Written by Tingting Zhang
Here are 5 most obvious ones.
1. Existing models
Europe: Most e-commerce companies in Europe exist as independent retail stores. B2B model mostly also utilize system with in-house inventory and direct checkout.
China: To make it more relevant, I’m going to elaborate Chinese inbound cross-border e-commerce models. There are mainly 7 different models, which lead the smaller ones to shape their business models:
- B2C platform + bonded facilities: no inventory; services like logistics and sales play critical roles (eg. Tmall)
- Retail + platform: strong internal financial conditions but lack of overseas goods resources or limited on categories (eg. Suning)
- Retail department store + strong supply chain: strong financial conditions and strong goods resources, with minority of platform module (eg. JD)
- Retail + special offers: they are rather influential on consumer market; strong suggestive contents and special promotions; fairly well equipped bonded facilities and logistics (eg. Jumei , as the “make infamous famous” type; started from vertical e-commerce)
- Retail special offer directly from overseas: to rely on overseas resources; strong sourcing and logistics (eg. VIP, with the best linkage system with Chinese customs so far)
- Vertical retail with versatile sourcing and logistics: the most comparable model with normal European e-commerce; mostly they have very good financial base or solid and well financed for especially acquiring consumers (eg. Mia)
- C2C/B2C platform: this model takes advantages of a great many of overseas intermediary buyers or business (Chinese speaking); the challenge is integrated management; a lot of smaller cross-border e-commerce companies are using this model as part of their modules (eg. YMatou)
2. Webpage contents:
Europe: clean and clear. You might need more research to make a thorough understanding and final decision on the product if you were a critical buyer.
China: the webpages are extremely long: homepage, category page, product page, community. You get a complete “commercial presentation package” on one product page with a single tab: physical parameters, basic features, pictures as many as possible, video (sometimes), sources, packing process, things good to know, brand history, testimonial, media stories… The categorization is also sophisticated and chaotic. It brings you a shopping experience on literally “browsing and indulging” but you could get a bit lost. However, you can tag and save the products, as well as the stores. Please do no neglect the contents part since it was pointed out as one of the reasons Amazon was beat by Alibaba in Chinese market.
Left you can see an “extreme” example on Tmall: the two screenshots are for one product.
- Popular digital approach and regulations
Europe: SEO/SEA, affiliate, social media, and email marketing.
China: Social media, social media, social media, online banners (a lot of flashy ones) and email marketing.
There are excellent email marketing technology and methods in Europe; however, it’s to quite some extent limited by the regulations that you have to get permission from the recipients before you can put them on newsletter list.
China got no limitation on the email subscriptions but Chinese use accounts mostly connected with major third party social media accounts (Weibo, WeChat, QQ), telephone number, or payment account (Alipay). For the third party account, you could encounter difficulties to acquire effective email address. However, QQ number (account) is corresponded 100% to their QQ email box, which still has a biggest market share as email provider in China. (QQ and WeChat both belong to Tencent group)
- Social media and messenger
Europe: Facebook, twitter, Instagram, and youtube.
China: Weibo, WeChat, Youku Tudou. All the folks above are blocked, or periodically blocked in China. Chinese indulge in their social media and messengers on mobile phone with significant hours per day.
Weibo is akin to a hybrid of Twitter and Facebook;
WeChat (Weixin in Chinese pinyin), is an all-function app akin to a combination of whatsapp, facebook, twitter, paypal, online store, driftbottle etc, see infographic below; WeChat just hit 650 million users in late 2015.
Youku Tudou replaced Youtube in China, without an equal comparable business role as Youtube. (Youku and Tudou have just merged into one lately and acquired by Alibaba in November 2015.)
As a matter of fact, the social media landscape in China is immense, including a lot of excellent O2O social media, vertical commerce social media, experience sharing social media, and technology functional (like music and videos) social media, which provide great channels to build up brand recognition and sales.
Source: Launch-in-China Operations Consulting
One interesting thing is that when Chinese people meet in business, they are very likely to take out their smartphone to scan the QR code and add each other as friends. Of course you can set the person in different tags (groups) in order to show them your contents update selectively. Thus, the Chinese won’t hesitate to send you WeChat voice or text message for business purpose, nor will they hesitate to post business news or trends on a rather frequent base.
WeChat’s business account provides extensive possibility to open your We-store or open your WeChat business publishing house.
The famous intermediary buyer phenomenon, is taking advantages of WeChat as sales and communication channel as almost 100%.
- SEO and SEA
Europe: dominant search engine – Google.
China: dominant search engine – Baidu.
Chinese website’s url’s and Meta tags need to be in Chinese pinyin (pronunciation) or even Chinese simplified characters, logically; the website indexing, link building, and contents duplication all differ from western rules.
Baidu weigh very high on homepage contents while not paying too much attention to deep page contents yet; Baidu is much slower than Google on indexing new websites while it can all of a sudden bring you a higher ranking once its fully indexed; Baidu weigh inbound and outbound links building equally and you need to build links with Chinese language websites with relevant contents (even if your website is in English); Baidu doesn’t really mind duplicated contents so you don’t need to worry much about punishment in Google’s terms; yet if you get punishment for any reason from Baidu, you can rapidly drop your ranking.
- Affiliate Marketing
Europe: the advertisers are mostly price comparison sites or regular websites showing affiliate banners or links.
China: the affiliate banners and links are also majority in affiliate marketing. But there is almost no pure price comparison site because there are a lot of shopping platforms allowing business building their complete online stores with independent store views and promotions, also with the in-system checkout process. However, there are quite some white label stores/platforms in China, which you can barely find out it is an affiliate business. Sometimes you can trace the while label business from the alleged “distribution platform”.
4. Brand awareness and consumer behaviours
Europe: Europe carries very strong brand awareness with long term strategy and work. European consumers are rather loyal to their trusted brands too. Europeans dislike especially wearing same product as everybody else does.
China: Chinese are very fond of word of mouth. That is why “grass roots” strategy can apply so well in this market. Their brand awareness can be inveterately built over user experience (so they love blogs with stories) and they love to buy same products because that brings them trusted feeling according to already existed experience. So the homogenization of cross-border e-commerce contents/products is also not surprising in China (although it started to concern a lot of sellers) under limited goods source. Again, according to the unique brand awareness and consumer behaviours, you do need to plan a distinct way for approaching the market, instead of only sticking to the classic marketing and sales theory. It can be stubborn and it can be powerful once it starts to take effect. Please check my previous article for a better understanding.
5. Digital payments
Europe: Safety concern has been one of Europeans’ biggest worry for online payments. Various regulations haven’t been speeding up digital payment development to some extent.
China: It might not be true that Chinese have lower safety awareness of digital payments; but the convenience that Alipay (from Alibaba) and WeChat Wallet (from Tencent WeChat) can offer all around has been overwhelming.
The dominant Chinese digital wallets offer financial service to individuals covering infrastructure, shopping, life consumption, P2P, splitting the bills (which you just found in European startups), travel, taxi, restaurant, credit card, insurance, donation, gifts, lucky money, family accounts sharing, university, financing, saving etc etc.
The P2P payment via digital wallet hasn’t been anywhere seen in Europe without Alipay or WeChat Wallet, also because of tax and other reasons.
However, the Chinese digital wallet can only support Chinese bank account holders. The online payment gateway for overseas entities is on high transaction fee terms.
Below is a set of screenshots of Alipay wallet on iPhone. There is no English version yet. But it’s doubtless still the top one in digital payment market relating Chinese e-commerce business.
And the following screenshot is WeChat Wallet from Tencent WeChat. You will find it much more comparable with Alipay wallet in Chinese version in terms of functionalities, including all JD e-commerce channels. (In 2015, AliPay wallet launched their messenger functionality, which is almost a clone of WeChat.) After Meituan and DazhongDianping (below you can find it as Group Buy in icon) merged in 2015, the most popular group buy and testimonial social media/app is under Tencent’s management.
An anecdote to end the article: Alibaba group and Tencent group, as 2 of the top 3 internet business giants in China (the other one is Baidu, the Chinese version Google), do have a ‘child’ together: Didi Kuaidi, merged also in 2015, a strong Uber rival in China. As a serious joke, I personally believe it surely reduced a lot of traffic jams or accidents by pulling out the drivers from checking two smart-phones hanging on their windows. There are at least 5 significant merging cases took place in 2015 among Chinese internet business giants. To have smart strategy in internet business in China, following local trends and resources is very important too.