How Chinese D2C is shaping the future of global branding

Direct-to-consumer (D2C) is picking up in APAC. The pandemic accelerated this movement; we
observed brands go from one extreme to the other: from owning their own channels, to building
unique communities of hyper-personalised referrals.

As always, China offers a ‘crystal ball’ lens into potential futures for the rest of the world. This was first evident in its pioneering of e-retailer partnerships that served as a precursor to today's D2C market. 

E-retailer partnerships in China

In 2014, Nike was one of the first global brands to create a “brand zone” with Alibaba’s TMall—
demonstrating that you could control your image in the overcrowded e-marketplace, at a time
when counterfeits went unchecked. Today, Nike’s success in China is largely attributed to their
ongoing partnership with Tmall, with an ever-growing portfolio supported by more than 5000
mini-videos a year.

Today, TMall Global and JD.com are locked in a fierce “battle of the brands” to create exclusive
space, maximising behavioural data and pricing strategies. From Huggies and Head & Shoulders
through to Louis Vuitton, JD.com offers customised pages to redirect to, WeChat mini-programs,
and official sites to complete the transaction. Meanwhile, Tmall’s Luxury Pavillion (since 2017)
provides an ‘invite only’ luxury marketplace that shares behavioural and lifestyle data of its
consumers with their brands, such as Bang & Olufsen, Burberry and Maserati.

Adaptations in Southeast Asia

Southeast Asian ecommerce platforms have similiarly become a conduit for brands to engage customers more directly, even beyond CPG or apparel.  Pre-lockdown, BMW formed an exclusive partnership to launch its 1 Series on Alibaba-owned Lazada in Southeast Asia. Not just a gimmick, today you can buy test drives and leases for a complete suite of BMWs in a fully immersive environment—all on the Lazada.sg platform, which is typically known for groceries and electronics.

Rather than purely lifting and shifting ‘what works’ in China, SEA platforms are doing it their own way. Singapore-based Shopee (launched in 2015), with its mobile-first, super-localised team, structureand content, now leads the Southeast Asian e-commerce market. And now that they’ve garnered local support, they’re courting giants.

For example, Shopee launched two programmes to maximise their online development. First, the
Regional Champion Brands Program launched earlier this year for 16 brands that receive priority
support (marketing, innovation, insights), including Adidas, Amorepacific and P&G.

Michael Youngsoo Kim, head of Amorepacific APAC and Chris Feng, CEO of Shopee sign MOU at in Singapore in February 2021

And second, the ‘100 Million Dollar Club’. Shopee will reward the first 10 brands achieving USD 100
million Gross Merchandise Value (GMV) within a year with exclusive business perks.

AliExpress, Alibaba's online marketplace for shoppers outside of China, plans to recruit a vast army of global influencers, approximately 1 million, by 2023 to expand its global ambitions. The influencers will help brands on AliExpress promote through YouTube, Facebook, Instagram, TikTok and other popular platforms.

Own your channel

The beauty of going D2C is that no matter the size of your brand, you have majority of control.
Nike and Louis Vuitton have already employed D2C strategies in China in both distribution and
communication on their brand-owned channels. Michael Kors took the route through WeChat and
Weibo.

WeChat Mini Programs are very accessible, endlessly shareable, and highly targeted. The fact that
they’re cross-regional, with fewer restrictions, means they can be used outside of China. UK’s
Selfridges and Japan’s Tsuruha drug store are great examples of this.

Shoppers can find coupons in the “Tsuruha Drug Express” Weixin Mini Program. Courtesy: Tencent

Shopping via videos is also gaining huge traction. There are efforts from short video apps like
Douyin (China’s TikTok) that match brand owners with content creators for promotion. Consumers
use live videos to check out products and pose questions directly to brand owners.

However, be warned: Douyin is considered cutting-edge, so the products must be as well. Even Gucci’s launch on Douyin prompted a lot of feedback that they didn’t quite ‘get it’, and it looked like a ‘knock-off fan account.’

The rise influencer-own brands and platforms

We are seeing a shift in commercial models: from influencer-sponsored posts, to influencers peddling their own brands creating competition with agencies and e-retailers.

These influencer own-brands continue to thrive on a global scale. Ava Foo and Nikki Min, fashion
bloggers-turned models for Chanel and Gucci launched a clothing line, ‘Ava & Nikki’, exclusively on
Taobao. Their clothing line and product sold out quickly, exceeding expectations.

And influencers in China have evolved from creating their own brands to creating complete
creative studios—to the point of disrupting the agency landscape. This is largely driven by brands
asking influencers for a ‘one-stop-shop’ package: insights, digital production, and content creation;
all in one.

Take fashion influencer Peter Xu, who launched his creative studio in 2016. He provides
all the services a brand needs to connect with its customers, including photo and video production
for lifestyle brands, commercial shows, and fashion labels for celebrities and other influencers.
Another way influencers are disrupting the landscape is through the launch of their own
marketplaces.

Melissa Koh, a lifestyle blogger and fashion brand model in Southeast Asia, launched two unique online stores, Run After, a clothing line, and Some Days At Home, an ecommerce marketplace hosting small-sized regional brands.

Some brands do all of the above

Perfect Diary is a perfect example of a D2C brand fine-tuning in China to go global: In 5 years, it’s
gone from starting online on Taobao & Tmall to WeChat, Pop-up, with plans now in place to have
600 offline stores over the next three years.

Following its New York Stock Exchange launch (the first-ever Chinese cosmetics brand), revenue
increased 72%, and gross profit grew to $199+ million. This success is widely credited to their data-driven D2C model.

In October 2020, Perfect Diary appointed Aussie YouTuber Troye Sivan as its latest brand ambassador. Although this campaign was officially promoted in China, the campaign videos were uploaded across Western online platforms blocked by China's firewall such as Twitter, YouTube and Instagram.

These examples reflect how the remarkably fertile world of marketing in China continues to inspire brand owners worldwide. What began as initial ‘toe dipping’ experiments are fast becoming mainstream. Direct-to-consumer is upending our industry, from China and beyond.

Kathryn Sloane is APAC MEA executive managing director, commercial, at brand experience and packaging agency SGK