China represents both a huge challenge and a huge opportunity for brands looking to expand into new markets.

Julien Chiavassa is an expert on Chinese ecommerce having been living and working in the country since 2005. 

In 2011 he established Clarins’ first ecommerce store in China and has recently moved to Singapore to become head of digital and ecommerce in APAC.

I caught up with Chiavassa at Demandware’s Xchange ’14 conference to find out more about the challenges facing luxury cosmetics brands in China…

Please explain your role at Clarins…

I recently became head of digital in APAC, covering China, Japan and Korea. We’re also contemplating moving into Taiwan and Australia in the New Year.

A big part of my job is to control the branding of the website, ensuring that all merchandising and communications is in line with the brand’s creative guidelines.

This involves working with the marketing and creative teams in the region to make sure we support our advertising campaigns.

In 2015 we want to maintain strong sales and profitability, while also expanding into new countries.

Clarins’ Chinese website

We also want to become more proficient in using eCRM features, improve conversion rates, and increase our share of voice on social.

And a big project which is now coming up is moving to an omnichannel model, which involves digitising our POS using tablet devices and different types of merchandising.

How does your distribution model differ in APAC compared to Europe?

It’s very different. In the West our products are sold through distributors, but in Asia we have our own counters in department stores, where the sales team are Clarins employees.

This accounts for about 90% of the business.

This means we have much more control over the POS and the customer database, which makes it easier to build a more seamless experience between online and offline channels.

What is WeChat’s role in bridging that gap between offline and online sales?

We are active on social networks across APAC and mainly focus Facebook, though we’re just trialling Instagram in Singapore.

The one exception is China where we use Weibo and WeChat. We first established an account on WeChat in June 2013 and have had really good traction so far.

Our WeChat fanbase grew very rapidly and it drives really good traffic to our ecommerce site as well. It’s actually one of the first times that we’ve seen a social site driving a large number of ecommerce sales.

We also use WeChat as an online acquisition tool to bring people into the stores.

At Clarins we do a lot of sampling, and we offer prospective customers the chance to try before they buy, so for each marketing campaign we do there is an online sampling initiative where we ask people to register with Clarins on WeChat and then they can collect a free sample at the store of their choice.

We can then explain to them how the products should be used, so they benefit from advice of the sales team.

Do you use Tmall?

Yes, we have an official flagship store. It’s important to have a presence on Tmall as it helps to establish wider visibility among Chinese shoppers.

When Chinese people are looking for a brand, they turn to either Taobao or Tmall ahead of search engines.

But as it’s not our own asset we are a bit cautious in the way we deal with the platform, and our own Clarins site is very important as we have more control over the content and CRM.

Clarins’ Tmall store

Looking at our Tmall campaigns, one thing we did there tied into Women’s Day, which is a very popular event in China.

Tmall users could register for a free sample that was redeemable if they went into a specific department store to buy a product.

This campaign created a huge increase in offline sales during the three-day event.

We’re trying to do more of these types of campaign, but I would say we are still at the beginning of the tests. We need to get to the stage where it is an ingrained process, rather than a one-off pilot that takes a lot of effort.

Tmall is owned by Alibaba. How do you think it has changed as a result of the IPO?

In the lead up to the IPO there was a big push to secure high-end brands to give more credibility to the platform.

There was also a bigger push to control the sale of fake goods. 

If you go on Tmall you will see our official site, but also a number of other resellers. Many of these are unofficial, so there was a move to clean it up ahead of the IPO.

Now this being said, I’m really eager to see how it develops. 

I think it’s going to become tougher for companies now the platform has more credibility and is more popular with high-end brands.

It could become a media-buy game, where the cost of media will increase very rapidly.

If you look at the mass market environment, some brands are already finding it a challenge to justify the amount they are being asked to pay on Tmall, and some are considering using that investment elsewhere.

Looking at search in China, as Tmall is so popular how much of your focus goes on Baidu?

We definitely focus on both, because Tmall is a closed environment. Its pages don’t even show up in Baidu.

Baidu is a no-brainer as it’s the biggest search engine in terms of marketshare, however the issue we have is that the cost inflation for Baidu PPC is crazy.

For me it’s not playing a smart game or considering the long-term relationship with brands.

Search results for Clarins on Baidu

The cost inflation we are seeing is higher than the comparative growth of the ecommerce market, so it’s almost impossible to sustain the same visibility as we had last year because to do so we would have to massively increase our investment.

Thankfully 360 is now taking a greater share of search traffic, I think it’s up to around 20%, and I hope that continues to grow and shake up the search market because it will create a more healthy environment.

One common question among brands expanding into China is whether they should recruit locally or transfer over their Western staff. Which approach did Clarins opt for?

For the first two years I was the only foreigner out of 80 people in Clarins’ Chinese subsidiary, however we have begun to recruit more from overseas to create a more mixed culture.

I’m now moving to Singapore and the person replacing me in China is Chinese, so we strongly believe we need local talent but this being said, we also believe that we need cultural diversity in our teams. 

There is still a divide between Chinese people and foreigners in China, both professionally and socially, so it can be difficult to build something together.

So in terms of the approach we have when it comes to digital in China, we think it’s key to have strong local talent.

If you talk with platforms such as Tmall it’s 100% in Chinese, so even though I speak Mandarin I was limited to what I could achieve with them.

So though my role was to build our presence on these platforms, we now need someone who can create closer relationships.

In terms of agencies, we have a mix of both. Usually it’s a regional agency based outside of China, which is able to work in China and in other countries.

This is because Chinese companies often only work within their own country and nowhere else, with the exception of WeChat and Alibaba.