For efficient brand impact in China’s massive retail market, more U.S. retailers are turning to key opinion leaders (KOLs) to influence Chinese consumers’ online purchases. Fung Global Retail & Tech expects the emergence of KOLs as ‘cewebrities’ — popular online personalities — will continue to propel the growth of cross-border e-Commerce for foreign retailers.
Why are U.S. retailers expanding into China?
How KOLs Can Help U.S. Retailers
Influencer marketing using KOLs is one of the best methods to promote retail brands and products in the competitive China e-Commerce market. KOLs are savvy marketing influencers who have built a large community of engaged followers on social media.
Their solid understanding of Chinese consumer behavior trends gives KOLs the potential to create viral content. Their deep insights into what Chinese consumers want makes KOLs a powerful force in digital marketing, and retailers should consider aligning with them.
Influencers with 50,000 to 100,000 followers are particularly cost-effective targets for KOL campaigns because of their:
Growth orientation: Given their relatively small business size, KOLs seek to grow their own follower base through compelling content at a reasonable commission;
Market intelligence: These influencers engage with followers frequently and directly, deepening their understanding of followers’ shopping behavior; and
Drive for results: Commission-based KOLs tend to be passionate, proactive and motivated to grow their audience to yield bigger rewards.
These business benefits matter to U.S. retailers because Chinese shoppers tend to buy best-selling merchandise and products recommended by their peers. KOLs help foreign retailers get on shoppers’ radar.
China is going through rapid consumption upgrade and the country has the biggest middle class in the world, representing 220 million people. To capitalize on this large, increasingly affluent market, retailers have flooded the market with products — and consumers are confused. These market conditions create opportunities for KOLs to offer clarity by endorsing specific products directly to thousands of followers, especially if the products align with a particular lifestyle.
Where To Find Influencers
KOLs usually have their own social media presence and pay close attention to online comments and messages to discover new marketing opportunities. U.S. retailers can connect with KOLs directly on social media or through affiliates or agencies.
Affiliates are an alliance of influencers that receive orders from advertisers to promote campaigns and products. Of particular importance to U.S. retailers, ‘haitao affiliates’ focus on helping foreign companies reach Chinese consumers, as the term haitao refers to overseas shopping. These companies have long-term cooperative agreements with KOLs, allowing retailers to mitigate risks and improve ROI analysis.
How To Work With KOLs
KOLs’ content marketing usually starts with a compelling short story and transitions to product recommendations. For instance, cosmetics influencers’ content often injects emotional appeal and reflects common feminine topics. The content shares retailers’ brand stories and product information to inspire consumers to visit retailers’ e-Commerce web sites. In return, retailers often compensate influencers with a sales commission or free product trials.
KOLs’ Effectiveness And Reliability
Influencers are effective at promoting certain categories, including beauty products, cosmetics, mom and baby products and fashion. KOLs excel at transforming unpopular products into ‘dark horses’ — brands that quickly evolve from unknown to popular. Once a product gains popularity, retailers’ priority transitions, from using influencers for promotion to improving supply chain visibility to ensure the product is always in stock.
Since today’s consumers often seek what’s ‘new’ and ‘now,’ certain KOLs’ popularity could be transient. Once consumers forget about the influencers, they no longer make good marketing channels. To minimize risk, U.S. retailers should pay attention to statistics on a KOL’s recent engagement activities, shares and views to gauge their marketing longevity.
Who Buys From Influencers?
An iResearch report found that three-quarters of Chinese consumers who buy overseas products fall within the ages of 26 to 40 — a demographic that matches the audience of influencers. These Millennial shoppers have growing purchasing power and unique purchase behavior.
To meet shoppers’ needs, Chinese KOLs have become symbols of virtual communities of followers with similar lifestyles, tastes or shopping behavior. Most importantly, Chinese KOLs understand their followers’ needs. As such, followers trust KOLs — including their product recommendations — because they feel understood and gain a sense of belonging within their virtual community. Followers also believe KOLs have tested the products and the items work well.
Proof Of KOLs’ Effectiveness
Bioeffect: Icelandic niche beauty brand Bioeffect attracted fewer than 100 cross-border e-Commerce orders in China before it starting working with Azoya. After we helped them collaborate with opinion leaders, Bioeffect earned hundreds of orders within 12 hours after the opinion leaders promoted the products, generating 10 times the company’s annual sales within a two-day promotion period.
‘Walk into ANZ’pharmacy tour: Last year Azoya invited several KOLs to visit our pharmacy retailer partners in Australia and New Zealand. Our tour gave customers the chance to experience the retailers’ supply chain, marketing, warehousing and customer service in person. These face-to-face interactions enhanced the retailers’ brand awareness and influence in China through real-time, online broadcasting, which generated positive word-of-mouth referrals. The KOLs enjoyed the free trip, and pharmacies were satisfied with the result. Within days, the KOLs’ live streaming video marketing amassed an audience of 600,000. Sales of pharmacy chain Amcal increased by 135% after the campaign and the number of KOLs’ followers increased.
KOLs can represent an efficient and cost-effective way for U.S. retailers to gain a competitive advantage in the large, lucrative China market. To maximize the value of your cross-border e-Commerce offerings, include KOLs in your China marketing strategy to amplify brand awareness and speed up online sales.
Franklin Chu is Managing Director U.S. for Azoya International, a provider of turnkey cross-border e-Commerce solutions to assist retailers looking to expand into China through a cost-effective and lower risk method. To date, more than 35 retailers in 11 countries are partnering with Azoya to expand into China with ease, including French fashion retailer La Redoute, Australia’s largest pharmacy group, Sigma, as well as Feelunique, the largest online beauty retailer in Europe.