given commissions to incentivize hard work.

By Elena Gatti, MD of Azoya Europe: https://www.azoyagroup.com