Rewards through mobile games
China’s revolutionary social e-commerce platform Pinduoduo has shoppers playing virtual games to draw rewards IRL like discounts and free products.
Pinduoduo is famous for popularizing social e-commerce with big group purchases where shoppers band together to buy in bulk for big discounts. Users can get better deals the more widely they share promotions on their social channels.
Pinduoduo has another way to get people hooked beyond social media promotions: mobile games which yield real rewards in the form of discounts and products. In one game, time spent growing a virtual tree or completing tasks like viewing livestreams results in free deliveries of products like fresh fruit and milk to customers’ real doorsteps.
The platform’s deep discounts on everything from office supplies to Teslas has helped Pinduoduo draw the most annual active buyers among China’s e-commerce giants. According to earnings releases, Pinduoduo claimed the top spot in 2020 with 788 million annual active buyers, beating out Alibaba’s 779 million.
But Pinduoduo hasn’t quite managed to convert all that user activity into sales numbers that can compete with giants like Alibaba. The platform’s losses deepened last year in the cutthroat battle for China’s grocery delivery space.
Digital boutiques that blend online and offline
Luxury brands are using WeChat to blend the experience of shopping online with visiting physical stores.
WeChat may be best known as a social media platform, but its vast array of tiny third-party apps called “mini-programs” have quickly become an essential tool for luxury brands courting Chinese consumers. Now, brands are finding ways to sync shopping in physical boutiques with the digital experience of a mini-program.
At Burberry’s IRL boutique in Shenzhen, visitors can scan items to visualize them in WeChat and use the platform to customize the playlist in their real dressing room. In the brand’s WeChat mini-program, shoppers can collect digital currency to book fittings and try out different looks on an avatar. “WeChat also allows linkage between offline experience with online presence via technologies like augmented reality and QR codes,” said Jenny Zhang, strategy director for marketing consultancy TONG.
WeChat reaches more than 1.2 billion active users, 60% of whom use mini-programs, according to TONG. Zhang describes mini-programs as “the brightest star” of online shopping experiences in China, enabling shoppers to immerse themselves in a brand’s digital boutique. Creating an engaging mini-program environment that blends with a “phygital” in-person shopping experience (a portmanteau of physical and digital) requires a high level of investment from brands, she added. “That’s why most of the highly successful mini-programs come from big brands like Burberry and Prada.”
A live show and a hot sale
Indonesia’s e-commerce giant Tokopedia is turning livestreamed K-pop concerts into online shopping events with time-sensitive deals.
Tokopedia is leveraging the star power of Korean supergroup BTS, the most-streamed musical artist in Indonesia, to attract shoppers to seasonal promotions. During the platform’s month-long online shopping event, Waktu Indonesia Belanja (“Indonesia Shopping Time”), concerts by K-pop superstars like BTS and girl group Blackpink are broadcast via livestream, while new discounts and deals are released in the Tokopedia app.
The concerts air simultaneously on Tokopedia’s app and YouTube channel and Indonesia’s free television network Surya Citra Televisi (SCTV). The show also features Indonesian pop stars, rappers, and comedians. Bonuses like free shipping are on offer for purchases made in the app during the event.
Tokopedia was Indonesia’s top e-commerce platform in 2019, but lost out to Shopee in 2020. Tokopedia hopes “the BTS effect” will brighten sales thanks to the presence of these brand ambassadors as the K-wave washes over Indonesia.
Grocery shopping organized by neighbors
Chinese e-commerce giants like Meituan have finally cracked the notoriously tough grocery sector with group discounts, next-day delivery, and… neighbors.
China’s biggest e-commerce companies like JD.com, Alibaba, and Tencent have poured millions into delivery platforms to win the business of shoppers in second- and third-tier Chinese cities that were previously hard to reach. The key to competing with physical grocery stores? A model called community group buying, which depends on the neighborly connections of convenience store owners and stay-at-home parents who act as group leaders organizing their network’s orders.
The model is different from the popular Pinduoduo group buy. Instead of getting a discount for going in on a deal for the same item, shoppers get a better deal by placing individual orders with a group leader, who coordinates distribution for the neighborhood.
Group leaders help e-commerce platforms save on investment in both logistics and marketing. They’re responsible for the last mile of delivery, eliminating the need for couriers to stop at individual homes. Group leaders can easily convert friends and family into new users, replacing corporate marketing and customer service with a familiar face. The potential opportunity is enormous — McKinsey estimates China’s retail grocery industry to be worth roughly $800 billion, only 10% of which is currently online.
Group leaders in Changsha, Wuhan, and Wenzhou told Rest of World that tech companies were “burning money” in a race to the bottom to offer the lowest possible prices — at times, even below market value — to customers. The community group buying model is catching on. By September 2020, 101 million people in China were buying fresh produce through WeChat mini-programs — mostly group buying apps — according to market research firm QuestMobile. That is a nearly 70% increase from 2019.
The element of surprise
Blind boxes are taking off as a consumer strategy among local and international brands in China, Japan, and South Korea.
The format, where shoppers receive a mystery playing-card sized figurine that is part of a set, was recently popularized by Chinese toymaker Pop Mart, but has been growing for more than a decade with Japanese brand Sonny Angel and Korea’s Sticky Monster Lab. The collections are typically based on licensed characters from games, television, and anime.
Major international brands like IKEA, Disney, Starbucks, and Sephora launched collections with Pop Mart as a novel way to reach consumers in East Asia, leading Pop Mart to a blockbuster Hong Kong IPO in December 2020. “In addition to the uncertainty and excitement brought by blind boxes, another part of the reason why young people love blind boxes is the popular intellectual property,” said Zhang, the strategy director at TONG. Zhang predicts the trend will extend into other industries like gaming and tourism.
For shoppers, the appeal of the format isn’t as much about the product as the addictive feeling of suspense in the unboxing, and the satisfaction of completing a set. Fan and collector communities are flourishing online, where buyers can trade if they’re surprised with an item they already have. On some platforms, shoppers can pay extra to exclude specific items, while otherwise preserving the uncertainty of their purchase.
But it’s not all fun and games. Earlier this month, local media reports of a Chengdu warehouse found to be transporting puppies and kittens in packages disguised as blind boxes prompted calls for regulation on Chinese social media.
