June 29, 2011
NEW YORK – LVMH’s Benefit Cosmetics recently launched an ecommerce site in China, whose trial-and-error approach depicts the main worries and tips that most brands should take into consideration when trying to reach that kind of audience.
The reason to get into China is self-explanatory: By 2014, approximately 42 percent of all online users will be in China and ecommerce sales in the country will surpass $150 billion. But to completely reap the benefits of this viable market, luxury marketers should take a few things into consideration.
“Ecommerce sites live and die by their product pages,” said Marc Gallagher, consulting director for digital and commerce at Benefit Cosmetics, San Francisco. “China is a growing space and is well worth watching.”
Here are some best practice tips from Mr. Gallagher:
1. Know your legal status: Most luxury companies do not realize that ICP licenses are not easy to come by.
"Even though other LVMH brands have acquired ICP's, it was still a struggle for Benefit to receive one," Mr. Gallagher said. "Benefit is actually in a joint venture with a company in China to legally sell its products to consumers."
There are also differences between brand sites versus transaction sites, as are differences in hosting in China and hosting in Hong Kong.
Chinese consumers are also different from U.S. consumers. For instance, there is a COD policy in China that allows customers to return the product after it has already been shipped to their houses.
2. Do not dumb down design or content: Affluent Chinese consumers find that a Western-style site is luxurious.
Although brands should tweak their design for the Chinese consumer, keeping a basic design is a brand’s best bet.
“Our LVMH sister brand Dior has a Flash-based site that takes a long time to load in China, which is why Benefit decided against it,” Mr. Gallagher said.
3. Architect your platform carefully: The global platform offers a single point of product data and content.
It is important to monitor order management, payment gateway, warehouse management and customer care, which must be localized.
“The payment gateway must be done by a local vendor or it just won’t work,” Mr. Gallagher said.
4. Go local or go home: Localizing the marketing strategy is a must.
“Local vendors are a must,” Mr. Gallagher said. “Business is dictated to relationships.
“Unless you deal locally, you will be shut out,” he said.
In fact, Benefit Cosmetics used seven local agencies plus three based in the U.S. to launch.
5. “Yes” may mean “Huh?”: Brands looking to create an ecommerce site in China cannot underestimate cultural differences and language barriers.
Marketers should repeat themselves, and make sure that their colleagues in China understand exactly what they mean.
“You cannot discount cultural differences,” Mr. Gallagher said.
6. IE6 is not going away: Despite what is going around, the old browser still dominates.
In fact, more than 60 percent of the target market uses Internet Explorer 6, per Mr. Gallagher.
Benefit plans to run a promotion to get users into IE8 in the near future.
7. All networks are not created equal: Network speeds in China depend on carriers, location, building infrastructure and time of day, per Mr. Gallagher.
Therefore, brands should expect wild swings in performance times.
“Global content delivery networks [CDN’s] require a partnership with one or two CDNs in China,” Mr. Gallagher said.
Luxury brands need to acknowledge and understand caching rules in different countries.
For instance, Benefit Cosmetics mistakingly found other consumers’ cards and products on the site.
8. Take to the streets: Go beyond traditional marketing to get the word out.
Benefit Cosmetics tried email campaigns, taxi cab placements, blogs and in-store promotions.
China is a huge blogging culture and consumers do not trust brand-driven reviews, relying rather on influencers.
Brands should also not rely on SEO, SEM and reviews, as their customers surely do not.
“Some competitors go on other branded sites and post false reviews,” Mr. Gallagher said. “Therefore, no one pays attention to reviews on branded sites.”
9. China is the land of the deal-seeker: The Chinese consumer is the most savvy bargain hunter.
“Give something that consumers cannot get anywhere else,” Mr. Gallagher said.
This includes promotions, gifts with purchase and deluxe samples.
10. Visit early, visit often: Nothing can replace in-person meetings to cultivate relationships.
Team members stationed in China should spend as much time as possible with Chinese colleagues.
“Testing is critical to be collocated with local teams,” Mr. Gallagher said. “Also, Skype is very important.”
Rachel Lamb, editorial assistant on Luxury Daily, New York