China E-Commerce

Tencent Takes a Stake in Dianping

Recent rumors of Tencent’s possible acquisition or investment in Dianping have become fact. Multiple sources have revealed that Tencent has already acquired a stake in Dianping and will announce the news early this week.  

Rumors are circulating that a 20%-25% stake has been bought by e-commerce giant Tencent - valued at around USD1.8 – 2 billion. 

Dianping is currently in its eleventh year, being founded in April 2003 and is currently the most popular ratings & review service in China. As of Q4 2013, active monthly users were at the level of 90 million, 75% of views coming from mobiles. The platform currently has 8 million merchants and 30 million ratings/reviews – covering 2,300 cities in China and a dozen countries.

Dianping has found its competitors in group-buying and other lifestyle/local sectors. Since group buying has become one of Dianping’s major revenue sources, group-buying services such as Meituan have become direct competitors.

Having had a slower growth rate than some other group-buying services, Dianping has big plans for acceleration this year – the company has now launched a food delivery service and is currently building a hotel booking service.

It is expected that Dianping’s services will be integrated into Tencent’s properties, especially their successful mobile messaging app WeChat.

Source: Tech Node

China E-Commerce

Who is the Chinese Luxury Consumer?

Pinning down the quintessential Chinese luxury consumer is a tough thing to do, as there are a few different types.  It has been estimated that globally, there are 300 million luxury consumers who spent $295 billion USD in 2013.  In terms of size, the Chinese made up the third largest group (14% of the total), after Americans and Europeans.  Spending-wise, however, the Chinese were second in line with $1.7 billion USD, right after the Middle Eastern consumers.  Breaking down the global luxury consumers, we can estimate that about half, or 150 million of them, are true luxury consumers, or people who purchase luxury goods on a consistent basis.  Though they only make up half the group, they account for about 90% of 2013’s total luxury market, and the Chinese make up about 19% of this group ($29 million USD).  Today we’ll be looking at the two groups, omnivores and the opinionated, of Chinese luxury consumers who make up 60% of the group as a whole.  Overall, females are the top spenders (60% of the group) and Chinese luxury consumers will spend mainly overseas and at monobrand stores.  Another factor that contributes to luxury spending is gifting, which is seen as a cultural ritual. 

Omnivores:  Omnivores are known as those new to luxury and are often inhabitants of lower-tiered cities.  They have an insatiable appetite for luxury and are brand name and status conscious.  This group is the one typically portrayed in the media.  Omnivores do most of their shopping abroad and have low sensitivity to advertising and are influenced by social networks.  They are usually in the 30-40 age group (the lowest age group of the consumers). 

The opinionated:  The members of this group are typically found in Beijing and Shanghai, followed by Western Europe and the U.S.  This consumer is typically a highly educated manager in his/her early 40s.  They shop repeatedly throughout the season, usually in his/her hometown or country, during work-days.  They leverage new technologies and tablets.  They are strong luxury connoisseurs with the highest level of brand awareness.  They are very receptive to superior in-store service, and targeted communication is crucial to driving their purchases. 

Source: Red Luxury

China E-Commerce

WeChat reveals Self-Serve Advertising System

January 2014 saw WeChat testing Guangdiantong (GDT), a self-service advertising system for subscription accounts. According to GDT, dozens of accounts (operated by either free-lance writers or media) joined the 10day trial leading to a click-through rate of 3.5%.

Peter Zheng, head of GDT and VP of Tencent has stated that Guangdiantong doesn’t take revenue shares at this moment in time in order to encourage subscription accounts to get onboard. There are currently more than 2 million official accounts on WeChat, including both subscription and service accounts. The subscription accounts are used by media or other kinds of publishers to deliver voice messages, text, videos and general content to subscribers, whereas service accounts are for businesses.

At this moment in time the most popular account is run by a former TV producer. This account received more than 10,000 yuan in the ten day trial and had the highest click-through rate of 13%.

Source: Tech Node