Future Tech China: How Taobao Turned Product Listings Into Entertainment
Plus: How collaborations are defining experiences in China, a new Vans collab, and could Alibaba try to acquire Farfetch?
Published three times per week, the Content Commerce Insider newsletter highlights how brands create content to drive revenue, globally. If you have received our newsletter from a friend or colleague, we hope you will subscribe as well and follow us on LinkedIn and Instagram.
The evolution of retail goes something like this:
Brick and mortar: People go to a store, they browse, they buy.
E-commerce hails the advent of search-led shopping: Because online stores process inventory differently from their offline counterparts, instead of trudging and schlepping items around a store, users can now search for items they need within virtual storefronts. But users have to seek out what they want proactively.
Discovery shopping: Online retailers gather data from user searches and their algorithms and AI becomes more advanced. Enter passive personalization.
So what is discovery shopping?
Content Feeds and Discovery Shopping
Interestingly, discovery shopping is more like brick-and-mortar browsing than search-led purchasing. Discovery shopping means that users shop without actually knowing what they want. They don't need to know what they want because the platform knows them better than themselves.
The experience for users is more like being in a physical store than traditional e-commerce. On Taobao and Tmall, users are essentially scrolling through recommendations via a content feed that combines:
Various content formats such as video, lists, articles, and more, in a double-row setup
We're all familiar with content feeds on social media, and Alibaba's is similar: a highly personalized feed with a wide range of content formats.
Initial searches often provide the user input and data that is needed for a platform to learn more about individual preferences. But what's more interesting here is how this content is shown, especially on mobile.
It looks something like this:
Content formats range from regular product listings, livestreams, store recommendations, user-generated content (mostly short videos), professionally created content, and more. The content users see depends on age, purchasing power, geographic location, purchase history, category preferences, and other factors.
The feature is called qianren qianmian (千人千面, literally “a thousand people, a thousand faces”), referring to the system's prowess in showing users (the thousand people) different fronts (the thousand faces). It automatically and effectively creates a unique and continuously optimized interface for each user. Alibaba previously shared in 2017 that there is a 20% higher conversion rate on personalized landing pages compared with non-personalized pages.
And then, of course, there is the infinite scroll. The true bottomless bowl of the digital age. All content is loaded on a single page instead of being spread across a series of pages. The psychological experiment of the "bottomless bowl" illustrated that people could be “tricked” into eating more soup when it came in an endless serving, consuming 73% more. And that's exactly what discovery shopping does to shoppers.
Consumers also love the content feed, even when they don’t intend to buy anything in particular. This is a key difference from search shopping — consumers can actively enjoy browsing recommendation content feeds as a form of entertainment. Alibaba has acknowledged this as well, noting that recommendations are a part of its efforts to motivate users to open the Taobao app, even when they aren’t looking for specific items. It works because the content is so varied, recommendations so personal and, let’s say it — scrolling Taobao is a bit addictive. Product listings and the content surrounding them are entertainment here.
If you only remember one thing, remember this: On Taobao and Tmall, brands compete within the content feed. That means you should think less of your product listing as informational and more of it as entertainment.
- by Tanya Van Gastel
Mentioned in today’s newsletter: 24S, Alibaba, Amazon, Artémis, Bytedance, Douyin, Farfetch, JD.com, LVMH, Lyst, Off-White, Pinduoduo, Richemont, Taobao, Tencent, Tmall, Vipshop.
Webinar: How Collaborations Are Defining Experiences in China
China’s Gen Z and millennial consumers seek novel products that stand out from the crowd, fueling a rapidly evolving culture of innovative “mega-collaborations” between brands.
While many brand pairings may appear extreme or even bizarre, such items are widely talked about, and their freshness and limited-time appeal can tempt young consumers to at least try new, (often affordably priced) products—which also make them attractive candidates for posting on social media, further helping to expand the reach of brands among that valuable demographic.
Register today to join the Jing Group on Tuesday, January 26 at 10 a.m. EST / 3 p.m. GMT for a live webinar exploring “How Collaborations Are Defining Experiences in China”.
During the hour-long broadcast, presented by cross-cultural agency TONG, we’ll discuss why—from a consumer standpoint—brand collaborations continue to resonate and accelerate in China, and the value for all parties involved, including brands in and out of China collaborating together.
In our discussion, you’ll learn:
The importance of collaborations for your 2021 China marketing strategies
Distinct characteristics of China-focused collaborations
How collaborations continue to be creative by driving forth creativity and innovation
How brands can build upon collaborations with experiences—both digital and physical—and content for wider reach and greater impact
Plus, ask questions and interact with Jing Group editors and guest speakers
This digital event is a continuation of Jing Group x TONG’s “Tracking the Trends for 2021” content series. All Registrants will receive a copy of our joint Jing Group x TONG white paper following the webinar’s conclusion.
CCI Take: Could Alibaba Try To Acquire Farfetch?
by Avery Booker
One of the big winners in the luxury e-commerce market in 2020 was the London-based, NYSE-listed Farfetch, which saw its fortunes turn around amid the online retail boom accelerated by the global Covid-19 pandemic. During a year when many physical stores saw their doors shuttered for extended periods, while consumers stayed glued to their smartphones and laptops, online luxury purchases rose from $39 billion in 2019 to $58 billion in 2020, with e-commerce’s share of the global luxury market nearly doubling to 23% of total sales, up from 12% the previous year.
Amid this rapid growth, Farfetch saw its market capitalization rise by a staggering 475% last year, and the company looks set to report its first-ever profit for the fourth quarter of 2020.
Following its acquisition of New Guards Group (parent company of Off-White) for $675 million in August 2019, Farfetch seemed to be in decline, with its shares falling by 40% after the purchase. But the e-commerce marketplace has steadily recovered since, and positioned itself for continued growth in the red-hot China market via a major partnership with Alibaba and Richemont announced in November 2020.
Arguably the most high-profile luxury e-commerce deal of 2020, the $1.1 billion venture between Richemont, Alibaba, Artémis, and Farfetch entails the creation of a new “Farfetch China” online marketplace and a joint $600 million investment in Farfetch by Alibaba and Richemont (amounting to a combined 25% stake in Farfetch’s Chinese operations). After announcing the deal, Alibaba rolled out plans to launch dedicated Farfetch shopping channels on its Tmall Luxury Pavilion, Luxury Soho online outlet, and cross-border marketplace Tmall Global, with Farfetch ditching its existing presence on rival JD.com. For Richemont, in addition to ensuring that the French luxury group can better tap the crucial China market, the deal was seen as a way to compete globally (and digitally) with rival LVMH, which launched its own wholesale e-commerce platform, 24S, in 2017 and invested in Lyst the following year.
But perhaps most interesting are the global implications that a closer tie-up between Farfetch and Alibaba in China could have down the line. While Farfetch clearly wants access to the ever-growing Chinese luxury e-commerce market – which Alibaba has been able to increasingly dominate in recent years via the Tmall Luxury Pavilion — it is also possible that Alibaba could see the collaboration as the first step in a longer-term process of acquiring a majority stake in Farfetch and expanding Alibaba’s global footprint, becoming, in the process, a true worldwide competitor to Amazon, which has its own luxury ambitions.
Brand Collab Pick: Vans x Suwukou
Working with artists has become a tried-and-tested strategy for brands seeking to up their cultural cachet with China’s increasingly sophisticated consumers, and the skating and streetwear brand Vans continues to focus on appealing to the creative classes in its latest collaboration for the Lunar New Year.
Vans partnered with Chinese designer Suwukou, inviting a group of artists, musicians, skaters, and other creatives to participate in designing a collection for the upcoming Year of the Ox. The Vans x They Are series aims to highlight the “bullheaded” spirit of individualism among its creators through their takes on classic footwear and apparel, including monochromatic suede sneakers, plus sweaters and jackets with graphics designed by Chinese artists Gaga (Peng Lei) and Chen Tianzhuo, streetwear brand C2H4 founder Chen Yixi, and skater Xiang Xiaojun.
News From China: Corporate Scrutiny on the Rise in 2021
Increasing scrutiny of China’s tech giants for antitrust and unfair competition is at the top of Beijing’s regulatory agenda for 2021, and while Alibaba has been the initial target of investigation for allegedly abusing its dominant market position on the e-commerce front, its rivals are not expected to escape unscathed. Last weekend, the State Administration of Market Regulation, the Central Political and Legal Affairs Commission (the Communist Party’s top judicial and law enforcement body), and a meeting of national court heads all sent separate but unified signals about the importance of curbing monopolistic business practices and other abuses within the tech industry.
In addition to new draft anti-monopoly guidelines, the cancellation of Alibaba fintech affiliate Ant Group’s mega-IPO and the announcement of an antitrust investigation into Alibaba, actions against other players have been in the news recently:
Alibaba’s Tmall, JD.com, and Vipshop were each fined RMB 500,000 ($77,000) for pricing irregularities during the 2020 Singles’ Day shopping festival.
Alibaba, Tencent’s China Literature subsidiary, and Shenzhen Hive Box Technology were also fined RMB 500,000 ($77,000) for failing to report previous acquisitions to regulators, in violation of China’s existing Anti-Monopoly Law.
Bytedance’s Douyin was reportedly fined a relatively small amount (in the tens of thousands of RMB) for allowing “obscene, pornographic, and vulgar” content on the video platform, though the fine apparently reflected the maximum allowed under law, and the was followed by a harshly worded editorial from the official Xinhua News Agency that warned: “Douyin is not the first to be punished and it will not be the last. All internet platforms will be treated equally by regulators regardless of their size.”
While social e-commerce platform Pinduoduo has been touted as a potential beneficiary of any official action against Alibaba, it has been plagued by a growing PR crisis over its labor practices and culture of overwork over the past two weeks: A 22-year-old employee dropped dead on December 29 after working well after midnight, another worker committed suicide, and a third was fired after sharing video of a colleague being taken away by an ambulance and making critical comments about the company.
Regulators are also striking at the “closed loop” ecosystems of China’s major tech firms by pushing for Ant Group, Tencent and JD.com, among others, to share their valuable consumer credit data, ostensibly to prevent excess borrowing and fraud, but it would also have the effect of curbing their power.
Will China’s big tech brands be forced to “fundamentally rethink” how they operate? Beijing has been quick to rein in high-flying conglomerates in the past, essentially crippling them or taking them over, but today’s internet leaders are so intertwined with the consumer economy (and its necessary but tenuous recovery) that an overly-heavy hand could backfire.
News in English
Nasdaq-listed luxury e-commerce platform Secoo has received a take-private offer from founder and CEO Li Rixue and may be next in the exodus of Chinese firms from U.S. exchanges. Caixin
Meanwhile, three more U.S.-listed companies — Tencent Music, online retailer Vipshop, and livestream operator Joyy — are all reportedly seeking secondary listings in Hong Kong as a fallback option to the threat of delisting by U.S. regulators. Nikkei Asia
In another abrupt reversal for the Trump administration, plans to add tech giants Alibaba, Tencent, and Baidu to an American investment ban were shelved, reportedly due to pushback from the U.S. Treasury Secretary. Reuters
Ten key trends for Chinese e-commerce in the year ahead, including the continued importance of livestreaming and short video platforms. Coresight Research
One month before the Lunar New Year holiday, more areas of China are being locked down due to rising Covid-19 numbers. CNBC
Pay to stay: The coronavirus threat is prompting some local authorities to offer cash and other incentives to keep people from traveling during the upcoming holiday period. Sixth Tone
More than half of Chinese consumers reported purchasing at least one smart device since the coronavirus pandemic started in early 2020. China Internet Watch
From Barbie dolls to luxury timepieces, how brands are celebrating the Year of the Ox with themed product drops. Radii
South Korean audiences are voicing complaints over product placements from Chinese brands such as JD.com on local dramas, as well as the perceived cultural appropriation of kimchi by top lifestyle vlogger Li Ziqi. Global Times
A pair of case studies highlighting how brands can work with Chinese influencers to create compelling video content for young audiences on Bilibili. China Marketing Insights
A Pinduoduo employee’s suicide is adding to the scrutiny of the social e-commerce giant’s labor practices. KrAsia
Bubble tea is more than just a beverage in China — it’s become a trendy lifestyle concept that holds powerful appeal for brands across a range of consumer categories. Dao Insights
A guide to brand store setup and ownership on popular social platforms Douyin and Xiaohongshu. Parklu
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