Florent Courau, managing director of JD.com’s newly opened Paris office, explains why brands that want to enter the Chinese market need to up their game – and fast.
China has leapfrogged into the digital dimension as its fashion-hungry and increasingly wealthy consumers demand a true omnichannel shopping experience. If western brands want a place in this enormous market, they need to act now, or risk getting left behind.
Chinese consumers have embraced technology faster than in other parts of the world, and millennials have discovered brands with a smartphone in their hand, enriching their brand experience. On JD.com, 80% of orders now come from mobile and about 25% of first-time purchases come from social media platforms WeChat or Mobile QQ.
Growth is phenomenal but the competition is also intense, and will not cool down as Chinese fashion brands increasingly enter the fray.
This means brands that have been afraid to go online or into China need to make the leap sooner rather than later. In Europe and the US, online is the crumbs of the market, but in China, it’s the whole meal. Brands simply cannot afford to get left behind.
To cut through in such a huge and dynamic market, it is critical for western brands to tell an authentic story, adopt a truly digital strategy and permanently rejuvenate through innovation.
China is an interesting laboratory and an inexhaustible source of inspiration for brands. Consumers there are real risk takers in terms of fashion, much more so than Europeans or Americans. For a designer, this is very exciting because they can be bolder with designs, confident that Chinese shoppers will take a chance on them.
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Those already doing well in China are the ones that have clear narratives and are creative with things like limited availability products. “See now, buy now” is a strong phenomenon. The fashion brands that succeed will anticipate these trends and become more flexible and faster.
One of the key differences between European and Chinese shoppers is brand loyalty. Europeans tend to find designers they like and follow them sometimes throughout life. However, Chinese consumers want to feel special and individual. They follow trends and don’t necessarily stick with favourite brands. They are “window shoppers” and more experimental. They need to compare several products and read multiple recommendations on social networks before deciding to buy. Word of mouth and recommendations from thought leaders carry considerable weight with their purchase decision.
The proliferation of artificial intelligence (AI) and other technology also allows brands to listen to the market across all categories. Advances in digital retailing make me think that China will be a reservoir of knowledge for tomorrow’s retailing, with a trove of information and data insight – both social and shopping-related – on young consumers available.
AI, big data and advanced analytics are at the core of our strategy at JD.com. Our research and development centre in Santa Clara, California, went from fewer than 20 employees at the beginning of 2017 to about 120 today, and in February we announced a new partnership with Hong Kong’s Fung Retailing to develop an AI retail centre that will focus on virtual fitting, unmanned stores and smart shopping assistants. In Europe, we also announced earlier this year plans to open an AI centre in Cambridge in 2018.
Interactive augmented reality technologies help brands to enhance online experiences for shoppers, and this is critical in China. For instance, our AR makeup technology gives users an opportunity to test products virtually, like they could in-store.
With growth of around 100% in 2017, JD.com fashion is one of its fastest-growing businesses. Last year we began partnering with Farfetch and in October launched standalone luxury platform Toplife, where brands such as Saint Laurent and Alexander McQueen trading. We also recently signed agreements with the British and French governments to help companies access China via JD.com.
So while some retailers remain hesitant about tackling the scale and unknown nature of China’s vast market, and doing so digitally, many know it is necessary, and this will become ever-more apparent as the pace of retail innovation and growth continues to spiral upwards.
Florent Courau will be one of the keynote speakers at the Drapers Digital Festival on 26 April in London. To hear him speak in more detail about how to engage the increasingly important Chinese market, alongside other speakers including Valeria Juarez, senior vice president digital commerce international at Ralph Lauren and Ian Dewar, director of customer lifecycle and analytics at The North Face, go to digitalfestival.drapersonline.com to book your place.