“In China, they get to monetization much faster than the west. You need to get your hands dirty, as retail is always one click away.”
This is what exactly holding most of the western companies back, Charlwin Mao talked in an interview with American magazine Wired, who is the co-founder of Xiaohongshu.
He told Wired, “If the best way to deliver experience is to have direct sourcing, do that. If you have to work with government, do that, we built a government relations team with 20 employees. These are things western companies tend to stay away from. In China, to build a successful business you don’t have a choice.”
Created in 2014, Xiaohongshu, also known as Little Red Book. In Chinese, “Red” has varied positive meanings, such as hot, popular and the best. Expectedly, Xiaohongshu has become the fastest-growing and successful social commerce platform.
Leading social networking apps in the Apple App Store worldwide in March 2019, by number of downloads (in millions)
After 5 years of development, Xiaohongshu is not only changing the way that Chinese Millenniums buying products both in-board and cross-board but also influencing their lifestyle as a further consequence.
By late 2018, Xiaohongshu had attracted 100 million users and a monthly 30 million active users, and crucially, 80-90% of these users are middle or upper-class women in first-tier cities like Beijing, Shanghai, Guangzhou, Shenzhen with good education background and a respectable income. Which largely distinguish itself from other popular social and e-commerce Apps like Douyin(TikTok) and Pinduoduo, which are more aimed at Millenniums from 4th or 5th tier cities in rural China.
As a social commerce App, obviously, social content and brand e-shops are the two main components of Xiaohongshu. Whereas, there is something makes the contents of Xiaohongshu different from other social media platforms and E-commerce websites, which is “Biji”, this is not just a dispensable name for its contents, “Biji” means “Notes”, it stands for something more professional, authentic and genuine than other social contents. In this condition, users who write a Biji must be more responsible and follow certain rules, since the content regulations of Xiaohongshu are really strict, it doesn’t allow anonymous contents, reviews, and one-click ratings, it has a specific attitude and measures towards fake engagement and fake account, for example, if you buy fake followers, likes or comments, your relevant Biji will be deleted and your account may be suspended.
With its strong focus on content integrity, Xiaohongshu Biji has made it clearer for users to know whether they’re viewing trusted user-generated content or a word of mouth advertising or a paid Biji ad (KOLs must register any paid promotional links with brands).
For a new user, you can select some interests, such as fashion, beauty, luxury, travel, etc. at your first login in, then these relevant Biji will be pushed on your homepage, you can scroll down to view more or use the search box to explore more precise Biji, or follow the accounts you’re interested in, or view Biji based on your geo-location by click “Nearby” button, all these functions are similar to any other social media platforms. In fact, users have described Xiaohongshu as a product search engine, or “like Instagram and Pinterest sprinkled with a dose of Taobao”.
Due to this unique UGC(User-Generated Content) strategy and its incredible demographic user distribution, Xiaohongshu is definitely an ideal platform for global fashion, high-end cosmetics, niche beauty brands, etc.
That’s why Charlwin Mao mentioned, “We don’t ask ourselves if we’re a social or a commerce company. We ask, ‘What does the customer want?’, If the customer wants it, you do it.”
The social side and commerce side of Xiaohongshu flow seamlessly from each other, on the one side, users can insert product links into their Biji when the brand has an official flagship store on Xiaohongshu Store, on the other side, under the product page, there is Biji from other Xiaohongshu users. No external links are permitted, which allows the platform to keep users and provides brands with an effective internal conversion between the social contents and product pages.
For any interested brands outside China, Xiaohongshu provides perfect logistic service from 60 days free warehouse in Hongkong, Europe, the U.S., Australia, etc. to the last mile delivery in mainland China. So that foreign company just need to provide their foreign company registry, and foreign bank account, then they can do cross-board commerce and open their market in China. Chinese customers will pay by like Alipay or WeChat Payment, but Xiaohongshu will convert it into U.S. dollar for the company. To do this, the 10-15% commission will be charged, and no fixed fee charged.
In my point of view, if you’re a small-medium niche foreign brand, especially cosmetic, beauty or fashion brands, Xiaohongshu is definitely a good social commerce platform for you to start your first step in the Chinese market. First of all, you can start your pre-launching contents-Biji via working with regular accounts for quantity and KOL accounts for quality to make some noises. Secondly, register your own official account to collect relevant contents on your board.
Consequently, open your official flagship store on Xiaohongshu Store to smooth the way for your potential customers. After increasing the selling, you will have more Biji to attract more users, so that you will have more customers and sales, with this, a positive circle will be created.
The fragrance market represented 40 billion dollars in sales in 2017. The trend is appearing positive as 49 billion euros in sales are predicted in 2022 (Global – Fragrances, 2018. Fragrances Industry Profile: Global N.PAG-N.PAG). In order to answer this growing demand, fragrance brands need to be up to date with the latest marketing techniques. Making digital their best friend has been one common characteristic of fragrance brands in the last few years.
However, digital still represents a serious challenge in the always-wanted increase of sales. Indeed, it remains one of the last product type for which getting the people to smell your product is essential to their conversion.
In 41% of the cases, “when looking to buy a new fragrance, millennials are influenced the most by the scent” (Teads Millennials Fragrance Study (Q4 2016)).
If they don’t know the smell, they won’t buy it. Even though the younger target is willing to buy fragrance without smelling, it remains a small percentage of the overall consumers (30%).
The trend is changing…
In-store sales still represent 90% of sales in the beauty-care sector. However, the percentage of online sales has doubled since 2008 to achieve 9.7% in 2018. (Xerfi report – The Global Perfumes and Cosmetics Industry: the Market – May 2018 – 4,8% à 9,7%).
This statement makes us wonder the following.
What tools can brands use to increase their online conversion? How can digital become the first conversion channel in the fragrance industry?
“Brands are shifting a growing share of their advertising and promotion budgets towards digital channels to better reach their customers – particularly a younger generation of digital-savvy, more connected millenials – and also to enhance their relationships with customers via two-way web interaction and data collection, advanced behavioural segmentation and personalised promotional campaigns.” (Xerfi report – The Global Perfumes and Cosmetics Industry: the Market – May 2018).
A fragrance sample is a small quantity of a product aiming to make people discover the scent. There are multiple ways for brands to incite customers to buy online using samples:
- The “Try and buy” strategy. Inserting a sample of the same fragrance the client is buying. This is a very efficient way to counter the barrier to the purchase of perfumes online. The customer will less be afraid of being disappointed. Indeed, they will be able to send the fragrance back if they do not like it.
- Cross-selling sampling. Offering a sample of another fragrance than the one the customer has bought allows brands to promote their portfolio. This is a very efficient to make customers discover other scents that they already know. It will likely incite them to buy the newly discovered perfume next time.
- Exchange consumer data for a sample. On a dedicated platform, the user will enter their contact details. In exchange, they will receive a sample of their choice. This allows brands to combine the collection of data and the fragrance discovery online. This is a win-win solution as customers receive this sample for free and brands increase their database.
2. A very thought-through online redirection strategy
Social media has become key for fragrance brands in their digital marketing strategy. It is essential at every step of the customer journey. When they create marketing assets, brands need to define clearly the objective behind each one. This will allow them to redirect the consumer to the best platform. The different redirections can be:
- The brand’s social media platforms (if the asset is posted by an influencer for example)
- The brand’s website
- Online retailers’ website
Not all the redirection links will be relevant for a certain type of asset.
Having a thought-through online redirection strategy will make the consumer very inclined to click on the “Buy” call-to-action when he sees one. This is very important in order to bring the customer through the buying process smoothly.
Once the customer has made it to the “conversion” part of the funnel, it is important for the brand to use the right type of asset. Interactive and shoppable ads are a good example. “The Millennial Fragrance Shopper” study highlights that “35% of respondents said “I like watching ads that allow me to shop for the advertiser product”.
To know more about the two other strategies, go and read this article.
E-commerce players always want to find THE solution that will improve considerably their sales performances. Many strategies are currently used online, but have you ever tried to launch a cross-selling strategy?
In this article, you will find the main key points to be aware of how it works and how to implement it. Pure players always want to improve their online sales to reach more market share and take over the competition. For that, they try to implement cross selling into their main strategy. But what is concretely cross-selling?
The cross-selling can be defined as “a strategy that suggest complementary items which will fit with the one you just bought during your purchase. This king of process tends to improve your revenue thanks to an increase of your client’s average basket.” So, you will understand that cross selling is obviously about increasing your sales performances through an item that provide an added value to the product you just purchased.
Moreover, you may know that cross selling can be use through different way but will always be associated to e-marketing and e-merchandising. Indeed, e-marketing tools will analyze your purchased habits and will be able to suggest you relevant items which fit with your product. And e-merchandising will help the company to match those complementary products in the order pipe during your purchase. It is also possible to suggest added value product to your client by e-mail thanks to retargeting methods.
For example, you are French, and you want to go to Brussels for the week-end. You book the hotel you want, and the website will suggest you to rent a car as well, to make your trip more convenient. As a buyer, you will be sensitive to this kind of offer because you don’t want to be dependent to train schedules or even train rates that can be very expensive.
Other solutions can be implemented and correlated to cross-selling. Indeed, pure players tend to promote cross selling to bring added value to their product but some of them try up-selling and down-selling strategy.
Up-selling is usually used in e-commerce to not only bring added value, but also to suggest an alternative product that is more expensive but with a higher quality. We can take the example of flight ticket, the client buys a second-class ticket, but the company will tell him during his purchase, “if you had only 80 euros more you will be upgrade to First class”. Companies do that to improve their margin and sell product/service they didn’t sell yet, knowing that the flight is quite soon.
On the contrary, the down-selling is to suggest a product with a lower price to your client. Ian Brodie coach and consultant in marketing and sales talks about down-selling: “The advantage of a downsell is that even if a customer doesn’t buy the product you’d ideally like them to buy, they are at least buying something. That means you get some return for your sales effort. And since they’re now a customer they will hopefully have a good experience with you and be much more likely to buy higher priced items in the future.”
This solution is less used because of its low-income generation but still relevant to attract customers. To illustrate my words, you can find a simple explication about down-selling; cross-selling and up-selling strategy.Now that you are holding the aces of e-commerce cross selling strategy, you need to know how to launch it.
Targeting will be the key of your project. In fact, all your strategy will be successful if you can target your client at the right time. For that, your marketing segmentation must be flawless and your capability to use new techs like machine learning will considerably help you in your process.
Finally, to stack all the odds in your favor, some tools are available on e-commerce hosts website as Shopify that help you to create your shop online. The interface allows you to add some features “plugins” to implement cross-selling. There are also, Boxia, OASIS E-commerce and Powerboutique that help you to set up your automation marketing strategy to increase your online sales performances with a CRM integrated.
Who said the luxury market could live without taking the digital transition? Who? Phoebe Philo. Céline’s previous creative director has been quoted a few years ago as having said “I’d rather walk down the street naked than join Facebook”. She might think the future will tell. And time proved her wrong! Céline has digitally integrated itself in many ways: an e-commerce platform, social media strategy, a website improving the overall online customer experience, as well as content strategy, among other things (digitization not being limited only to an online shopping platform). The various methods paved the way for the brand to achieved a fully digitized marketing strategy.
Céline was one of the last luxury companies to make the digital transition; a necessary step due to the onset of new luxury sociology. Aside from some remarkable exceptions, luxury brands remain sluggish in establishing an online presence.
Are they fearful of losing their untouchable status? Are they hoping to preserve their exclusiveness? After having lost many opportunities, brands seek to conquer the proverbial “goose that lays golden eggs,” A.K.A., “Millennials.”
For decades, the two realms of luxury goods and digital technology have progressed without ever overlapping each other. Nonetheless, the digital revolution has been ongoing. Now all market sectors, including luxury goods, are influenced by new technologies which in turn enable new products and services. In 10 years, the internet transformed the marketing and commercial landscape to such an extent that the relationship between a company and its prospects/clients has drastically changed. The digital revolution merged accessibility with transparency and conveyed an ideal of the mass market. Digital technology is about “anywhere, any time, on any device”.
”Luxury is a necessity that begins where necessity ends” said Coco Chanel.
The luxury market in essence evokes symbolism, creates inspiration and stimulates desire. Iconic, timeless pieces, rarity, preserving exclusivity and an air of mystery—this is how the luxury market could be defined. Luxury goods and e-commerce have continued to expand the market. Indeed, according to Deloitte, the sales of luxury goods in 2017 grossed US$212 billion.
In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.88 trillion US dollars in 2021. With 8,5% of luxury sales done online, market growth is on the horizon. 2022 is anticipated to a 6% growth for the luxury market and 18% for the e-commerce market: the latter metric is the newest challenge facing the industry.
78% of sales that were influenced by the internet along with new fully digital retailers—Baume, Net-a-porter, HudaBeauty—have given a boost to this timeless sector. The desire is now for brands to preserve their ability to inspire and trigger the “impulse buy” reflex by enhancing psychological attractiveness.
The Emotion Appeal of Luxury
Why do people buy luxury products? Studies have shown that our decisions are driven by the emotions associated with our judgment. Purchase behavior is the outcome of how a consumer perceives the emotional benefit delivered by a brand through its products while buying them. Luxury brands understand this challenge and use myriad ways of manipulating this psychological appeal in order to drive people to buy their products through this emotional phenomenon.
According to a study conducted by Bain, by 2025, Millennials will represent 45% of the global luxury goods market. Millennials want a new shopping experience: one more personal and tailor-maid. To reach this new clientele, brand are implementing new strategies.
How to become more attractive?
Luxury brands had to think twice about their strategies in response to their new target, the Millennials. They knew that they had to generate key emotions in order to hit the target. What is better than storytelling? Storytelling allows them to enter a world, to take part in a brand’s creations and to escape their life. Storytelling speaks to young people and all of the strategies implemented regarding the branding, such as inbound marketing, have shown really high return on investment. More strategies were developed since—for example—new jobs like “online promoters”emerged thanks to social media visibility.
Companies changed their schemes in order to implement digital marketing: traditional 4p was scrapped and made room for 4E: Evangelism, Experience, Everywhere, Exchange.
All these strategies required more investment from companies, and now, investments in digital marketing are superior in those in traditional marketing.
“Consumer-centric,”“consumer insight”— I am sure that you have heard these words before. Even today, experience is paramount and companies are trying earnestly to put the client at the heart of their strategies. To implement the online/offline or “drive to store” concept they use a huge asset: data. Turning data into consumer insights is one of the keys to taking advantage of this digital transformation. Data enables the creation of a consistent relationship between the client and the brand. At any time and on any device (or even in store) the brand can access a client’s preferences and past purchases in order to better assist the client.
Between digital and luxury brands it is only the beginning of a long story.
This relationship will improve in the future due to the ever-increasing demand from millennials.