Ecommerce Verticals in China
Taobao, TMall, JD.com are the titans of Chinese online marketplaces. However the growth and spread of specialised verticals are increasingly a popular way to monetise for forums and niche social apps. Here’s why brands should understand this trend.
I was recently giving comments for an article in Business of Fashion, on a niche fashion platform called Yoho, when it struck me just how many companies in China have opted for a particular way of monetising their existing audience through ecommerce. I’m not saying this is a unique model for China, but it seems to be a trend worth looking at in the country.
Monetising an online audience, or user base, has traditionally fallen to the advertising model: if I have X number of users or readers, then brands and companies wanting to reach these users can pay me for advertising space (or in the case of many bloggers, editorial space and product reviews).
Selling advertising space works if you’ve got the traffic, $9.16B of Facebook’s $9.32B revenue in Q2 last year (2017) came from ads (that’s a whopping 98%). Twitter, Instagram, and Google all receive the majority of their revenue through advertising, as does forums such as Mumsnet.
Sell stuff, not space
There is another way, one that seems to have strong viability in the hyper-ecommerce market that is China: opening a store.
Yoho started life as a magazine aimed at a young, trendy audience. It’s content was mostly celebrity gossip and fashion trends. The magazine’s masthead boasts that “Being young is an attitude”. While advertising helped the magazine grow, it’s the brand collaborations and street-style product curation that seems to offer the publication it’s value. Especially in a retail environment where traditional, formal fashion houses are moving towards street-style and younger aesthetics.
The model is replicated across other sectors too. The platform Baby Tree (宝宝树) is, at its essence, a mother-baby forum. It’s similar to Mum’s Net in the UK. However within the app is a store, which carries a chosen selection of products from brands with partnerships with Baby Tree. Consumers have more assurance when buying products through the app, as Baby Tree brings respectability and expertise in the mother-baby sector.
For international brands
Finding and partnering with a vertical in your industry is a great way to get initial traction in the market. It’s not always easy, these platforms can have some outrageous demands. Make sure you have a strong locally-savvy negotiator and that you come prepared. If successful, brands can pick up both reach and a sale channel in one hit.
