Craft Focus - June/July 2020 (Issue 79)

79 BUSINESS FEATURE Private traffic Another tactic that has taken off is the use of private WeChat groups to circulate discounts and other promotions for loyal customers. In China, this is called private traffic, in which brands and retailers will set up private 500-person WeChat groups that are not visible to the open public. This gives members both a sense of privacy and exclusiveness. In the West, retailers are more likely to use e-mail marketing for the same purpose, but in China e-mail is less frequently used and people prefer more instantaneous messaging channels such as WeChat. It also enables retail players to build a stronger sense of community with local customers, as often the people hosting these WeChat groups are local store managers at department stores and other retail outlets. In a sense, private traffic turns store employees into mini-influencers that seek to provide a greater degree of service for customers looking for advice. Department store chains in both Hangzhou and the coastal city of Xiamen have adopted private WeChat traffic methods to encourage consumption online. Even global luxury brands have started to do it. Upstart Chinese beauty brand Perfect Diary has even created a virtual influencer called Xiao Wanzi, and hundreds of different WeChat groups in which employees provide discounts, games, and other gimmicks to customers. Customers can then pay through WeChat Pay. Such tactics have enabled Guangzhou- based Perfect Diary to become valued at $1 billion, just a few years after its launch in 2016. Adapt and conquer Will tactics such as livestreaming and private traffic take off in the Western world? It is hard to say. In China, content is much more integrated with e-commerce, often on the same platform. This is because online advertising historically has been less targeted and provides lower ROI than in the Western world. Additionally, mobile payments are a way of life in China and it is very easy to make an online purchase with just a few taps of the finger and a six-digit pin code on WeChat Pay/Alipay. The West has yet to eliminate the use of cash and clunky credit cards with their 16-digit numbers and security codes are still required to make online purchases. However, as the coronavirus crisis makes its way across North America and Europe and millions of small retail merchants are forced to shutter their doors, they may have to resort to new measures to keep their businesses alive. KEY TAKEAWAYS 1. In China, many retail players turned to livestreaming e-commerce to entertain customers and encourage them to make purchases through the coronavirus crisis. 2. Private WeChat groups, using the concept of private traffic, are popping up all around China as retail players look for ways to maintain their customer relationships. 3. Livestreaming and private traffic marketing tactics are made possible because of integration of content and commerce in China’s digital ecosystem, as well as the prevalence of mobile payments via Alipay and WeChat Pay. It remains to be seen whether such tactics can be replicated in the Western world, but at this point smaller retail merchants have to think of new ideas to keep their businesses alive. B SINESS FE T RE