While e-commerce marketplaces continue to drive the bulk of a brand’s online revenue in China, placing greater focus on DTC channels has become a growing trend in the global consumer goods sector – and the luxury industry is no exception. Not only do DTC channels provide brands with higher margins, but in today's data and insights-driven retail climate, it also gives them the opportunity to forge closer relationships with consumers and build more comprehensive data profiles. In China, this comes in the form of developing brand-owned channels – typically on social platforms. This is also known as the private domain.
In a panel discussion with Alexander Wei, Editor of Luxury Society, Archer Li, Vice President of E-Business at SEPHORA China; Tobias Bordal, Greater China Digital Director at Hublot; and Elsie Zhang, Client Development Director at DLG (Digital Luxury Group), discussed how brands can engage with consumers in the private domain. According to Li, the concept of private domains is not new in China. But it is only in recent years, with the cost of acquiring traffic in the public domain skyrocketing, that brands have started weighing the value of building up a DTC business in the market. At the same time, while brands have access to a wealth of data gathered from the public domain, they have reduced ownership over user profiles and limited ways to leverage the information collected to communicate with and convert consumers on their own channels.
Many brands regard WeChat as a critical private domain vehicle in China, as it is one of the few digital platforms capable of spanning the entire consumer journey. WeChat is Hublot's only online transactional channel in China, and the company makes use of it to launch limited edition timepieces. According to Bordal, this e-commerce structure is part of the company's private domain strategy. “When we have limited edition watches, you cannot buy it from anywhere else except for WeChat. It gives the credence to WeChat as a channel, it gives people reason to come back beyond four articles a month and campaigns,” he added.
After establishing channels in the private domain, brands should also integrate and consolidate the data collected on these platforms to better develop marketing, advertising strategies. Zhang believes that, first and foremost, brands need a solid data infrastructure in order to capture users’ transactional and behavioural data. "Having more data visibility allows you to do retargeting," she explained. "Especially when you're launching media buys for different campaigns, you can leverage this data capability to make sure you are targeting your ads at the right person.”
This session covered additional strategies for brands to roll out when operating their private domain channels in China. Watch the full panel discussion in the video below: