5 unique Taobao app features that drive its mobile sales

Picture search function

Imagine you are in a store looking at a really nice watch that would be just perfect for you. Unfortunately, you can’t be sure that you are getting the best deal on the price. That’s when Taobao app picture search comes really handy. All you have to do is snap a photo directly from within the app, or load previously taken image, and within seconds Taobao app displays the matches from its vast database.

This powerful functionality enables users to instantly compare online prices while browsing for goods in a physical store or, practically, anywhere they come across something they would like buy. In most cases, Taobao prices will also be lower which, in effect, threatens to turn some traditional retailers with brick and mortar stores into nothing more than showrooms.

Package tracking system

All online marketplaces have some type of shipment tracking system but only Taobao app takes it all the way to the new level. As soon as a seller ships the product you have just bought, it will be tracked at every point along its journey regardless of what delivery service was used.

Tracking packages is being updated within minutes which makes it really easy to figure out where it is and when it will be delivered. Finally, when it arrives, Taobao app will send you a push notification and, in some cases, SMS message as well.

Alipay payment integration

Alipay, Taobao payment system, is the principal technological enabler of the platform and the integral component of Chinese ecommerce landscape. Alipay provides an extremely easy and secure way to pay for purchases both online and offline.

Practically, everyone with a smartphone and a bank account in China has Alipay account which is also widely used to pay for purchases in physical stores, restaurants and even in the government offices. When used within China, Alipay doesn’t charge any fees except for very large transactions. Paying with Alipay is also very secure, convenient and fast. In effect, Alipay acts as a personal bank account in and of its own, complete with monthly statements and spending breakdowns.

Although, some Taobao vendors still accept cash on delivery, it is hard to imagine Taobao achieving such popularity without Alipay being its integral part.

AliWangWang instant chat

Chinese online consumers overwhelmingly expect Taobao vendors being able to answer questions and reply to inquiries within the shortest time possible. Also, the vendors realize that responding to inquiries from potential buyers in real time significantly increases chances of closing the sale. This is why Taobao integrated live chat app called AliWangWang, has become another important component of Taobao platform.

Customers can initiate chat sessions with sellers directly from the mobile app while sellers can use AliWangWang as a stand-alone app running on mobile or computer. It offers an easy way for both parties to communicate and not only serves as an effective pre-sale tool but also goes a long way in building trust.

Push notification remarketing

Almost all mobile apps use push notification in one way or the other. What makes it different in Taobao case is that the push notifications are tailored to each user and are made relevant to them. The way this is done is by taking into account users’ product search history, content of their wish list and past purchases in order to deliver tailor made messages that are most likely to pique their interest.

Also, unlike in the case of other apps, users tend not to disable push notifications from Taobao on their phones because they don’t want to miss messages related to product deliveries or any issues related to their purchases in progress

Mobile app makers are well aware that sending too many push notification can quickly annoy users. This why Taobao typically limits them to no more than once per day.

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Alibaba still dominates Chinese ecommerce with Taobao for C2C and Tmall for B2C. The other major player in B2C space is JD.com, currently this company holds about a quarter of the total market.

WeChat Weidian is another newcomer that is quickly gaining traction in Chinese m-commerce but it is not featured in this infographic due to lack of available data.

Other platforms in China ecommerce landscape are significantly smaller with market share in single digits. They also tend to be more specialized – for example, Suning and Gome mainly sell appliances and electronics while Vancle is a clothing branded retailer.

China ecommerce landscape

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WeChat, Chinese mobile “super app” by Asia most valuable company Tencent, is perfectly positioned to consolidate and strengthen its dominance over China’s mobile marketing landscape in 2018. Having reached one billion active users in 2017, the app is used by practically everyone in China as the primary social media channel as well as shopping and entertainment outlet. When it comes to mobile marketing, whatever direction Tencent takes will determine its development.

Based on what we have seen so far and the technological innovation already introduced, here are our top four mobile marketing predictions for China in 2018:

#1 Accurate location based triggers for serving mobile ads

One of the most underutilized mobile marketing potential capabilities is location based targeting. Thanks to WeChat’s popularity with users in China and the fact that it is only used on mobile phones, the app always “knows” the current location of its users. Therefore, it is possible serving highly targeted ads based on users’ real-time location. In such scenario, when a user is in the proximity of a point of sale of a specific product, he/she would get a special offer like a discount coupon or another incentive to visit a store.

Moreover, more shopping outlets and even individual stores can now track visitors with extremely high precision via apps or mobile floor guides. For example, many modern shopping malls in China encourage users to connect to a floor guide via WeChat allowing them to track those users throughout the mall. Serving them the most relevant ads based on the accurate location and time holds a huge potential for businesses.

So far, WeChat hasn’t taken full advantage of this possibility, although it is certainly within Tencent’s technical capabilities to implement. Location based triggers advertising adds another dimension to mobile marketing and it is likely that Tencent is working on ways to capitalize on such technology in near future.

#2 AI based big data processing

Tracking users online generates enormous amounts of data for marketers. In case of mobile, adding a location dimension creates even more information that can be extremely useful. The challenge lies primarily in analyzing huge amounts of data and automating the whole process. AI holds a lot of promise in meeting those challenges. Big industry players have been heavily investing in AI, driving the field’s rapid development in the last couple of years. Once again, Chinese companies like Baidu and Tencent, with the government support, have been on the forefront of innovation in AI.

Being able to efficiently process vast amounts of data generated by mobile devices will further advance targeting capabilities of mobile marketing and this is what AI is very likely to be able to accomplish for those companies in the next year going forward.

#3 Individual user targeting

Marketing efficiency is, essentially, all about targeting accuracy and market segmentation is the way to make such targeting more precise. Creating a persona representing each segment allows marketers to design a specific approach that would be most suited for the members of each group. The smaller the segment – the better it can be defined.

Unfortunately, it also makes marketing much more complex, and, in many cases, unmanageable. This is all about to change with the introduction of AI based data processing and analysis when segmentation can potentially become even more granular, all the way down to individual level. This would potentially allow marketers to tailor the message targeting each individual rather than a segment. When this become possible, mobile devices will be a natural channel to reach users on that level.

Our next mobile marketing prediction: we are going to see more of such highly personalized marketing in 2018.

#4 Facial recognition

Facial recognition is another maturing technology that is likely to get widely adopted by marketers in 2018. Although not without a controversy, facial recognition adds new level to personalized marketing that can be delivered via mobile. The advantage of facial recognition vs. other tracking and identification methods lies in its non-intrusive nature because it can be done without close physical contact with users. For better or worse, facial tracking doesn’t require users’ consent (at least not now), so people can be tracked remotely and even matched with their public social media profiles.

For example, when a visitor to a physical store expresses interest in a product but, ultimately, decides to pass on a purchase, facial recognition would allow finding out who that person is, and then retarget them via other channels by offering a similar product or a discount on the original one.

It is very likely that regulators and consumers groups will start campaigning against such methods, citing privacy concerns, however, it is reasonable to assume that the technology is here to stay regardless. When it develops further, perhaps it will even become possible to identify and record shopper’s facial expressions to figure out the overall sentiment towards a brand or a product. This would represent the next frontier in mobile marketing.

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It has achieved 2.5 percent penetration rate which is no small feat in the crowded app market in China, although it still dwarfs in comparison with WeChat with over 80 percent penetration.

While WeChat and QQ are for connecting with friends, Momo is an app for connecting with strangers based on interests and location.  Its closest equivalent in the Western market would be Tinder or Grindr. The app has been gaining in popularity in the recent years, transforming itself from a hook-up app into broader social network Designed to connect people based both location and interests, by the end of 2014 it claimed to have 180.3 million registered accounts, 60.2 million monthly active users, 25.5 million daily active users.

The company started monetizing also in 2014 but hasn’t been profitable. After IPO, things have began to change and in Q1 2015, Momo achieved total net revenues of US$26.3, up 383 percent on the same period last year. US$6.1 million of that was from social gaming, US$13.0 million from paid memberships, and US$1.1 million from paid emoticons and the gifting feature.

The app managed to make a net income of US$6.7 million in Q1 2015, compared to a net loss of nearly US$3 million at the end of 2014.

Unlike WeChat, Momo doesn’t have an English version – it was shut down earlier with the promise to come back one day. At the moment, Momo has decided to stay focused on domestic market and Chinese communities overseas.

The app is free and its revenue comes primarily from gaming, premium membership fees (it has 2.3 million paying membership subscribers), emoticon sales and advertising. In fact, advertising seems to be one of the most promising routes to generate revenue – Momo has also launched a new advertising platform for offline retailers.

One of the potential advertising possibilities are around targeting customers through location based service. For example, while users are scanning for people to connect with, an interest-based ad of a store or a club can be inserted with the results. It could be offering a discount or a free drink, inviting people in the area to pay a visit.

Advertisers would simply specify the geographic area and the time period of ad placement and Momo would display it based on those settings. Currently, it charges 10 RMB each time user interacts with an ad. It is very likely that Momo will continue adding services that allow business to advertise and target users based on their profiles.

In August 2014, Momo Inc. launched Dao Dian Tong, a marketing tool for local merchants. Through Dao Dian Tong, local businesses and merchants can construct profile pages that allow Momo users to find them with the Momo’s LBS. Members can see the businesses just as they would see other Momo users. Momo Inc. plans to further monetize user traffic by referring users from the Momo platform to e-commerce companies.

There is little doubt that Momo’s user base, just like WeChat’s, will continue growing in China, especially considering the fact that Chinese government started to gradually shut down foreign based messaging apps. This year, Line and Kakao Talk got blocked and Viber has been experiencing periodic disruptions on the Mainland. Whatsapp is still working in China but  its users may be quickly moving to a more stable and features-rich WeChat, and, possibly Momo as well.

2015 was all about live streaming in China and Momo has also added live-streaming function which helped it gaining more users and revenue around it.

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In China, smartphones are involved in every step of the typical sales funnel – from discovery and research to payment and feedback. As a result, Chinese m-commerce has been undergoing meteoric rise in recent years.

According to recent KPMG online consumer behavior report, smartphone remains the primary device for online purchases – well ahead of other countries, while laptop and desktop PC are used the least.

There is a number of main drivers behind Chinese m-commerce rapid development:

1. Highly developed mobile payment ecosystem.
   The primary systems are Alipay and WeChat Pay which are ruling Chinese m-commerce as well as becoming an increasingly common payment method offline. They also enjoy high degree of consumers’ confidence in payment security;
2. Large number of mobile users.
   According to data from the Ministry of Industry and Information Technology (MIIT), China’s mobile users exceeded 1.3 billion at the end of 2015, with 29.6 percent of them using 4G. Furthermore, China sold 457 million smartphones in 2015, up 17.7 percent from 2014;
3. Convenience and accessibility.
   Chinese m-commerce has leveled the playing field for all types of consumers regardless of location. While physical stores of some brands may not be available in 3rd and 4th tier cities, the shoppers can still gain the same access to brands as that available to people living in major cities;
4. Continuously growing economy.
   Last but not least is the fact that, despite the recent slowdown, Chinese economy continues growing at about 6.7 percent rate. In recent years, this growth has been primarily driven by local consumption with e-commerce being large part of it.

KPMG survey shows that more than 90 percent of the respondents made at least one online purchase using a smartphone in the past 12 months:

Consumers often research products using smartphones while in physical shops. In China, nearly 70 percent of respondents have looked up a product on their smartphone or tablet while being in a brick and mortar store. While this figure is still slightly smaller compared to other parts of the world, it is higher than the previous year. Also, this type of consumer behavior is likely to be gaining momentum after rolling out the new feature of Taobao and Tmall mobile apps allowing instant product search from a photo:

Market research company eMarketer estimates that Chinese m-commerce sales accounted for almost half the share of e-commerce sales in 2015. This year, retail mobile commerce sales in China are forecasted to grow by 51.4 percent to account for 55.5 percent of retail ecommerce sales in the country in 2016. By 2019, mobile users in China are expected to spend nearly $1.5 trillion on m-commerce:

Finally, China’s mobile commerce is another reason for the popularity of O2O concept. Companies, both local and multinational, are constantly on the lookout for more innovative ways to engage Chinese mobile consumers from all the angles.

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• Most Chinese use smartphones as a primary device for getting online;
• Major ecommerce platforms such as Taobao, Tmall and JD already have very successful mobile apps;
• Mobile payments infrastructure is quite well developed with Alipay Wallet being the market leader;
• WeChat, the most popular mobile app in China, already enables built-in ecommerce capabilities within the platform.

In this post we’d like to share a new infographic from Go-globe on the state of m-commerce in Asia Pacific. It clearly demonstrates that Chinese m-commerce is leading the region in number of areas.

• Over 70% of Chinese consumers have made purchases using smartphones, almost double the figures for such advanced places like Hong Kong or Singapore;
• 37.4% of Chinese consumers shop for clothing and accessories with their smartphones. This underscores the importance of mobile component in marketing strategy for fashion brands in China;
• 27.9% of of Asia Pacific consumers are adopting mobile banking. Although, there is no data specifically for China, it is safe to assume that the numbers here are near the top of that scale;

Asia Pacific M-commerce vs. Chinese M-commerce

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With over 83% of Chinese regularly accessing internet with mobile devices, it is no surprise that shopping online is quickly becoming one of their most favorite activities. Alibaba, China’s ecommerce giant, has seen this trend developing well in advance and made sure that Alipay, Alibaba’s payment system, will become the payment method of choice for millions of mobile shoppers.

As a result, mobile payments in China are dominated by Alibaba with its Alipay wallet app. Tenpay, the system developed by Tencent, is a distant second with only 8.9% market share vs. Alipay’s 79.9%

As the infographic further illustrates, mobile payments in China are mainly used for online shopping (63.2% of the time) followed by banking with 36.3%. Here is the full infographic:

Mobile Payments in China

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To this end, the understanding of brand building power through digital and mobile communication and knowing how to effectively insert themselves into the ongoing conversations are crucial and major factors; especially for any company aiming at the Chinese consumers.

According to a report by McKynsey, consumption will account for 43% of total GDP growth by 2020, compared with a forecast contribution from investment of 38%. Chinese consumers are an opportunity and will probably continue to be as they get richer. But there are still some unchanged variables like: Chinese pragmatism. They rely on multiples channels to get information about products and services. And as you can see in the graphic below, most of these channels are online platforms. This trend is still ongoing as the shopping behavior of Chinese people changes, they have lesser time to shop in physical stores so they are embracing new ways of experiencing the products and consumption.

3 Key Points for a Successful Digital Communication in China

Social Media

What is leading to the adoption of social media by Chinese people?

• The separation between families due to the rural exodus
• Young people that were born or grew up without siblings and during the Internet revolution
• Inexpensive access to the Internet

Why commit time and resources in developing your brand on social media platforms?

Here are some numbers to convince you from the Wearesocial report on Digital, Social & Mobile in China in 2015:

• QQ platform has 843 million users, Wechat has 600 million users;
• 714 million people in China are active on least one social media platform.

These platforms are also:

• Effective tools to build a brand by initiating conversations with consumers, creating and posting engaging social objects;
• Marketing tools: Chinese online buyers often post reviews or have their own blog where they discuss their latest acquisitions. This is the KOL phenomenon.

KOL stands for Key Opinion Leader. In China, they can be used to advertise a brand on a large scale as some of these KOL have millions of followers on Weibo. Paid advertisement campaigns on a platform like Weibo are not as efficient as on platforms like Facebook or Google. The rate of people clicking on these ads is usually low because Chinese consumers have distrust in traditional advertisement.
As mentioned above, Chinese consumers have a tendency to trust friends, coworkers when they research a product. They also trust their idols or online friends. That is where the KOL are useful for a digital communication strategy. They allow a company to reach successfully a specific target audience.

E-tailing

Why brands should be present on E-commerce platforms?

For the first half of 2015, E-commerce represent 10% of China’s total retail sales value. In that same period, E-commerce generated 253 billion dollars (1.6 Trillion RMB) of revenue in China. The major online companies Alibaba (which owns Taobao) and 360buy.com have established a national position, ranking among China’s top ten retailers. E-tailing platforms can help foreign companies building clear and consistent brand images and are a cost-effective way to reach consumers in small cities.
Due to the size of the Chinese territory, installation of physical stores takes a lot of time and money. The E-commerce system in China is well organized and can be seen as a replacement allowing companies to fill the gaps from lack of a physical store network.

The competition between E-tailers is growing. It naturally led to a cut of product prices, especially in the three major segments of Chinese E-commerce market: Apparel, Household appliances and recreational products. Transportation and health care product are also growing online markets.
The development of e-tailing is boosting consumption. The scope of opportunities is clearly widening for inside and outside players.

E-mobile

In July 2015, 20% of the population used a mobile phone to buy a product and 29% used a computer, 15% of the population used a mobile phone to research a product and 18% use a computer. It is estimated that, in 2015, half of all Chinese online consumers will be M-commerce consumers.
The price of mobile phones in China is dropping every year. It is a more affordable and convenient way to access the Internet. So much that they have replaced computers to become the main devices for accessing internet in 2012.
Why brands need to invest on mobile?

• Enable direct contact with the target audience: messaging apps (WeChat, QQ, KakaoTalk, Line, etc.) create a 1-to-1 communication with real end customers. For example: a company can create a WeChat official account where consumers can directly make a payment;
• Tailor-made and segmented content for brands;
• Optimize marketing expenses by geographic targeting and customer data analysis.

A successful digital communication will be the result of the integration of these 3 resources. Never forget that the objective is to make the brand concerned recognizable, trustworthy and different from its competitors. The business strategy must be carefully planned and also include: Point of sales, client relationship management and the product. Then, these factors must be coherent with each other and consistent for a good implementation in China.

Article written by Wei Hsu founder and CEO of INS Global Consulting, leader in PEO Services and HR Management in China since 2006.

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Also, WeChat has become one of the marketing channels for virtually every type of company or a brand in China. Having an official account and actively marketing on WeChat are becoming important elements for every business that realizes the importance of keeping their customers close and engaged.

On the other hand, WeChat has often been a disappointing experience for marketers. Obviously, the huge potential of WeChat in marketing is in its ability to reach users directly through their most beloved and personal item, a cellphone. In addition, there is a possibility to know user’s current location that would allow reaching them with more relevant content. Finally, there is plenty to be learned about those users – from the way they use their phones, to what they are sharing in their moments.

Unfortunately, WeChat, so far, didn’t deliver on that potential. Here are the main deficiencies of their platform from the marketing standpoint:

1. Few targeting options with marketing on WeChat

   Currently, followers can only be targeted by gender, age, account type and location. Even location can be highly inaccurate as it is determined by account registration and not the physical location of the user;
   

2. High cost

   WeChat marketing by advertising can also be quite expensive. WeChat charges about 10 RMB per click/follower for ads that are displayed at the bottom of subscription messages. This is quite high compared to other online options, so only big brands would usually go for it. Ads in “Moments”, the relatively recent addition, could potentially deliver higher click through rate but they cost at least 5 times more.
   

3. Low click through rate

   Ads at the bottom of popular accounts are often ignored for a number of reasons. The main problem is that once clicked, the user than will be taken out of the app elsewhere, such to a built in WeChat browser. Since most people don’t casually browse WeChat but have some purpose while using it, they wouldn’t typically abandon their activity in the middle to be redirected elsewhere.
   On the other hand, ads in Moments would have had better chance to be clicked if they were relevant to user’s interests or current location. Unfortunately, this is not the case.
   

Considering that marketing on WeChat via advertising delivers relatively low ROI, there are basically 2 other options left to make it work:

• Engaging WeChat’s KOLs to spread your message and attract followers.
• Grow WeChat follower’s base organically through promotions in other media.

We will turn to those options in upcoming posts, stay tuned!

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In fact, playing games is the second most favorite activity after chatting on a phone in China. Chinese gamers already outnumber the American ones by 1.6 to 1 and are estimated to have reached 450 million already.

This also shows that games provide a lucrative business opportunity for foreign game makers, although the market is still dominated by local companies. Tencent, the company behind WeChat and QQ is dominating the market with 7 out of 10 top games developed by them.

Another fact that we can learn from the data is that over 40% of Chinese would only play free games. However, despite this fact, an average revenue per per paying user at $32.46 is still higher in China vs. $26.72 in US.

Here is the infographic:

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