Will digital platforms remain as relevant in a post-Covid China?
Since China’s abrupt opening up, we’ve fielded numerous questions about whether digital channels will diminish in importance now that Chinese consumers can get back out to safe, real-world locations. They are valid questions, particularly with foot traffic close to pre-pandemic volumes and a slew of announcements about physical store expansions.
There is no question that bricks & mortar stores have just become a lot more important in China. There is no replacement for the tactile experience of eating, entertaining and shopping in the real world, each of which feature prominently on the list of what Chinese consumers do for fun.
Yet while visiting physical locations is going to take up more of consumers’ time, in many cases that won’t be cannibalizing digital channels too much. Brands shouldn’t think of online and offline as being one-or-the-other. Rather, Chinese consumers want to merge the experiences of the physical and digital worlds into much of what they do. They rarely separate the two and respond better to brands who don’t either.
Terms like ‘o2o’ and ‘omnichannel’ have been thrown around in China for years, but they have never been more relevant than they have become in an [almost] post-Covid China. The sudden lockdowns of early-2020 forced Chinese consumers online as a means of survival. For most people, it was the only way to get food and drink, communicate with loved ones and be entertained as they worked their way through the hierarchy of needs. Although these online behaviours have evolved, many of the habits will continue long after Covid is categorised alongside the common cold in China.
We can see this with the WeChat figures from the Chinese New Year holiday last month. Although it was the first Spring Festival that Chinese got out en masse since February 2019, the volume of WeChat users increased 23% year-on-year from the holiday in 2022. Some of this would have been down to the euphoria around China’s opening and ability to get out and about and share their experiences with their friends, but it also symbolizes how Chinese consumers habitual use of online platforms isn’t going anywhere.
At a more specific product level, luxury ecommerce is likely to continue to go from strength to strength. Luxury brands were among the slowest category to start selling online, concerned that the premium experience of the luxury store couldn’t be replicated on a smart phone, and worried that it would diminish their exclusively and cheapen their brand. As it turned out, those subcategories which had higher online penetration have fared a lot better than those who didn’t since the pandemic.
Whilst the online luxury experience can’t replicate the physical world, companies like Alibaba have done a solid job at creating an immersive experience online. They have addressed some of the special moments in the physical encounter such as 1-on-1 sales consultancies, try-ons through augmented reality and being able to inspect a luxury product from every angle. They have also created innovative experiences that can only be online such as their metaverse and VR shopping, all which appeal to the fastest-growing luxury shopping segment of Gen-Z. The next step is to further integrate online and offline, both in China and where Chinese visitors will return to in numbers, to stay relevant and interesting to Chinese consumers.
The continued importance of online touch points will be largely driven by consumers. More consumers than ever got online during the pandemic, particularly the traditionally slow-adopting elderly – largely out of necessity as we mentioned above. This greater share of the population have adapted more of their lives to online platforms and are hooked! Similarly, Beijing recognizes that digital platforms present the greatest chance of driving a consumption-led economic recovery, which has seen them pivot from censuring, to championing the tech giants. As a result, tech companies will ramp up their innovation leading to more alluring features and platforms in the digital sphere.
Back to the original question: are digital platforms losing relevance in China? Definitely not, but how they are incorporated into customer journeys will evolve in the post-Covid world. Get in touch with China Skinny to understand how best to incorporate online and offline into your marketing strategy.
