I tell this story to luxury brands’ marketing teams whenever I had the chance–10 years ago when you asked where educated Chinese wanted to work, they most likely answered Fortune 500 companies. When asked the same question today, the new generation with a similar profile is most likely to be seen in one of the WeWork locations, building their next big ventures.
Same goes with the role models and the style icons of technology, who changed the image of being professional. If the very idea of the successful career has changed (from working in a high-rise glass building in the city center to rolling up their sleeves at the warehouse turned open plan space), so has the concept of luxury, boosting first the dressing-down trend and more recently the rise of streetwear fashion. Like Peter Thiel advised in From Zero to One, “pass on any company whose founders dressed up for pitch meetings.” So in the age of Google and Amazon, or Tencent and Alibaba in China, for that matter, the power of the tech brands is bringing change to the luxury and fashion business. Here’s what to pay attention to:
Learn Business Lessons from the Tech Startups
The startup craze has swept the world. The technology backed ventures are seen having a far greater chance to succeed than the ones in traditional industries.
The ROI-driven approach which is common among tech enterprise has also been adopted by fashion brands–tech startups rarely use the expensive components like celebrity endorsement and offline events in their traditional marketing sense, digital information enables them to quantify the impact of every penny they spend.
Retention trumps acquisition as a concept has also been widely practiced by tech start-ups and adopted by e-commerce marketplaces (the CRM tools built and used by Alibaba are for sales conversion to existing users, for example). It is gradually acknowledged by fashion brands as well–in key sales occasions (Singles’ Day, Qixi, and Christmas, for example) luxury and fashion brands have started to re-target existing consumers/brand VIPs with exclusive discounts/purchase with gifts.
Plug into Powerful Partnerships
Luxury brands trying to crack/grow in China market have started to develop partnerships with tech and e-commerce platforms lately. From Audemars Piguet’s partnership with JD.com, offering technical support to watchmaker’s e-store on WeChat, to Farfetch’s acquisition of CuriosityChina, a digital technology solution agency, the trend is clear–in order to be successful in China’s social commerce digital environment, brands need a much closer integration of commerce, marketing, and technology capabilities.
Technology companies in China are obsessed with building their own ecosystems
Alibaba and Tencent had led the way of creating their closed-loop ecosystems, this has also been practiced by big and small tech enterprises alike (think Xiaomi’s entering of content streaming business or Netease’s Yanxuan). These tech brands have brought major user journey changes–whether it is “See Now, Buy Now” or “Social Commerce,” the idea behind the buzzword is to eliminate the obstacles for immediate conversion. CRM systems, data management platforms, and e-commerce management tools are all for the purpose to keep the journey in the ecosystem quick and smooth. At least for now, technology companies are better positioned to create solutions to this new requirement.
It’s not surprising to see agencies can still survive in the digital age with the setup and service scope more or less unchanged since the 1990s. But I think the new reality is a breaking point for both luxury brands and the agencies. Technology may be just a buzzword for now, but the underlying need for luxury brands and agencies to restructure themselves for a much more advanced China digital ecosystem will persist in years to come.
This story was written by Chenyin Pan, China Manager of post-digital agency Fireworks.