Marketing in China: Understanding the Vitality of Ecommerce - eMarketer

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Marketing in China: Understanding the Vitality of Ecommerce

September 30, 2015


Jane Lin-Baden
CEO
Isobar China Group

Digital is now the most important channel in China, the world’s biggest ecommerce market, and Jane Lin-Baden, CEO of digital marketing agency Isobar China Group, is one of the industry’s leading experts. Lin-Baden, who has an MBA from Wharton Business School and an M.A. in History of Contemporary Art from University of London, founded an internet technology agency in China in 2000 and is one of Ad Age’s 2015 Women to Watch China honorees. She spoke to eMarketer’s Lisa Barron about how ecommerce drives digital in China.

eMarketer: How important is digital marketing in China today?

Jane Lin-Baden: It’s not just important, it’s essential. It’s no longer just a communications channel, it’s a crucial business pillar. Many people outside of China don’t realize how mature the digital environment is in China and how complicated it is. Chinese consumers are highly adapted to digital and also very well adapted to ecommerce.

The internet penetration rate is very high in China, and mobile penetration is even higher than desktop. Now 80% of internet mobile users use mobile for ecommerce. Consumers are very familiar with the digital environment in China, particularly in tier 2, 3 and 4 cities, where many products may not be available through traditional channels. I would say that ecommerce is really the force behind the digital marketing environment in China.

eMarketer: Why is ecommerce developing so quickly in China?

Lin-Baden: We need to look at the fundamental economy here because China is the country that is going to see the largest urban immigration in the next five years. It is going to increase its urbanization rate from 50% to 70% in the next five years. Many people misunderstand this undercurrent.

“[E]commerce is really the force behind the digital marketing environment in China.”

It’s not about the marketing trend, it’s about urbanization. When a government has a policy of moving a country towards high urbanization, that means they are moving people and they have urbanized second- and third-tier cities, so the expectations for consumption after five years are totally different from this year. Consumers are eager to explore more products and get the products faster. They are eager to gain knowledge because they have the need. They are eager to upgrade themselves.

This underlying trend is the reason why China moves so fast and why ecommerce has become such a big topic and why ecommerce is a fundamental pillar for a digital agency. When urbanization is going on, consumers have no choice because the retail physical space is limited.

It’s very expensive for a retailer to go into so many different tiered cities because of regional policies and the real estate markets and so on, so a retailer has to introduce their brand through ecommerce. And consumers are trained to know and get everything from ecommerce—literally everything.

eMarketer: How do you help your clients design their businesses based on these digital marketing and ecommerce trends?

Lin-Baden: At Isobar we call it brand commerce. We ask our clients if they are looking at the brand or at commerce, because many of them are separating the two. Many brands still put ecommerce and mobile commerce under the sales department rather than integrating them with the marketing department, which is fundamentally not correct because if we treat commerce only as a sales channel we miss a great opportunity.

If commerce is not integrated with marketing, marketing people won’t be able to track what exactly they are doing with digital that leads to commerce. So the No. 1 thing we always discuss with clients is top-down commerce: Do they have a larger strategy to integrate both brand and commerce?

“It’s very expensive for a retailer to go into so many different tiered cities because of regional policies and the real estate markets and so on, so a retailer has to introduce their brand through ecommerce.”

The next question we ask them is what exactly is the commerce strategy? Do they use commerce only as the distributor, like a big structured store, or do they use it as a brand engagement experience with clients? These two are fundamentally different.

If you want to use commerce as a customer experience and a gateway, you need to have an omnicommerce strategy. Look at how you are going to engage with the customer, so no matter where this person goes they have a consistent experience through all the different commerce channels.

eMarketer: How important has WeChat become to this social commerce strategy?

Lin-Baden: WeChat has become a mobile commerce portal for many brands to extend their sales. I remember when WeChat came out on the market and I said at the time that WeChat is not a messenger. WeChat is an OS—an operating system.

The proposition behind WeChat is that it has always been a platform; it is not just a messenger. It is not just for one-to-one communication. It connects to a shop, it connects to third-party applications, it connects to the experience. WeChat has positioned itself very differently from WhatsApp or Facebook Messenger. It has positioned itself from day one as a mobile desktop platform for everyone. Almost everyone in China who has a smartphone has WeChat. It’s a gateway, so that’s why it’s become a phenomenon.

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