L2, an "internet" think tank for luxury, published a study on the "Digital IQ" of luxury brands in China in June 2010; its results are fascinating. The following are the 3 most important conclusions in my view:
- The visibility-factor in the strategy of brands in China: they have all adopted a very conventional approach - which consists of opening stores and considerable publicity. Yet this study - which measures the visibility and impact of brands on the net - shows:
- That most luxury brands do not know how to make use of the distribution / communication channel the Web offers in China: there are 385 million Internet users in China, i.e., more than the U.S. and Japan combined - and 80% of luxury consumers are under 45. They therefore belong to the Internet generation.
- There is no interconnection between a physical presence and a presence on the net: the brands most firmly implanted in stores are not the most talked-about on the net!
- Very few luxury brands foster relationships with their customers / consumers: they do not know how to create bonds by building their communities - although this is not specific to China. They are present - but in a strictly top-down relationship - which is nothing but a transposition of a typical "print media" relationship onto the Internet.
- The largest category concerned - and the most advanced - is Beauty (followed by cars): here, where on an average 10% of luxury brands have a merchant site, 46% of beauty brands have only one / here, where on an average 20% brands do not have a site in Chinese, only 8% of beauty brands lack one (remember that e-commerce in China increased fourfold between 2006 and 2009!).
It is therefore particularly interesting to analyze the Web strategy of the luxury brand that is ranked No. 1 in this study: Lancôme. It is built on four complementary pillars, allowing it to reach out to a base of a million prospective buyers:
- A corporate website and e-commerce: the brand acquires its experience by selling and has a list of 300,000 clients and prospective customers.
- The nucleus of this plan is a community mini-site (rosebeauty.com.cn): A combination of events, celebrity forums, product info, and interactive customer forums, Rosebeauty has a "prospective clients" base of 500,000.
- A presence on the Chinese version of Twitter, Sina Weibo, with 30,000 brand followers.
- A page on the Chinese Facebook, Kaixin001, with 300,000 fans of the brand.
The dynamics behind Rosebeauty is impressive: 64% of its visitors come to the site more than once a day and 45% of the topics elicit more than 5 client reviews. If this site is so successful it is because the brand provides a clever combination of conversation, information, and event updates. But this raises two questions - which are also of key importance to Lancôme:
- Only about 40% of the topics discussed by Chinese netizens on Rosebeauty actually concern beauty: 54% relate to luxury in general (including brands other than Lancôme). This presents a unique opportunity for making Rosebeauty a real luxury portal - which is a challenge for any beauty brand.
- A comparison with the results of a similar study in the U.S. is instructive: Lancôme (like other beauty brands) has much better results in China than in the USA! Web strategies of luxury brands need real benchmarks (like this study) and best practices (shown here in the case of China) to start developing coherent global strategies. Looks like there's a lot of work ahead!
