(Source: Inside Retail Asia | June 20, 2017)
Luxury brands in China are investing heavily into e-commerce channels.
More than 90 percent of them now have an account on the messaging app WeChat, double the number back in 2014. This puts WeChat on par with Weibo, a popular Chinese microblogging site, on which about 94 percent of luxury brands have an account.
WeChat and the WeChat Store allow brands to stage creative and engaging marketing campaigns to reach customers in China. Setting up shops and multimedia marketing on the app has become simpler, as Tencent – WeChat’s developer – courts luxury brands in its competition with Chinese e-commerce giant Alibaba. For the most part, the move has been successful with more luxury brands experimenting with the app.
WeChat is one of the most widely used apps in China. While those outside of the mainland may use different apps for messaging, reading news, catching up on social media, ordering food, buying tickets, making appointments and more, those in China can do everything on WeChat, meaning a user never has to leave the app.
Called Weixin in Chinese, the app had 768 million daily logged-in users by September 2016, and a year-on-year growth of 35 percent. In the first quarter of 2017, monthly active users reached 938 million.
The app also allows users to send money linked to bank accounts through WeChat money transfers, or through “red packets”, which depict the red envelopes that are traditionally gifted on special occasions. In 2016, the average user sent over 70 messages per day and 28 “red packets” per month, spending RMB 580 per month.
Another feature of WeChat, and the main attraction for luxury brands, is the WeChat store – a digital store connected to the company’s official WeChat account. All WeChat users can access the website and can pay for the store’s products through WeChat Pay. WeChat stores can be created independently, or through third party e-commerce platforms, a process that is quicker and cheaper than Alibaba’s B2C e-commerce platform Taobao.
It is through these WeChat stores that many luxury brands are now targeting their customers, and it is easy to see why. By opening a WeChat store, companies can receive orders in real time, spread sales promotions through coupons and WeChat group buying, access analytics to track growth, and customize the page to fit brand image.