No Distributors No Problem How to Use Digital Marketing to support Direct-to-Consumers Sale in China






A new round of retailers’ store closings and bankruptcy filings has hit the news in the last couple of days. This time it includes Victoria Secret, CVS, Gap, TopShop and Bed Bath & Beyond. It’s not surprising to see these brands are struggling. Just from my personal experience, I can’t recall the last digital advertisement I have come across from these brands on social media. Meanwhile, brands such as Third Love, Purple Mattress, Article.com are taking advantage of newer publishing platforms like Podcast. Not to mention the popular fashion eCommerce site ASOS, whose followers have grown to 9.4 million on Instagram. UK sportswear brand Gymshark reached $128M sales in 2018 with its successful influencer marketing strategies.


The retail landscape is bleak worldwide. However, it also gives rise to opportunities for companies who are the early adopters of eCommerce and digital marketing. In China,traditional retail is a distant memory. Ecommerce sites like Taobao, Tmall and JD.com had already transformed consumers’ shopping behavior, while the retail crisis is gradually unfolding in the United States. For companies who want to capitalize on China’s fast-growing economy, especially in fitness, wellness and health industry, in addition to having a China eCommerce strategy, the differentiating factor is your brand’s social media marketing strategy in China, especially the amount of quality content produced. 


Unlike fashion and cosmetic industry, where there is an ocean of information on product reviews and tutorials from publications, branded content, influencers’ blogs, vlogs and many other content platforms, Health, fitness and wellness industry is still at what I call the “information deficiency stage.” Customers are still desperately looking for and ultimately shopping for trustworthy information on fitness training and nutritional health advice. Regardless of a brand’s popularity outside China, whoever is able to fulfill the demand for quality content will be at an advantage to win market share.

Distribution is no longer the only solution brands should rely on in order to sell to China. If you don’t want to wait for investors and distributors knock on your door, don’t want to give away company equity or risk trademark and intellectual properties, and don’t want to lose control on pricing and brand representation in China, you can actually reach and sell direct-to-consumers in China.


What Makes DTC Sales Possible in China in 2019?

Cross-Border Ecommerce

The major benefit of cross-border platforms is to allow foreign brands to sell their products in Chinese e-market without Chinese business licenses and facing less Chinese regulatory, testing, and approval hurdles. For sport nutrition industry, for example, capsules products are extremely difficult to be imported through traditional channels, making Cross-Border Ecommerce the perfect solution for health and nutrition supplement category. Besides that, Tmall Global and JD Global work as a first step into China in order to collect data on the market as well as their consumer.


Social Media Platforms

WeChat and Weibo have grown tremendously over the last 5 years. Customers can learn about product information, watch promo videos, place online orders, refer products to friends and families all within Weibo and WeChat. They are by far the most critical platforms in China for product and service providers to build brand awareness, grow followers and enhance consumer engagement.

Unlike Facebook and Instagram, WeChat and Weibo have eCommerce functions seamlessly integrated. Alipay and WeChat Pay also make it easy to finalize online transaction without leaving the app.


KOLs (Key Opinion Leaders)

KOL marketing is referring to influencer marketing in China. By collaborating with influencers in certain fields and platforms, brands can effectively reach consumers within a short period of time. Many KOL campaigns can drive sales directly to eCommerce sites. However, it is important to note that KOL marketing can’t stand alone. Many brands work with KOLs to create quality content, which is integrated into the brand’s content marketing strategy. By leveraging KOLs' existing audience, brands can grow followers and subscribers to their Weibo and WeChat official pages.

Also, many sport nutrition athletes’ contracts are only one-year. It’s very common top brand ambassadors switch companies after a year. Without brand’s official Weibo and WeChat accounts, it can lose momentum with change of KOLs.



Who Are Doing it in Sport Nutrition Industry ?

Myprotein

In many markets, Myprotein is taking the direct-to-consumer approach, China is no exception. Even though back in 2017, Myprotein had worked briefly with several Chinese distributors, it didn’t take long before it became apparent to the distributors that Myprotein was not planning to keep the distribution model. One of these distributors is the current owner of Nutrend China, who also distributed BPI Sports briefly before he formed a long-term partnership with Nutrend.

Myprotein’s Weibo official account was registered back in 2015 and has a dedicated team translating and posting content daily. All traffic from Weibo and WeChat are directed to Tmall Flagship store, which is their main eCommerce sites.


MuscleTech

Since the change of ownership of Iovate, MuscleTech has a brand-new China team. They have taken over the operation of Tmall and JD flagship stores and focus on online promotions to drive sales. Distribution has become limited, especially as Muscle Tech implements strict pricing control policies. Many MuscleTech distributors have turned to other brands. On June 18th, one of the largest online sale days in China, Muscle Tech’s sales is ranked #1 among all international and domestic health and sport nutrition brands. In this case, since the brand is very well-known in China for many years, limiting distribution channels only help to drive traffic and consumers directly to their flagship stores.

Muscle Tech is not 100% direct-to-consumer, but its strong eCommerce performance is driving the revenue.


Benefits of Direct-to-Consumer Model:

Better Margin

Your brand will need to invest in social media marketing and content creation upfront, but the margin is usually better without multiple layers of distribution. It is even better if you own manufacturer facility and produce products yourselves. 

Better Brand Control

Your brand will have better control on brand representation as you are working with your Chinese marketing team directly. Your vision won’t be compromised. Often times, distributors prioritize certain brands and products over others as they have a full product portfolio to balance. Your brand might not get the attention and resources you would like.

Price Control and Flexible Promotions

Pricing control is critical to brand equity. Direct-to-consumer model enable brands have better transparency and control on pricing. More importantly, brands will have the flexibility to run online promotions on large sales events such as November 11th (Chinese Black Friday), without compromising their distributors’ margin and sell-through.



What Types of Digital Marketing Work in China?

WeChat and Weibo Official Account

Foreign companies can open official accounts without Chinese business license. A very small percentage of US sport nutrition brands have done that. It serves the purpose of a website where consumers can learn about your brand story, product offerings and athletes’ information.  

Video Marketing

Short videos on Douyin ( Tik Tok )and long-form video blogs are the most popular formats in video marketing right now. The volume of users and influencers generated videos is as important as high-quality professionally edited videos your team produce.

KOL Generated Content

Micro-influencers are sought after by an increasing number of sport nutrition brands. Since the fitness industry is still in its growing stage, many micro-influencers are in the process of growing their follower base. These influencers see the credentials and exposure established brands can bring to them, meanwhile, brands can utilize the content generated by influencers, not to mention the younger audience many micro-influencers are attracting. It is a win-win solution.




Why Now is the Best Time to Focus on Content Creation ?

China’s digital marketing landscape is moving very fast in terms of platforms and tactics; however, health and Sport nutrition industry content market is still underdeveloped. There is no bodybulding.com, Muscle & Strength, Muscle Insider magazines in China. Fitness and Beauty Magazine (健与美) though has WeChat account and digital version, it is inadequate in meeting the needs of internet users, as there is a lack of community engagement.

Such information deficiency means opportunities for brands and content creators. My interview with Nutrend and Olimp China CEO Mr. Li drove this point home. He said he starts seeing his company as a fitness media company, not just a supplement distribution company. With hundreds of KOLs across China, Nutrend China has become a content powerhouse.  It's still early in the game.




Reference:

https://beeketing.com/blog/gymshark-growth-story/

Myprotein Weibo and Tmall

https://www.weibo.com/myprotein

https://myprotein.tmall.hk/

MuscleTech Tmall

https://maisitaike.tmall.com/

Nutrend Weibo

https://www.weibo.com/NUTREND

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