Although virtually unknown abroad, a new crop of local direct-to-consumer (D2C) brands are emerging in China, even outperforming some mainstream foreign brands. Alibaba said that during China’s recent 618 shopping festivals, Chinese brand Babycare’s sales exceeded those of P&G’s Pampers. Alibaba also reported that 459 new brands (those that have been on the Tmall platform for less than three years) achieved record sales for their segments in the first half of June 2021. During last year’s event, local beverage brand Yuanqi Forest’s sales on Tmall exceeded those of Coca-Cola and PepsiCo. In addition, WeChat provides these brands with a platform to build a more intimate connection with shoppers. In contrast, Alibaba's Tmall provides a wider reach and highly customized brand pages and a range of features. Other major platforms include short video apps Kuaishou and Douyin, and Pinterest-like Xiaohongshu. eMarketer predicts that China's social e-commerce revenue will reach 2.427 trillion yuan (US$351.65 billion) this year. The new generation of Chinese D2Cs are taking advantage of a uniquely complex market. They tend to be more savvy with the local digital ecosystem, logging onto top social networks and joining more niche platforms. These brands have relatively small or no physical presence, but some that do offer in-person retail are leveraging their direct customer relationships to optimize the experience. Another reason for local D2C success is their ability to iterate quickly based on emerging trends. Some D2C companies have also beaten global brands by offering competitive prices or customizing products to local tastes and needs. Compared with Nike and Adidas, high-end sports and leisure brand Sylphleike Loli keeps prices below 300 RMB (about 43 USD). Cosmetics brand Perfect Diary caters more to the skin tones and needs of Chinese consumers and has been stealing market share from L’Oréal Maybelline in recent years. Young Chinese consumers are also becoming more and more confident in local brands. |
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