Xinliangji is a Beijing-based seafood supplier, founded in 2015. Until recently, the company had earned a pretty penny supplying products like frozen crayfish and basa fish to restaurants such as fish hotpot chain New Spicy Way. But like almost every business in food service in China, its income sources fell off a cliff from mid-January with the abrupt closure of China’s restaurants.
Sitting on a stockpile of crustaceans and catfish, Xinliangji did what a number of successful businesses have done during these unique times: it adapted. It swiftly pivoted its target market from businesses to consumers – knowing consumers had swapped dining out for eating at home. With many seeking convenient cooking options, it launched ready-to-eat seasoned crayfish on ecommerce channels including Tmall and JD, and social commerce through Douyin. Between February 7 and 17, online sales increased more than 10-fold from ¥80,000 ($11K) to ¥1 million ($140K).
On April 1, when online celebrity Luo Yonghao held his first livestream to an audience of 48 million on Douyin, his top seller was Xinliangji crayfish, which topped ¥20 million ($2.8 million) of sales. It has since launched new products including a Sichuan-flavoured ready-to-eat fish set, which sold over ¥1 million ($140K) the first evening it launched.
With traditional B2B companies such as Xinjiangli entering the consumer market, competition has further increased. However on the flip side, there are also many brands who have been “waiting it out, to see what happens” and have done little to move with the new trends – this has freed up opportunities for businesses who are across new trends and preferences, and have evolved their strategies accordingly. In addition to diversifying their revenue streams, those adaptive brands have been appreciated by consumers, who are experiencing stronger emotions than ever as a result of the COVID-19, and are more likely to be loyal in the future, as Hema has discovered.
Xinliangji provides plenty of angles on how successful companies are adapting to the new environment that has resulted from the virus. Firstly, they understood changing customer preferences and habits and launched new products that appealed to these. They had a strong focus on ecommerce and tapped into the livestreaming trend, which saw an 88% growth of merchants in Q1 on Taobao Live alone.
Although ecommerce still has a long way to go before supplanting traditional brick & mortar retail in China, the pandemic has further accelerated its importance. In the first quarter – the height of China’s outbreak – retail sales in China fell 15.8% overall, while online sales of products grew 5.9%.
Just as ecommerce is rising, the diversity of online commerce is also growing – and its slew of acronyms. There are many options beyond traditional listings on Tmall or JD. In addition to livestreaming, the adoption of social commerce has boomed, and the greater margins, higher price points and customer ownership that come with it. Similarly, private groups have been a popular and intimate way to connect with consumers. C2M (consumer-to-manufacturer) models have also seen rapid adoption over the past few months driven by both Alibaba and JD, as have DTC (direct-to-consumer) models and the connected MLM (multi-level-marketing), although this hasn’t been without regulatory issues on both sides of the Pacific. Contactless delivery, one of the winners from ecommerce during COVID-times has also seen its share of challenges, as Hive-Box will attest. And the list goes on.
Chinese consumers’ every-day lives have slowed and become simpler as a result of COVID-19, but it has done nothing to simplify marketing strategies for China. Adaptable brands who can understand and navigate the new retail environment are likely to be rewarded, and in many cases, come out stronger than before, as we have seen with Xinliangji.