China’s e-commerce agencies and the trust crisis
Sharp-eyed Chinese online shoppers browsing through Taobao stores are used to spotting product comments and images that look very similar. “It’s most probably the work of professional ‘brush-up’ groups,” says Hu Ancheng (not his real name), who is a brand specialist working for e-commerce agencies. “It’s likely that the business is trying to improve its search rankings, so they pay for attention – hiring people to brush up their comments section.”
E-commerce agencies, which often employ these brush-up experts, are growing in number as they seek an edge in an ultra-competitive market. But they are now facing a backlash as brands wonder whether they can trust what the agencies are offering.
The Chinese e-commerce service market was valued at RMB 200 billion (around $28.2 billion) in 2019, according to data from IiMedia Consulting. It is expected to top RMB 295 billion (around $41 billion) in 2021. In China, at least 80 per cent of brands use e-commerce operations agencies to market their online business.
An example of an e-commerce operations agency is Buy Quickly, based in Shanghai, which focuses on serving international fashion brands, with a particular emphasis on the luxury sector. It’s worked with more than 80 global brands, establishing long-term relationships across a range of product categories, including apparel, footwear, luggage, jewellery and watches, and has even opened branches in Milan and New York City.
Facing the challenges of the complex Chinese e-commerce sector, most brands simply don’t have the skill sets to match their ambitions. That’s why they leave it to the professionals. “Efficiency is the key,” says Buy Quickly president Zheng Zhengshun. “For the company, it depends on the costs and efficiency of hiring an agency compared with those of its own internal team. Based on current results, an agency’s operational efficiency is higher — I think that will remain true in the future.”
These agencies operate in three key ways. There is the distribution model, where an agency buys goods from a brand and sells the products directly, independently of the brand, with the right to set prices and discounts. Second is the service model, where the agency provides operating services for a brand, with income deriving from commission based on performance. A third model covers a wider range of services charged on a project-by-project basis — such as the creation of short videos online or live streaming.
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