The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
SHANGHAI, China — Coronavirus may be keeping shoppers indoors and hitting retail companies' balance sheets, but business is booming for Chinese tech firm Tencent.
Last week, the company’s earnings report revealed that the outbreak spurred a surge in the usage of its app WeChat, which went from WhatsApp clone to ‘super-app’ in less than a decade by growing its ecosystem to encompass everything from ride-hailing to luxury e-commerce. According to tech researcher Sensor Tower, downloads of all Tencent apps grew 32.3 percent month-on-month in February and 42.9 percent year-on-year. When the firm’s annual results were released last week, it said it did not foresee the pandemic having a significant impact on its bottom line.
Moreover, users have never been more engaged with the app’s fashion and beauty content. According to a spokesperson, WeChat saw a 159 percent boost in transaction volume for fashion mini programmes (brand-powered app-in-apps embedded within its interface) between January and February, when China’s outbreak was at its peak.
Users have never been more engaged with the app's fashion and beauty content.
This boost has come at a critical time for the platform — which despite its pool of 1.16 billion monthly active users (as of December 2019) has in recent years ceded screen time to tech upstarts like Bytedance-owned Douyin — and reasserted its dominance in China’s cut-throat tech landscape. And as the mainland cautiously eases back to business, staying abreast of online trends and making the most of shrinking marketing budgets is critical. Here’s what brands need to consider in the post-pandemic era.
Content Isn’t Always King
Brands need to start approaching WeChat differently, said Pablo Mauron, Shanghai-based managing director of Digital Luxury Group, which manages brand clients' WeChat strategies and content.
Even as a social media platform, WeChat differs from other go-tos like Weibo and Xiaohongshu: open ecosystems akin to Instagram that encourage users to share posts and are structured so that content can go viral. WeChat is a predominantly closed ecosystem — content can be shared, but it’s hard for brands to spread awareness by word of mouth alone.
“Producing content alone is not going to be enough to make an impact,” said Mauron. “The latest fashion show, no matter how viral it was, doesn’t go viral on WeChat.” While producing top-notch content is important, it is crucial that brands invest in advertising and influencer marketing to ensure the content gets seen, while making the most of WeChat’s extensive data capabilities to target the right users.
Producing content alone is not going to be enough to make an impact.
Lauren Hallanan, the head of marketing at WeChat management platform Chatly, recommends that brands embrace the WeChat's option to create a service account — as opposed to a subscription (media) account — which will include various interface options and add-on features like WeChat Pay, better equipping brands to direct users to information about offline store locations or connect them to loyalty programmes. Sephora, for one, has had success with its mini programme, which encompasses an online store, member hub and service centre, through which shoppers can discover beauty trends and log loyalty points.
She notes that third party social customer relationship management (CRM) firms like 31Ten, WalktheChat and Chatly can also plug into brands’ service accounts to help develop their WeChat presence, whether by segmentation, user targeting, or other functions that may not be available directly through WeChat’s backend without customisation. These are all ways that brands can better service users rather than simply broadcast content to them. “The goal is to be a service centre, as opposed to a media outlet,” said Hallanan.
Think Long Term
Building and maintaining a fruitful presence on WeChat isn’t cheap, and because of the platform’s highly customisable nature, it’s hard to pin down an average or minimum running cost.
But what will benefit companies across the board is a longer-term financial mindset. “Budgets are set for many ongoing campaign activities, but you’re not going to develop great products on WeChat with a monthly retainer,” said Mauron, referring to brands' budgets allocated to agencies for ongoing social media content production. He recommends brands frame WeChat as capital expenditure (CapEx rather than operational, or OpEx), expecting that the investment will be amortised over time, and supplement with additional one-off investments like the platform's add-ons to truly enhance their WeChat offering.
This ties in with a wider shift: rather than using WeChat to expand a brand’s reach for instant gratification, marketers need to focus on going deeper on the users who really matter and will keep coming back. “Unfortunately, there are still so many brands that are focused on follower growth and less focused on retention, conversion, repeat customers and increasing engagement rates,” said Chatly’s Hallanan. “[Brands are] still in a media mindset as opposed to an engagement mindset.”
[Brands are] still in a media mindset as opposed to an engagement mindset.
One option for brands is to pivot to a customer-centric strategy. Lessons can be drawn from brands outside the fashion fold like Dyson, which sought to streamline its e-commerce experience within the brand’s WeChat mini program. According to a WeChat spokesperson, the platform’s data revealed that the bulk of the appliance brand’s users added items to their baskets but didn’t follow through with a purchase.
Dyson decided to channel the data into adopting a more user-friendly approach that highlighted payment security and customer service. According to WeChat, the brand saw triple the number of daily active users following the move in November and a 52 percent decrease in bounce rate over the same period.
Embrace One to One Purchasing
Pre-coronavirus, it was common for customers with a certain profile to have private WeChat conversations with staff in luxury stores to set aside items or find out what style was in stock. But the pandemic made this a much more widespread phenomenon as online shopping became the only option for most consumers.
In many ways, WeChat is working to facilitate more direct communication between brands and shoppers. One is WeChat Groups, through which brands can funnel users into different sets and engage with them accordingly — a particularly useful function given that the app only allows service accounts to send out a limited number of content bundles to users. “If you run a WeChat group you can send messages to users multiple times a day,” said Hallanan, adding that brands can add staff (via WeChat Work, below) and chat bot groups as well to answer questions. “Some companies have different groups depending on the consumer segment or location.”
WeChat Work is a hub through which shop staff can message consumers as they would on their personal profile, but within a company’s larger account. “It gives the company a lot more ownership over these conversations... that’s been growing a lot over this period [of the outbreak] as well.”
The new service is already paying off — in the company’s earnings report it noted an uptick in its user and traffic figures. “Clienteling [via WeChat Work] will become mainstream,” DLG’s Mauron predicted. “Brands will be able to better equip employees with guidelines and media libraries, soon they’ll be integrating WeChat as part of the sales training process.”
Prada's WeChat Channel | Source: Courtesy
Look Ahead to Moving Content
Like consumption, events have also been shifted online due to Covid-19. “Now it’s even more than digitising offline events,” said DLG’s Mauron. “It’s about replacing offline events with online ones.”
More recently, WeChat began testing channels: feeds which will house video and other content from brands and influencers to challenge viral apps like Bytedance-owned Douyin and Kuaishou in the mainland’s lucrative short video space. “[Channels] are actually one of the more open features on WeChat,” said Hallanan — users will be able to discover and follow other users from the channel interface, and brands can repurpose content from other platforms to share on their channels.
The first luxury brand to experiment with WeChat Channels was Louis Vuitton, which published its first short video on March 7. The content quickly received over 100,000 views, and brands like Dior and De Beers followed suit. On March 23, Prada launched its channel with videos of its Spring/Summer 2020 advertising campaign.
"Emerging platforms such as Tencent Channel support us to present the campaign creativity in short video format and reach a more diverse audience," said Lorenzo Bertelli, Prada's head of marketing and communication. Miu Miu's channel launch will be happening in April.
While WeChat was relatively new to enter China’s vast livestream landscape (it launched its mini programme live streaming feature in early March), it has the benefit of allowing brands to integrate video content with existing mini programmes and other elements of the user experience within the app. Mauron predicted that Alibaba-owned Taobao’s success with livestreaming has opened the door for competitor WeChat to add e-commerce functionality to its platform, which will be a valuable opportunity for brands.
“That [feature] was used a lot during the virus period,” said Hallanan. “After things go back to normal I think we’ll still see a lot of growth with it.”
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FASHION & BEAUTY
Ms Min's Spring/Summer 2020 collection | Source: Courtesy
Ms Min: Keeping Calm Amid Disruption
Ms Min — the decade-old womenswear brand launched by London College of Fashion graduate Min Liu — is one of the brands taking part in Shanghai Fashion Week's "Cloud Fashion Week" event hosted with Alibaba-owned e-commerce platform Tmall following the mainland's coronavirus outbreak. Though this season's digital shift (whereby brands will showcase collections via online video presentations and livestreaming sessions) will be anxiety-inducing for many independent designers, Liu isn't one of them. She has used livestreams to engage with customers on her Tmall store and the designer is determined to align the digital experience with her brand's understated, luxurious aesthetic. Livestreams have become a widely commercialised marketing tool across the mainland, but Liu doesn't see the opportunity as something much broader. "Consumers buying the pieces, though a good thing, is not the goal. Commercial aspects are simply [one] potential result," she told BoF China. (Shumin Lai for BoF China)
Former Chinese Media Powerhouse to Launch Consultancy Firm
Su Mang, the former president and chief executive of Trends Media Group and editor-in-chief of Harper's Bazaar China, is back. Su resigned from her post in 2018 and cited personal reasons for her departure, but media insiders close to the situation said that she was compelled by the group to resign. According to Jiemian, she established a consultancy firm under her name on March 13, and time will tell whether the move will see her re-enter the Chinese fashion industry, which she had a staggering influence over during her 24-year tenure at Trends. Or whether her comeback might be in an adjacent industry. (Jiemian.com)
TECH & INNOVATION
Screenshots of videos on Douyin | Collage by BoF
How Short Videos Changed China’s Advertising Landscape
While other digital platforms saw 18 percent average annual growth in online advertising revenue last year, short-video platforms reportedly saw advertising revenues soar 43 percent during the same period. As such, advertisers have adopted the medium for promotional campaigns from reviews to ad campaigns in order to cater to audiences' shortening attention spans. Moreover, short videos and e-commerce platforms like Taobao, Tmall and JD.com have become increasingly intertwined, and over 42 percent of product pages on Taobao already include video content. (Tech in Asia)
Cloud Computing Takes Hold Over Chinese Tech Market
According to research firm Canalys, China's cloud infrastructure market grew 66.9 percent to $3.3 billion in the last quarter of 2019. China's is the second largest cloud infrastructure market in the world after the US, with major players like Alibaba claiming 46 percent of the local market share. Next up is Tencent and Baidu, with 18 percent and 8.8 percent market shares respectively. Though the figures predate the country's coronavirus outbreak in January, experts anticipate that the sector will continue to grow as businesses reassess their infrastructure and digitise operations to protect against future risk. (TechCrunch)
CONSUMER & RETAIL
Modern Weekly's September 2017 Cover Story photographed by Jumbo Tsui | Source: Jumbo Tsui
Modern Media Sticks Landing on Digital Pivot
Modern Media — the owner of esteemed fashion and lifestyle publication Modern Weekly — turned a profit last year despite facing a challenging media landscape and macroeconomic headwinds. According to the group's latest annual report, the period saw revenues from its digital business surge 19.5 percent to 184.7 million yuan (around $26.1 million), while revenues from its multimedia arm increased 344.4 percent year-on-year. The group's stock price climbed by over 30 percent in early trading on March 24 after announcing the results on Monday. The company attributed the success of its turnaround to an increased emphasis on building digital platforms, and pointed to the contribution of video media brand Nowness for digital revenue growth in particular. When asked about how the industry will fare post-pandemic, group Founder and Chairman Shao Zhong expressed his confidence in China's economic resilience and appetite for consumption. (Fashion Now)
JD.com Announces Share Buyback Ahead of Rumoured Second Listing
The Chinese e-commerce giant announced a $2 billion stock buyback plan last week, prompting its shares to surge almost 9 percent on March 17. The company hasn't been immune to the global economic fallout following China's coronavirus outbreak and saw its shares fall 11 percent in recent months, but has remained relatively resilient in maintaining the operations of its retail business and reported strong growth for the fourth quarter in early March, boosting shares up 12 percent on the day. Meanwhile, the company is rumoured to be planning a second listing in Hong Kong as early as mid-2020, which would see it join rival firm Alibaba on the Hong Kong Stock Exchange after the latter's blockbuster $13 billion listing last year. While a successful listing could be a harbinger for a strong Chinese recovery post-coronavirus, it remains unclear whether aftershocks to the country's economy will result in a postponement of these plans. (TechNode)
POLITICS, ECONOMY, SOCIETY
A shopping street in Wuhan, China during Golden Week in 2019 | Source: Shutterstock
Wuhan Lockdown to End in Two Weeks
Two months after Beijing imposed a draconian lockdown on the coronavirus' epicentre, Hubei's provincial government has announced that measures would be lifted as the country pushes people to return to their jobs. Meanwhile, the pandemic has gained speed in countries like Italy and the UK, where the British government on Monday night announced the imposition of similar lockdown measures. Chinese businesses are attempting to get things up and running and major automotive factories restarted operations this week, but experts are forecasting aftershocks as demand (globally for exports and locally for consumer goods) is expected to drop. (South China Morning Post)
US Publications Urge Beijing Against Expelling Journalists
Publishers behind The New York Times, The Washington Post and The Wall Street Journal have written an open letter to Chinese authorities requesting a reversal of their recent decision to expel multiple mainland-based correspondents (in retaliation to a Trump administration move to limit the number of visas for Chinese journalists working for Chinese state media publications in the US). In the letter, the publishers called the decision "uniquely damaging and reckless as the world continues the struggle to control this disease, a struggle that will require the free flow of reliable news and information" and persuaded Beijing to ease what they deemed a growing crackdown on independent news organisations in the mainland. (AP News)