{"id":11789,"date":"2021-04-20T16:51:12","date_gmt":"2021-04-20T08:51:12","guid":{"rendered":"https:\/\/www.jingdigital.com\/?p=11789"},"modified":"2021-04-20T16:51:12","modified_gmt":"2021-04-20T08:51:12","slug":"wechat-luxury-index-2021-from-social-to-commerce","status":"publish","type":"post","link":"https:\/\/www.jingdigital.com\/en\/articles\/11789\/","title":{"rendered":"WeChat Luxury Index 2021: From Social to Commerce"},"content":{"rendered":"
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by\u00a0Alexander Wei<\/em><\/span><\/h5>\n

As the WeChat communities of luxury brands continue to grow, the way in which they are interacting with brands on the platform is evolving. The all-new report released by DLG (Digital Luxury Group) and JINGdigital takes a closer look at key performance indicators on WeChat, and how brands fared on the platform last year.<\/strong><\/p>\n

With the global luxury market clouded in uncertainty, many luxury brands chose to look East in 2020. As the only luxury market in the world functioning at a semi-normal capacity, international brands naturally began to step up their investments in China last year. This, coupled with the ongoing growth and evolution of the Chinese digital landscape, created a robust environment for brands\u2019 online activities in the market to thrive.<\/p>\n<\/div>\n

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A report by Bain estimates that\u00a0China\u2019s online luxury penetration in 2020 is expected to grow by 153 per cent compared to the previous years<\/a>, accounting for 23 per cent of total consumption. It is worth noting that unlike in Western markets, Chinese consumers are purchasing luxury goods not only on brand-owned websites and third-party marketplaces such as Tmall and JD.com, but also social channels like WeChat, or Douyin and Weibo which have rolled out their own e-commerce offerings as well.<\/p>\n

Social platforms are rapidly evolving and develop more functions that span even more touch points along the consumer journey, causing the digital ecosystem in China to become increasingly fragmented. While WeChat remains the most ubiquitous digital platform, user behaviours on the platform are starting to change and brands are finding it increasingly challenging to engage their communities. The latest 2021 WeChat Luxury Index report by DLG (Digital Luxury Group) and JINGdigital delves into these issues based on an in-depth study of the WeChat Official Accounts of 33 luxury brands from January to December 2020.<\/p>\n

Still Growing<\/b><\/h3>\n

According to the report, the overall growth rate of luxury brands\u2019 WeChat communities rose by 44 per cent in 2020, up from 2019\u2019s 37 per cent. This rise likely stems from the influx of brands ramping up their investments in the Chinese market, as well as on local digital platforms. While an increase in media investment has been observed, growth was largely fuelled organically \u2013 much like in 2019 \u2013 highlighting the continued importance of such channels. This indicates that brands should pay more attention to these channels, instead of banking too much on paid advertising.<\/p>\n

\"GROWTH
On average, luxury brand accounts on WeChat grew by 44 per cent in 2020, largely through organic channels. <\/strong><\/span>
Credit: WeChat Luxury Index 2021, DLG<\/span><\/figcaption><\/figure>\n

Of these organic channels, QR Codes and Search remain the two most pivotal in terms of recruitment, accounting for 63.18 per cent of the total growth. The third most significant channel was WeChat Ads, which brought in 15.07 per cent of new followers acquired. However, it should be noted that followers recruited through paid channels typically demonstrate the lowest retention rate: The unfollow rate of those recruited through WeChat Ads was at 32.07 per cent in 2020, meaning that one in three newly-recruited fans went on to unfollow the brand account. This significantly impacts the returns of investment for brands on this channel, and is something to be taken into consideration.<\/p>\n

\"UNFOLLOW
32.07 per cent of new followers recruited by WeChat Ads will unfollow the brand.<\/strong><\/span>
Credit: WeChat Luxury Index 2021, DLG<\/span><\/figcaption><\/figure>\n

\u201cIt is important for brands to develop stronger recruitment strategies around their organic channels,\u201d says Mario Juarez, SCRM and Data Strategist at DLG (Digital Luxury Group). He explains that while Search is directly linked to brand equity and harder to impact, QR codes are something that brands can easily leverage. \u201cBeyond adding recruitment QR codes at the end of articles or in offline stores, brands should think about utilising it in other creative scenarios such as in campaigns or surveys, and developing user journeys that will guide customers in discovering the brand,\u201d he adds.<\/p>\n

WeChat As an Information Centre<\/b><\/h3>\n

WeChat may be a top instant messaging tool with over 1.225 billion monthly active users, but the bulk of user interactions on brand Official Accounts \u2013 over 73 per cent \u2013 are centred on menu clicks. This is something that has remained fairly consistent from year to year. This suggests that users tend to only interact with brands when they have a query or are searching for specific types of information. In contrast, post interactions only make up about 10 per cent of all user actions.<\/p>\n

\"TYPES
73 per cent of all user actions are related to clicking on menu items.<\/strong><\/span>
Credit: WeChat Luxury Index 2021, DLG<\/span><\/figcaption><\/figure>\n

So while engagement rates within articles have decreased slightly from 10.89 per cent in 2019 to 9.56 per cent this year, this is not something that brands should be overly concerned with as the bulk of user interactions with the brands do not take place on this front. \u201cThis is also why brands need to be less caught up with \u2018traditional\u2019 social media engagement metrics and evaluating their success on WeChat based on the comments, shares or WOWs they get in articles. Content is essential, but it is a smaller part of how consumers are interacting with brands on the platform,\u201d elaborates Pablo Mauron, Partner & Managing Director China at DLG (Digital Luxury Group). \u201cBrands should also work on developing their service offering, such as social CRM programmes \u2013 where there is clearly still a lot of room for growth \u2013 customer service chat options and e-commerce.\u201d<\/p>\n

Leveraging Social Commerce<\/b><\/h3>\n

The total gross merchandise value (GMV) generated by\u00a0WeChat Mini Programs grew by over 100 per cent year-over-year in 2020<\/a>, and is estimated to surpass 1.6 trillion RMB in 2020, rivalling JD.com and Pinduoduo. However, unlike major marketplaces like Tmall, the way brands operate their e-commerce on WeChat needs to consider WeChat\u2019s primary social function.<\/p>\n

As a result, brands do not always follow the model of traditional e-commerce sites or their official sites when building up their e-commerce Mini Program storefronts. While some brands do present their complete product ranges on WeChat, others choose to launch pop-up stores, available for a limited time in tandem with brand campaigns and important marketing milestones (e.g., Chinese Valentine\u2019s Day, Lunar New Year).<\/p>\n

There are, of course, many creative ways to go about this \u2013 Danish jeweller Pandora\u2019s gifting Mini Program for Chinese Valentine\u2019s Day last year demonstrated just that. During the campaign period, users were able to purchase gifts for their loved ones and customise gift messages accordingly. In addition, to simplify the gifting process, consumers could also share a link with the recipient through the Mini Program and have him or her fill in details such as the delivery address, and size required (without revealing details about the gift).<\/p>\n

\"SOCIAL
Recipients can fill in the address or choose his or her size through Pandora\u2019s Mini Program<\/span><\/strong>
Credit: WeChat Luxury Index 2021, DLG <\/span><\/figcaption><\/figure>\n

The commerce opportunity on WeChat is significant, now even more so given the broadening of traffic options to Mini Programs. Weibo and RED now allow traffic redirection from their platforms to WeChat Mini Programs. Another new function that brands can leverage is sending SMS messages containing Mini Program links to redirect customers to WeChat. \u201cBy embedding Mini Program links in SMS messages, brands can further enrich their consumer marketing efforts and drive an additional layer of traffic to their WeChat Official Accounts,\u201d says Kai Hong, Chief Executive Officer at JINGdigital. \u201cThrough this, they will also be able to better nurture and activate prospects, directing them seamlessly to purchase as well.\u201d<\/p>\n

\"KEY
Brands can drive traffic to Mini Programs by inserting links in SMS messages, and sending them to consumers at opportune moments<\/span><\/strong>
Credit: WeChat Luxury Index 2021, DLG<\/span><\/figcaption><\/figure>\n

For more data and insights on follower acquisition, engagement and content, as well as case studies and frameworks on new business opportunities on WeChat, watch a replay of the WeChat Luxury Index 2021 livestream session. The full report is also available for download at the link below.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

by\u00a0Alexander Wei As the WeChat communities of luxury br […]<\/p>\n","protected":false},"author":39,"featured_media":18387,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[],"class_list":["post-11789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-en"],"yoast_head":"\nWeChat Luxury Index 2021: From Social to Commerce -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.jingdigital.com\/en\/articles\/11789\/\" \/>\n<meta property=\"og:locale\" content=\"zh_CN\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"WeChat Luxury Index 2021: From Social to Commerce -\" \/>\n<meta property=\"og:description\" content=\"by\u00a0Alexander Wei As the WeChat communities of luxury br 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