Mbaobao: We Did Better Outside of Tmall

Mbaobao has tried to transform itself from a popular handbag store specializing in selling fashionable women’s bags on Tmall (which is an online-shopping website similar to eBay operated by Alibaba) into an independent brand, focusing not only on increasing sales but also on improving brand awareness and satisfying customers’ needs.

I can still remember how excited my high school classmates felt when they received packages from Mbaobao that contained their favorite bags; knock-offs of internationally famous brands, they looked identical to the genuine articles by such designers as Coach, Kate Spade and Prada, only they cost much less. In the early stages of online shopping in China, Mbaobao was a star on Taobao, Alibaba’s other business-to-customer retail platform.

The Chinese e-commerce site that specializes in selling women’s handbags was founded in 2007. With the Internet’s development and e-commerce technology, the brand offering fashion bags with a high quality to price ratio gradually came to occupy a place in the e-commerce market with the help of Taobao and Tmall.

A few years ago, I visited Mbaobao’s website, which hardly included anything compared to its online “flagship” store on Tmall with assorted merchandise. However, when I take a look today, I see large numbers of bags representing more than 80 brands on its rack and a variety of customer services integrated into the website’s content. Curious about the changes, I sent Yudong Qiu, the company’s current CEO, an email asking how the company managed to complete the transition from being not only a famous store on Tmall, but also an independent brand.

To answer my question, Qiu began with the problem he faced when he assumed the position. Although successful in early stages, Mbaobao was troubled by a major issue, namely large platforms such as Tmall and Taobao held a controlling influence over Mbaobao. Thus, the company was unable to develop independently as a brand; rather, Mbaobao had to adjust its pace to the platforms’ requirements. At the same time, visits to Mbaobao’s website could not compare with those to its flagship site on Tmall. Therefore, Mbaobao aimed to increase sales on its website by developing precise marketing strategies, offering customers a satisfactory online shopping experience, and thereby improving customer awareness and brand favor.

After researching various case studies on Mbaobao, I discovered that the most innovative practice the company has adopted in its strategic marketing is to “label” its customers and manage its “life cycle” of shopping, strategies that were brought up by both Qiu and his marketing team.

Qiu has pointed out in many of his speeches throughout China about the e-commerce industry that, though the market has been continuously changing, Mbaobao’s ultimate goal has always been to attract customers to “visit more often, view more items, buy more products, and purchase more expensive choices,” therefore increasing the website’s number of visits and conversion ratio.

According to Qiu, in order to achieve this goal, Mbaobao has had to answer two questions: Who will buy its bags? And, how long can those customers keep buying them?

To address the first question, Mbaobao has assigned “labels” to its customers, hoping to attract and keep them by offering marketing content that fits its labels. “Each label stands for a characteristic of [its individual] customers, and we designed more than 1,000 labels in our database,” Qiu explained.

Mbaobao divided its labels into three categories. The first category contains demographic factors, including customers’ age, astrological signs, monthly income, amount of money spent on the Internet per month, and so on. The second category includes customers’ behavioral characteristics, such as how they accessed the website, how long they lingered on each page, and whether they read promotional emails and shared their experiences with friends. The third category encompasses customers’ purchasing characteristics, mainly referring to RFM (an acronym denoting how recently purchased, how frequently purchased, and how monetarily valued) but also referring to customers’ preferences.

“When a customer enters our website, we start to record her shopping and browsing habits and add various labels for her,” Qiu said in our interview conducted through email on February 5, 2015.

He told me that after recording and collecting the labels during customers’ shopping processes, Mbaobao divides its customers into different groups, each containing about 100,000 people who share common labels. The company will then deliver different marketing messages to each group based on the features of labels in the groups to which customers were added. At the same time, Mbaobao also labeled its bags with descriptions such as “workplace”, “multi-color,” “tote,” etc., and tried to find the common ground between customer labels and merchandise labels. In this way, Mbaobao was able to provide personalized recommendations to each customer.

“The more labels you have, the less time it takes you to find your favorite bags,” explained Qiu.

During this process, Mbaobao encountered another problem, because while the number of registered members on mbaobao.com increased rapidly, only 37% of them made purchases, and merely 32.62% of them returned following their first purchase, according to a research conducted by Mbaobao’s website department. This is the second question Mbaobao sought to address by managing the “life cycle” of its customers’ purchasing behavior.

According to Qiu, Mbaobao categorized its members into three groups: the ones who did not register, the ones who registered but did not make a purchase, and the ones who both registered and purchased. For the new customers who had not purchased anything, Mbaobao aimed to encourage them to make at least one purchase.

Qiu explained how to reach this goal with an example: “If you are a customer just registered on Mbaobao today, from now on we will keep in touch with you often. From our previous 12,000,000 customers, we will find the 100,000-people group whose labels are the same as yours. From our record, we know what kind of text message or email the group likes, what information they expect to receive on the second, third and fourth day, [and] what promotional activities are likely to encourage their first purchase.”

“If you are a repeat customer, we will also frequently send you marketing messages, not selling you bags but encouraging you to review and comment on the feedback of previous customers who bough items similar to yours. In this way you are able to know the history of your bag and feel more satisfied with your purchasing experience, and hopefully, you will come back and buy again. The goal of our managing data is to help customers find and buy their favorite products in the least time. Moreover, during that process, we want a customer to feel that she is unique and the only customer we are serving,” Qiu added.

These two precise marketing strategies led to a 70% upswing in Mbaobao’s conversion ratio and sales from its official website in 2014 compared to 2013, which accounted for 55% of its total sales, based on the research conducted by the website department of Mbaobao. “The ‘label’ and ‘life cycle” strategy worked very well,” said Yinglan, Mbaobao’s current CMO during our email interview on March 2, 2015. “With these methods we had a better understanding of customers’ purchasing habits and access paths, and were able to design and distribute our advertising to tailor the needs of our target audience. This also helped us build up accurate profiles of customers.”

To improve customer satisfaction with the brand, Mbaobao offered them specially designed packages and gifts for free. Qiu is a big fan of wine. Learning from his experience with wine products, he and his marketing team decided to provide customers with a pleasant box opening experience.

Yinglan thoroughly explained the rationale behind the box opening experience:

This refers to all the sensory and emotional responses the customer felt from the moment of receiving the package to the initial use of the products. Sensory experiences include visual and tactile pleasures as well as appreciation of convenience, and emotional ones including how the perceptions of patterns, colors, style, brand image, and brand messages [are conveyed].

After researching Mbaobao’s packages online, I discovered that there are nine heart-warming words, each printed on one paper box. For example: “In my world, the most beautiful scenery is you.”

Mbaobao’s customer will also receive a box opener in the package; the opener is delicate and colorful, designed to help customers open the box easily and elegantly without damaging their nails or the bags inside. A shopping bag will also be included, the appearance of which varies according to specific festivals or seasons. Additionally, Mbaobao uses air-filled bags instead of paper filler to make the packages fresh and neat visually. Mbaobao also puts flower patterns on the air bags, reflecting the company’s pursuit of customer satisfaction and quality.

Mbaobao’s shipping package includes a box with the company’s logo and a heart-warming word, a box opener, a cotton bag, and an air bag.

Mbaobao’s website shows its mantra to “spoil each customer with beautiful and high-quality bags and a pleasant shopping experience” is the true spirit of Mbaobao. The box-opening experience reflects Mbaobao’s effort to provide a superior purchasing experience to its customers and engage them emotionally. “People’s first impression of an item has a huge effect on cognitive processes in the future. The moment you open the box is like the first time you saw your blind date. You’ve got to dress your products up because this is the first communication with your customers. We want every part and detail of the box opening process to deliver the value and spirit of our brand,” said Yinglan, Mbaobao’s current CMO.

Currently, Mbaobao’s marketing efforts are still focused on the Internet and earned media because of a limited budget (which Yinglan cannot reveal). Off-line investments such as TV, broadcasts, and light boxes are in preliminary stages or have not yet begun. There is also no plan for hiring journalists to tell its story within the company. However, Mbaoabo has been considering these possibilities for a long time.

I noticed from last year’s news that Mbaobao had made its first foray into content investment, or resource exchange. In its inaugural product placement venture, Mbaobao cooperated with the film “Love on The Cloud,” designing featured bags for the two main characters and other film derivatives, developing a feature page on its website and WeChat account, and distributing relating press releases published on popular websites. In return, Mbaobao’s logo, bar code, and other product characteristics appeared on the film’s poster and at its premiere.

“Love on The Cloud” premiere on January 8, 2014. Mbaobao’s logo and bar code was shown on site.

In addition to content investment, Mbaobao must confront how to use creative ideas and execute them successfully to add value to its overall brand and to each sub-line brand, while also making Mbaobao competitive with and superior to overseas brands. Moreover, as Yinglan noted in an interview with Ebrun.com, in the future, there might be a new model that integrates a shopping guide, official website, and an app. How to manage the operation of the official website and associated mobile apps is another question that Mbaobao is considering.

To sum up, Mbaobao’s success in the above analysis reflects that by finding its customers and satisfying their needs, a vertical e-commerce website will achieve better effects than only focusing on increasing sales.