China Private Traffic: Direct-to-Consumer Retailing Market Report 2022
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Report Summary
“Private channels have received great attention as a direct result of ecommerce development in the wake of the outbreak. However, brands need to be aware that private channels are not the answer to all the problems associated with the rising costs of customer acquisition. Leading ecommerce platforms are still the dominating destination for consumers who shop online. Brands need to acknowledge the unique value that private channels bring. Established brands can build communities on private channels and use it to attract traffic back to flagship stores. Emerging brands may use private channels to obtain first-hand consumer data, and focus on providing customisation services to fit niche needs.”
– Blair Zhang, Research Analyst
Key issues covered in this Report
- Consumers’ channel experience in the shopping journey
- Source of private channels awareness
- Categories purchased from via online private channels
- Comparison of leading private and public channels
- Reasons for purchasing from private channels
- Attitudes towards DTC marketing, such as WeChat group communication style
Table of Contents
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Overview
- What you need to know
- Key issues covered in this Report
- Definition covered in this Report
- What you need to know
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Executive Summary
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- The market
- Companies and brands
- The consumer
- WeChat mini-program stands out as the most used online DTC channel
- Figure 1: Usage experience with various retailing channels, 2021
- Consumers engaged in private channels via recommendations from offline sales
- Figure 2: Source of awareness of brands’ private channels, 2021
- Similar product category rankings for online private and public channels
- Figure 3: Categories purchased from private channels in the last 12 months, 2021
- Private channels need a differentiated role in marketing, while leading ecommerce platforms still outperform in all aspects
- Figure 4: Attributes associated with different shopping channels, 2021
- Consumers expect better after-sales service, accurate products recommendations and additional bonuses
- Figure 5: Reasons for purchasing from private channels, 2021
- Different expectations are set for WeChat DTC marketing
- Figure 6: Attitudes towards DTC marketing on WeChat, 2021
- What we think
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Issues and Insights
- Brands should take a more objective view of their expectations for private channels
- What do private traffic channels mean to consumers?
- How to operate private traffic channels more effectively?
- Brands should take a more objective view of their expectations for private channels
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Market Factors
- Increasingly expensive customer acquisition costs drive brands to look for cheaper traffic sources
- Figure 7: Online shopper size and its share of netizen, 2016-21
- Access to consumer behaviour data helps brands respond quickly and provide better services
- COVID outbreak impacts the development of private channels
- Promoting values helps DTC businesses to attract consumers
- Increasing regulations around personal data protection create a dilemma for brands
- Increasingly expensive customer acquisition costs drive brands to look for cheaper traffic sources
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What’s Working?
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- Direct-to-consumer as the trend
- Effortless understands detailed needs through questionnaires; then makes recommendations
- User co-creation helps Huaxizi make innovation
- Lechun yogurt designs products with consumers and KOLs
- Target consumers with different strategies through tags and occasions
- Winona understands how consumers enter the WeChat group
- Restaurants provide additional benefits to special occasions
- Figure 8: WeChat messages from the restaurant, 2022
- Power the private channel with high quality content
- Emphasise on exclusivity
- Figure 9: WeChat messages from the restaurant, 2022
- Form a community through channel matrix
- Provide additional benefit to consumers
- Create a brand personality (人设)
- The successful case of Perfect Diary
- Figure 10: WeChat messages from Xiao Wanzi, 2022
- Create online and offline traffic linkage
- Luxury brands create smooth shopping experience
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Channel Experience
- WeChat mini-program stands out as the most used online DTC channel
- Figure 11: Usage experience with various retailing channels, 2021
- Private channels show strength in purchase conversion rate
- Figure 12: Awareness, browsing rate and purchase conversion of each channel, 2021
- Despite similar shopping experience ranking, different age groups show various preference for private channels
- Figure 13: Purchase experience with various private channels, by age, 2021
- WeChat mini-program stands out as the most used online DTC channel
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Source of Private Channels’ Awareness
- Offline sales recommendation is important in awareness building
- Figure 14: Source of awareness on brands’ private channels, 2021
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- Figure 15: TURF analysis, source of awareness on brands’ private channels, 2021
- Target high household incomes and young ones through high quality content marketing
- Figure 16: Source of awareness on brands’ private channels, by age and monthly household income, 2021
- Offline sales recommendation is important in awareness building
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Category Purchased from Online Private Channels
- Beauty and personal care products are top purchases via online private channels
- Figure 17: Categories purchased from private channels in the last 12 months, 2021
- Household-related products and discretionary spending see the largest gap between high- and low-income families
- Figure 18: Categories purchased from private channels in the last 12 months, by monthly household income, 2021
- Beauty and personal care products are top purchases via online private channels
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Comparison of Channels
- Leading ecommerce channels still outperform in all aspects
- Private channels need a differentiated role in marketing
- Figure 19: Attributes associated with different shopping channels, 2021
- Reach out to private-channel-only shoppers with novel experience and considerate image
- Figure 20: Reasons for purchasing from private channels, by channel experience, 2021
- 18-24 year olds see WeChat shopping groups as a cheap shopping channel
- Figure 21: Association with ‘having more competitive price’, by age, 2021
- City tiers impact consumers’ views on channels’ price competitiveness
- Figure 22: Association with ‘having more competitive price’, by city tier, 2021
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- Figure 23: Association with ‘being easier to buy new products/limited editions’, by city tier, 2021
- WeChat mini-program and shopping groups see opportunities in improving product variety and build membership management system
- Figure 24: Association with ‘having more various products available’, by living situation, 2021
- Leading ecommerce channels still outperform in all aspects
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Reasons for Purchasing from Private Channels
- Consumers expect better after-sales services and suitable products recommendations
- Figure 25: Reasons for purchasing from private channels, 2021
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- Figure 26: TURF analysis, reasons for purchasing from private channels, 2021
- Older consumers seek precise product recommendations, while young ones favour discounts and customisation
- Figure 27: Reasons for purchasing from private channels, by age, 2021
- Segmentation strategies are needed to cater to low- and high-income consumers
- Figure 28: Top 5 reasons for purchasing from private channels, by monthly household income, 2021
- Purchase drivers differ among various sources of awareness
- Figure 29: Reasons for purchasing from private channels, by sources of awareness on brands’ private channels, 2021
- Consumers expect better after-sales services and suitable products recommendations
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Attitudes towards DTC marketing
- DTC marketing should use a targeted approach due to varying consumers’ expectations
- Figure 30: Attitudes towards data privacy, by reasons for purchasing from private channels, 2021
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- Figure 31: Attitudes towards brands’ communication style on WeChat, by reasons for purchasing from private channels, 2021
- Figure 32: Attitudes towards brands’ WeChat group message frequency, by reasons for purchasing from private channels, 2021
- Young consumers prefer one-on-one brand communication, while older consumers hold a more uncertain attitude
- Figure 33: Attitudes towards brands’ communication style on WeChat, by age, 2021
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- Figure 34: Attitudes towards brands’ communication style on WeChat, by age, 2021
- WeChat group management starts from message frequency and content selection
- Figure 35: Attitudes towards brands’ WeChat group message frequency, by family structure, 2021
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- Figure 36: Attitudes towards brands’ WeChat group message content, 2021
- Providing personalised service while respecting consumers’ data privacy is crucial for brands
- Figure 37: Attitudes towards data privacy, by monthly personal income, 2021
- Simple-choice gain popularity among high personal income group
- Figure 38: Attitudes towards product options, by monthly personal income, 2021
- DTC marketing should use a targeted approach due to varying consumers’ expectations
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Appendix – Methodology and Abbreviations
- Data Sources
- Abbreviations
- TURF Analysis – Methodology
- Figure 39: Table, TURF Analysis, source of awareness on brands’ private channels, 2021
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- Figure 40: Table, TURF analysis, reasons for purchasing from private channels, 2021
- Data Sources
About the report
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
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