ONLINE PRODUCT & OPERATIONAL ANALYSIS

FOR CHINESE MARKET

BY JING HUANG

OVERVIEW

High PotentialWhile the US has the largest and most established e-commerce market in the world, it's no secret that Asia and, specifically, China, is catching up fast. A MasterCard survey in November and December found that Chinese internet users shop online the most. When it comes to fashion retail, the strongest interest comes from China (54 per cent), followed by Thailand and South Korea. By the end of 2016, China's e-commerce is predicted to be worth 2.8 trillion yuan (HK$3.5 trillion).

High ComplexityZara must continue to build brand awareness and acceptance by understanding and adapting to the complexity of the Chinese market AND recognise the unique challenges of online retail in China

There are many factors needed to be considered to achieve a successful operation online

Target Market Analysis- Target Customer Segmentation

- The Main Competitors Product Comparison

- Product Regional Preference

- 2013 F/W Current Season & Key Trend

Online Environments Analysis - Fashion Online Commerce Orientation

- Brand Competitors Online Operation Comparison

- Other leading Online retail Operation Competitors

- Extra factors to be considered

- ZARA.CN future Improvement Suggestion

TARGET MARKET ANALYSIS

- Target Customer Segmentation

- The Main Competitors Product Comparison

- Product Regional Preference

- 2013 F/W Current Season & Key Trend

WHO IS A ZARA GIRL IN CHINA …?

- Age 20-35 Professional Office Lady

- Could be a independent hard working lady or who are able to afford luxury brands with wealthy family background.

- Understands fashion, has a fashion Sensibility, Has a request for fashion, fashion Trend Follower

- Has brand consciousness

- Requests “Quality” lifestyle

TARGET CUSTOMER SEGMENTATION

Demographic Variables Psychographic/Behavioral Variable

•Well-educated•Professionalism•White Collar•Aged 20-35

•Shopping is a social activity•Fashion trend pursuer•Brand consciousness•Urban/City girl image•Smart & fashionable look requirement

Geographic Variables Usage & Benefit Variable

• Physiological differences North & South

• Climate differences-cold winters in North, humidity in South

• Region style preference difference affected by many variables

• Smart casual dress code from day to night.

• no strict boundary of dress code required of wear in different occasions

• Price needs to match quality

THE MAIN COMPETITORS PRODUCT COMPARISONThe Brand Design Usefulness Price/Value

(RMB) Quality Branding Convenience

store presence

Zara

• Catwalk style Element

• Luxury glamour Look

• Urban Quality Smart casual

• Designer Characterized cutting

•Smart Work Cloth•Daily Life•Night Out•Formal Event•Party

200-2000

Luxurious quality fabricHigh StandardCutting & TailoringSpecial wash instruction for Certain Article

VM, Smart Location, Posh look interior, customer focus,Shopping Experience

157 Stores(including Kong Hong and TaiwanOnline Zara.cnPrivate purchasing agency

H&M

• Trend Follower• Practical Life

style Full range• Designer

collaboration

• Daily Life• Night Out• Sport Casual• Easy Relax

Home Wear

• 40-1000• 40-2000 ( designer

collaboration)

Standard tailoringLow cost fabric Easy care

Designer Collaboration

114 Stores (including Hong Kong)Private purchasing agency

Uniqlo• Easy leisure

casual, Practical• Basic design

cutting• Real Life wear

• Easy Relax home wear

• Weekend causal out

• Daily wear Mix

40-1000Super quality,High standard material

AdvertisingQuality focusViral Marketing, The project Uniqlock

231 Stores including Hong Kong and Taiwan)Online uniqlo.cnuniqlo.tmall.com

Topshop

• Cool mix• Street style• Individual

designer• Edginess

• Night Out• Daily Life• Party• Fashionable

casual

50-7500

Standard tailoringLow cost fabric Easy care

Window Display, Individual Designer Collection, celebrity collaboration,Catwalk collection

1 Store in Hong KongPrivate purchasing agency

OTHER COMPETITORS TO LOOK ATInfluential domestic brand are

Metersbonwe

They launched sub-brand Me&City competing with ZARA

http://www.metersbonwe.com/#/app=hot

http://www.me-city.com

E.Land

http://www.elandfashionchina.com/en_index.php

JNBY(江南布衣）http://www.jnby.com

The brands sharing the market or are used to be on demand

BESTSELLER- (Only, Vero Moda), Forever21, Gap, Etam, Jeanswest, Ebase, Espirit

Other

many local individual fashion boutiques which offer very stylish, high quality product with friendly negotiable prices.

PRODUCT REGIONAL PREFERENCE

There is a variable cultural focus, different climate and different physiology in different regions of China, which leads to a different style and product preference orientation.

REGIONAL CULTURE, GEOGRAPHIC AND STYLE KNOWLEDGE

Beijing, The capital of China, the culture and political center, the influential city, long cold winter, dry hot summer, people in North are bigger build, Tall & curvy figure,image conscious, high social status awareness, wealthy and affluent, stable trends, material quality focus rather than fashionability.

Shanghai, business and finance center, more cosmopolitan, distinctive seasonal weather, smaller figure & sophisticated, fashion orientated, fashion appreciation, more style conscious, fashion leading city, high demand luxury fashion lifestyle, frequent trend update requirement

Guangzhou, commercial trade center,, informal relaxing lifestyle, warm tropical humid climate through whole year, smaller build & slim figurestrong Japan & Hong Kong fashion style influence, bright color preference, street urban fashion, extreme & eccentric fashion trend follower, adventurous, focus on individual expression, distinct sub-cultures

Changsha, Wuhan, Chengdu: Central region, Very open mind for fashion, trend catch-up speed slower than Shanghai

Nanjing, Hangzhou: near Shanghai, gentility & feminine style

Shenzhen: coast city, one of modern business active city , luxury easy acceptance, trendy, style mixed

Symbol Cities Product Buying Selection Demonstration ( from current season) according to Regional Customer Segmentation is following up.( Remark: Real buying proposal is essentially based on real daily and seasonal sales figures and finance budget besides market trend and customer demand )

BEIJING

SHANGHAI

GUANGZHOU

2013 F/W CURRENT SEASON & KEY TREND

FW 2013 CATWALK SEASONAL KEY TREND

Pastel Coat

Men’s coat Menswear Fabrics

Punk Crazy Fur Mid-century

As well as …

Translated by zara

Pastel Coat Men’s CoatMenswear Fabrics

CELINE IS THE MAIN DESIGNER BRAND INFLUENCE

CELINE FALL 2013 RTW

ZARA 2013 WINTER

ONLINE ENVIROMENT ANALYSIS

- Fashion Online Commerce Orientation

- Brand Competitors Online Operation Comparison

- Other leading Online retail Operation Competitors

- Extra factors to be considered

- ZARA.CN future Improvement Suggestion

FASHION ONLINE COMMERCE ORIENTATION

The Online Commerce Environment in China

Own Fashion brand E-Commerce is still not mature and popular in China, people still prefer to experience and try on the article before purchase especially as shopping is considered as a major social activity in China, but TAOBAO.COM pleases a very large commercial market because of its full range of lifestyle products and low price bargains.

TAOBAO.COM took the existing launched TMALL.COM contained many brands flagship online shop including Gap & Uniqlo. People prefer to shop at e-marketplaces where many brands are available in one site. TAOBAO.COM and TMALL.COM dominate the online retail market in China.

Smaller marketplace traders are able to collate brands that fill multiple niche markets, and respond quickly to changes in demand

3 Key Factors Can lead Online Commerce to Success

Style & Design, Experience and Price are three priority factors with the order which the target customers looking for, Speed delivery and Convenience are last factors they concern about. Those factor priority order could be taken as strategy providing consideration ( The Result From 4 focus group interviews)

Style & Design

Target customers are very keen to express their fashion taste, The products have to present themselves individually first. The product is king, desirability creates the demand for the online market above all else.

The Experience

The online experience needs to reflect the ‘social activity’ experience of physical retail. People want to enjoy the shopping experience with friends as a society activity. However, society is changing, people have a large online presence, especially through social media sites. Zara needs to use these resources to replicate the physical social activity online, through linking with these sites and facilitating social interaction.

Price

A key element, Chinese customers are very aware of value and what else is available for a similar price. They always seek to avoid paying ‘over the odds’ . The product quality has to be worth the price. Zara doesn’t have price advantage comparing the other competitors, but quality guarantee before the delivery can balance the weakness, especially the product without personal quality checking and longer trading process comparing to offline shop. It will be save a lot of cost and time of after-selling & return customer service.

BRAND COMPETITORS ONLINE OPERATION COMPARISON

The brand Product Description

Detailed fitting advise

Styling advise

trend guideCross/Link/Up Selling

Customer reviews

Selling quantity monitor

ZARAzara.cn

yes none none very weak none none

UNIQLOUniqlo.cn

uniqlo.tmail.com yes detailed detailed yes yes yes

Me & City(Domestic brand)

Banggo.com yes yes none none yes yes

H&Mhm.com/cn/

Non-active online yes none Yes yes none none

Gapgap.cn

gap.tmall.com yes Very

detailed none none yes yes

OTHER LEADING ONLINE RETAIL OPERATION COMPETITORS

Launching ASOS.CN 2014 springMulti individual DesignerCollection storyStrong Crossing SellingTrend editingFashion & Lifestyle blog

Net-A-Porter’s sub-brand in ChinaDiscount designers collectionOffer styling adviceHot piece recommendationBrand StoryUpselling

EXTRA FACTORS TO BE CONSIDERED

SOCIAL MEDIA ACTIVE PERFORMANCE

SOCIAL MEDIA CHANNELS ACTIVE PERFORMANCE COMPARISION

SEPTEMBER 6TH 2013

The Brand

Sina Weibo Renren Douban Youku Wechat Tmall

ZARA 335233 followers

activated

7800 followers

activated activated

Non-activated

H&M 524480followers

Non-activated

54413followers activated activated

Non-activated

UNIQLO 1263135followers

183490followers

50kfollowers activated activated activated

Reference website http://www.digitalintheround.com/china-uniqlo-hm-zara-forever21/

Taking Sina Weibo as a example, the major social media platform in China for brand’s promotion.

During a one month period in July,2013, Fashionbi performed an analysis of Uniqlo, H&M, and Zara, their performances on the social network. That following slide is a ranking of who’s been the most active. 

Reference website:http://www.digitalintheround.com/china-uniqlo-hm-zara-forever21/

WEIBO ACTIVE PERFORMACE COMPARISONJULY, 2013

Brands Reposting CommentsActive

follower per day

average audience per

Weibo per day

ZARA 53 68 4 16,099

H&M 3572 2370 206 326,778

UNIQLO 5,337 4,503 302 722,130

DEFINE SELECTIVE CHINESE SOCIAL MEDIA

Sina Weibo is one of the most popular sites in China, in use by well over 30% of internet users, with a market penetration similar to what Twitter has established in USA.

Douban.com is a

Chinese SNS website allowing registered users to record information and create content related to film, books, music, and recent events and activities in Chinese cities. It is a social platform for age group 20-35 well educated who has own taste of lifestyle and pursue life quality.

Wechat provides multimedia communication with text messaging, hold-to-talk voice messaging, broadcast (one-to-many) messaging, photo/video sharing, location sharing, and contact information exchange. WeChat supports social networking. It is a handset App for daily frequent communication. None of age group 20-35 doesn’t use including ZARA target customers.

ZARA.CNFUTURE IMPROVEMENT SUGGESTION

Refresh

ZARA Brand Value+ USP• Streamlined for efficiency

• Catwalk trend fast translator

• Product focus

• Strong VM window display as publicity tool

• Luxury store experience

• The winner of Fast Fashion

THE STRENGTH OF ZARA.CN

• As the branding communication, It is a good reflection of store brand image Neat, Luxury, modern, smart & easy operation web design

• Well commercial designed ‘PICTURE’ function well brand value presented street snapshot, directly leads to product shopping page

• Brand Core Valued web product presentation, experience translated online Quality movement photoshoot

• Good return service, It is able to return back to the nearest offline store, which delivers the brand USP Efficiency.

It is important that the brand remains consistent and continues to deliver the values and promises that customers expect. Although society is changing because we are now living in the era of information, digital world brought tremendous influence to our daily life. E-commerce business will gradually take over the traditional business operational model. Online operation should still follow this golden rules to operate successfully. The improvement is vital not to ignore Zara own brand value and USP. Reinforcing the brand value online is the ZARA’s own way to stand out from the complex challenge and compete with others.

AREA FOCUS OF IMPROVEMENT & SUGGESTION

• Extra online commerce operation platform

The competing Challenge ZARA.CN are facing is complicated and multi type of Chanel, offline and online own brand as well as those market-sharing brands joint website, also those little individual private boutique business. Joining in or create extra online operation platform can be considered a smart move with principle of maintaining the brand value and image.

• Improvement focus on 3 key success-leading factors: Style & Design /Experience/ Price relevant issue: quality

Style & Design is the most priority that ZARA Chinese lady is always looking for. To cooperate well together with offline business and stock extra best selling article of offline store as exclusive online treats in order to boost the online traffic.

To create luxury online experience reflected to offline store ( create a online 3D store , the online shopping experience just like picking up a piece in real store, make target customers feel when they click the website can have the same feeling of real physical shopping experience. To create online social activity networking as a unique function to achieve the fact of shopping with friends in a real life.

Price is always linked the conception of quality. To ensure 100% quality checking before dispatching.

• Online purchasing assistance and service page

To develop better product guide and selection assistance and other area

Detailed fitting advise/ Styling advise/ Trend guide/ Cross, link and up Selling/ Customer

reviews/ Selling quantity monitor

• Social Media (PR & Marketing)

In China, Shopping is a social activity. Online business has the barrier to achieve lifestyle experience, but Social Media is the essential and valuable tool.

To create a bridge between social media and ZARA.CN online shopping page, make ‘ enter the link of ZARA.CN ‘ more convenient in social media main page in order to increase online foot flow.

To highly activate the most efficient social media especially Weibo, Douban and Wechat. Those social media users are well qualified as ZARA ‘s target customer.

To improve the updating frequency of the lookbook, street style look through social media. Giving the impression of product focus by online operating.

To deliver the style newsletter, new-in collection and similar purchasing choice initiatively to existing customer through social media rather than E-mail, eg:Wechat. Make it more efficient following the concept of brand value.