Product-on-demand: China’s New DTC Brands Aren’t Just Faster, They’re Changing The Game
A brand new wave of Chinese language direct-to-consumer (DTC) manufacturers, comparable to Shein and Anker, have gone stratospheric within the final couple of years. For The Drum’s e-commerce deep dive, EPAM Continuum’s Miro Jin tells us what others can study – and which keys to their success western manufacturers would possibly wrestle to emulate.
Within the final two years, a brand new crop of Chinese language manufacturers has made a reputation for themselves abroad, outperforming main international gamers on a direct-to-consumer (DTC) e-commerce mannequin. DTC is a fast-track retail mannequin the place manufacturers transact with shoppers straight, eliminating intermediaries. Leveraging the pandemic-driven world e-commerce growth, these manufacturers aggressively expanded their digital presence in worldwide markets; some turned leaders in product classes.
Take quick trend retailer Shein, which identifies social media trend tendencies and delivers them to the doorsteps of younger shoppers, releasing a staggering 2,000 new gadgets day by day (factoring in several types, some put that quantity at 6,000). The e-fashion retailer is outshining its rivals, surpassing H&M, Zara and Perpetually 21’s US gross sales.
Equally, Anker: the electronics retailer began with battery chargers, then leveraged a ‘shallow sea’ technique to seize fast-growing area of interest classes, comparable to sweeping robots, wi-fi headphones and good projectors. The technique enabled the corporate to create main world manufacturers in these niches: Soundcore, Nebula and Eufy.
These DTC disruptors have shortly eroded market share for main worldwide gamers, outsmarting them in adapting to altering buyer preferences and constructing intimate buyer relationships. Their journey affords three key classes for each younger manufacturers and established incumbents seeking to emulate their success overseas.
1. Ship merchandise quick, catered to native tastes
The DTC mannequin offers manufacturers a aggressive edge, permitting them management of your complete client journey from acquisition to post-sales service. This permits DTC manufacturers to acquire information, acquire consumer insights and drive product innovation tailor-made to native tastes.
These Chinese language companies have highlighted a particular aggressive edge: whereas the standard DTC mannequin is designed to convey manufacturers and shoppers nearer, their new DTC mannequin additionally brings factories nearer to shoppers.
As the most important e-commerce market globally, China has cultivated many small and medium-sized factories that serve e-commerce manufacturers. This huge community permits Chinese language DTC manufacturers to reply quicker to client wants, offering quite a lot of merchandise to world shoppers in shorter manufacturing time spans. And the nation has long-established provide chains, creating economies of scale for native manufacturers (even amid world provide chain disruptions).
2. Leverage digital channels
The digital explosion pushed by Covid-19 enabled e-commerce firms increasing abroad to maneuver past Amazon as their solely on-line touchpoint, constructing an omnichannel presence by search engine marketing and social media. Leveraging direct channels, these DTC manufacturers enabled an nearly immediate suggestions loop between shoppers and producers, permitting them to know clients’ aspirations and launch new merchandise shortly and at scale. That is higher referred to as ‘product-on-demand.’
Conversant in China’s fierce on-line competitors, these Chinese language companies efficiently utilized ways of influencer advertising and marketing, gamification, content material advertising and marketing, peer suggestion and group purchases. These are extremely efficient on social channels comparable to Fb, TikTok or Instagram, as with China’s Taobao, Douyin and WeChat.
Shein turns social media feeds into stay client insights that drive actual actions. It noticed that youth in Europe and the USA had been taking their trend inspiration from social channels, somewhat than trend reveals. As soon as Shein identifies an rising development, it instantly requests its inside design crew and exterior suppliers to reply with merchandise.
Many native trend manufacturers wrestle to cater to the varied tastes of world audiences. Utilizing its huge community of clothes factories in China, skilled with small orders, Shein conducts trial-and-error evaluation, compressing the design and manufacturing cycle of a brand new type to as brief as per week.
3. Seize area of interest classes
Taking a distinct path to Shein, Anker’s profitable technique is to find and seize upcoming area of interest classes quicker than its rivals.
Anker began with area of interest merchandise: energy banks and charging cables. Following the ‘shallow sea’ technique, it shortly moved to determine classes the place market demand is rising shortly however will not be but large enough to draw large gamers. Thus Anker grabbed market share in fast-growing classes (together with good audio system, good projectors and sweeping robots) earlier than rivals may react.
An vital issue is the superior provide chain of client electronics in Southern China. Even when Anker entered a brand new class with little area experience, it may simply discover the correct design, expertise and manufacturing companions to show concepts into scalable merchandise in a matter of months.
A brand new period for Chinese language DTC manufacturers
Chinese language manufacturers are sometimes considered low-end substitutes within the world market. However the newest era of DTC manufacturers brings a brand new worth proposition to the market: customer-centricity and products-on-demand. They’ve constructed an nearly immediate product lifecycle between rising client tendencies and bodily merchandise.
This new paradigm of ‘product on-demand’ will proceed to evolve and influence extra industries. An increasing number of firms will attempt to do the identical: flip stay feeds of client insights into tangible merchandise, construct a highly-flexible provide chain, and in the end reshape into consumer-centric and fast-responding organizations.
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