What do earthquakes, tsunamis, and last-minute meeting requests have in common?
They are all “disruptions” to the status quo, interrupting life as usual and demanding that we pay attention. The same applies to mobile. Like it or not, as marketers we need to deal with the digital disruption that mobile has brought into our lives.
This is the final part in a series of articles about what marketers can learn from China’s mobile disruptors—those companies that have jumped on the mobile bandwagon and are not looking back. (Click here for part 1 and part 2.) According to the McKinsey Global Institute (MGI), China has the “world’s largest online population,” and the market for e-tailing will only continue to rise as “millions enter the consuming class.”
This post will look at three takeaways from China’s mobile disruptors.
1. Plan For The Consumer Who Practices ‘Trading Up’
Chinese consumers, similar to those in the West, have a desire for the latest and greatest products and services available on the market. In China, these consumers are driving a phenomenon known as “trading up.”
MGI explained: A noticeable trend “in spending is a propensity to trade up, driven increasingly by consumers aspiring to improve themselves, the way they live, and their perceived social standing. Many Chinese, like their western counterparts, judge themselves and others by what they buy.”
The consumers who are actively trading up are those at the highest end of the market. They are the “mobile elite,” as defined in the recent Adobe 2014 Mobile Consumer Survey. At a glance, the mobile elite prefer to use mobile apps for shopping, and they spend more time and money (over $750 in the past 12 months) via mobile devices. They also have a higher reported use rate of “mobile-assisted in-store shopping.”
Consequently, I don’t think it is a big leap to estimate that the percentage of mobile elite within the Chinese mobile ecosystem is comparable, if not higher, than the 28% of the U.S. and European respondents to the Adobe survey.
In “Meet the Chinese Consumer of 2020,” MGI said this about the folks who are trading up: “It is the top end of the market that will benefit most from trading up: growth at the high end of some consumer goods categories already outpaces average growth for those categories as a whole. Sales of premium skincare products, for instance, rose by more than 20% a year in the past decade while the industry average was 10%. Annual volume growth rates of more than 20% are foreseeable for luxury SUV cars, compared with around 10% for basic family models. China had already become a leading luxury market by 2010 and could overtake Japan to become the biggest such market by 2015.”
2. If You Can’t Beat Them, Join Them: Digital Marketplaces
The Chinese e-tailing market has emerged in the form of two main categories: digital marketplaces (think: eBay) and independent merchants. MGI, in “China’s E-tail revolution: Online shopping as a catalyst for growth,” explained: “Marketplaces are by far the leading model in China, accounting for roughly 90% of the e-tailing market in 2011.” China’s eBay equivalent, a company called Taobao that is run by the Alibaba group, has more than 6 million registered sellers.
So it’s the independent merchants (10% of all retail) versus the digital marketplace (90% of all retail). It seems clear that marketplaces own the majority of the market. Consequently, most retailers in China have jumped on the bandwagon. Western marketers, what can we glean from this? Perhaps there is a digital marketplace you have been resistant to “join”? Or maybe there is a digital space where your organization or brand can raise its profile? Consider your options.
3. Innovate In App Experiences With Value-Added Services
Despite barriers to innovation, China has demonstrated advancements in creating mobile apps. Mobile marketers in the West, I want you to take this as a specific call to action. If China, despite its limitations, can innovate in app development, then you can, too. China innovates in app development because apps matter to the mobile elite. In fact, I would argue that apps are one of the most important facets of the mobile ecosystem today. Outstanding apps have a direct correlation with increased brand presence, sales, consumer loyalty, and more.
One way in which China innovates is through add-ons, or what we refer to as value-added services. In “China’s Digital Transformation,” MGI cited Wacai as a perfect example. Wacai is a personal finance mobile app that “allows consumers to track and analyze their daily expenses and receive investment product recommendations.” Wacai was released in 2009 as a simple bookkeeping service, but the developers kept optimizing and improving through add-ons. In 2013, they added mutual fund trading features, and in 2014 they added a credit card manager. Today, the app has over 40 million users.
MGI also highlighted Fantasia, a real estate and property management company, which provides a luxury app, or “a comprehensive community mobile app called Colour Life.” Let’s pause for a moment on that language: comprehensive community mobile app. The app is aimed at providing for the total needs of the mobile consumer. The goal is, in part, to become an all-in-one place where Chinese mobile consumers can get their needs met, their questions answered, and more. They don’t need to go anywhere else.
Fantasia’s Colour Life app “integrates shopping, dining, housing, transportation, entertainment, travel, and other services with push updates of event information,” according to MGI. “It also includes an e-card issued in cooperation with China Everbright Bank that can be used for security access and parking and as a prepaid card for online and off-line shopping.”
It seems that Fantasia has combined the capabilities of Amazon, Yelp, Trulia, Uber, Expedia, and more into one application. This strategy may be something that companies such as Google, Apple, and Facebook are looking into. Stay tuned.
In closing, I’d like to leave you with one final thought: There is absolutely no reason why any organization in 2015 should not have an app to drive a personalized relationship with its customers. If you want to remain viable and profitable, it’s imperative that you define your app strategy immediately. Let’s learn from China and start innovating now, before mobile gets so far ahead of us that we won’t be able to catch up.
For some help with apps, visit my prior series: “Optimize that App: Why Guess When We've Got Science?” and “Stop the Insanity, Start Measuring Mobile.” If you need to go a step further back because your organization has not yet developed an app, then start here: “Should You Build a Mobile Site, a Mobile App, or a Hybrid?”