We present an edited version of our conversation with Amanda Baldwin, President at Supergoop!, and Erick Haskell, President of International at Allbirds, from a webinar held on June 25, 2020 by Coresight Research and Alibaba Group. The webinar was hosted by Deborah Weinswig, CEO and Founder of Coresight Research, and Tony Shan, Head of Americas for Alibaba’s Tmall Global and Kaola. We profile the speakers and their companies at the end of this report.

Consumer Trends in China

What consumer trends are you seeing in the China market? Tony Shan: First, in terms of consumer trends in China, we are seeing positive consumer sentiment in China post the height of Covid-19. I think 6.18’s success is a good indicator of future recovery and continued growth. With limited travel in the short term, I do believe that the demand for imported goods should rise. Other trends are as follows:

• Consumers like to explore and discover, and our mobile apps are personalized based on the consumer profile, their browsing and purchasing history, so content can be customized to further increase engagement.
• We do not see the livestreaming trend dying down, and it will remain a key component for marketing and increasing brand awareness as well as a sales-driving channel.
• On the consumer demographics side, we are seeing a rise in consumption of global brands from all millennials and Gen Z consumers, as 55% of our consumers of overseas products are post-1990s. These young shoppers are generally more in tune with global cultures; they are excited to try new products from abroad; and they also like to showcase their own individuality through their purchases.
• 60% of our new active customers are from less developed areas in China. Readily available talk technology for online shopping are making it easier for consumers in China to buy the things that they want—inclusiveness can be seen, especially in the lower-tier cities and rural areas.

I just want to highlight some examples of high-growth and emerging product categories that we are seeing that are currently trending in the Chinese market.

• High-end and technology-driven beauty tools and devices
• Men’s skincare—I think Chinese men are starting to take care of themselves and looking younger and younger.
• Maternity products, like pregnancy-friendly makeup and prenatal nutrition and maternity care
• Pet products are on the rise. For those who are not ready to have children yet, especially the Gen Zs, having pet companions is a popular option. The best products for pets are becoming quite popular in China.
• Health and wellness will remain a strong category, as consumers will continue to be health conscious to protect themselves and their families.

Partnering with Alibaba: Shopping Holidays and Market Entry into China

What were your strategies for the 6.18 shopping festival? Amanda Baldwin: We [Supergoop!] launched in China in mid-February this year, so right as Covid was really hitting its peak on that side of the globe. It was something that was a long-term decision; it was a long time in the making. We really felt like we still had a purpose and still needed to push forward with our plans. So, being a part of 6.18 was something that was really exciting for us, because it was our first opportunity to participate in a large shopping festival. It was the first time to see how we would stack up as a newbie in the market, and we beat our projections. The brand overall has performed way beyond our wildest imaginations, and I spent much of the last few months chasing inventory and stock—which is a wonderful problem to have. It was a little bit of a testing ground for us to see what happens in an environment like this and how do we understand how to build a business that is successful in a large promotion but is also built for long-term success. We are really investing very heavily in the market and spending a lot of effort driving marketing to ensure that we would be successful at a time like this. It was about being successful on 6.18 but also investing in terms of visibility—making sure that we are preparing ourselves for the long term. Erick Haskell: The shopping festivals for Allbirds are a really great opportunity for us to reach out to Chinese consumers, but I will say, they require us to be even more creative than normal, because as a full-price brand, we have to be really relevant to consumers. While many brands approach the shopping festivals with discounts and promotions, we do remain full price, so it means that we have got to be really compelling and really creative with our consumers. We did this by building momentum even before the 6.18 festival started: We had a really important product launch—we launched our first performance running shoe, which really built a lot of excitement in the market; and we announced a really innovative carbon-scoring program. Then what we had to do was constantly keep consumers interested through limited-edition products and interesting gifts related to the brand, such as a branded water bottle and innovative shoe bag. So, through the 20-day shopping festival we continued to do things that were exciting and relevant for consumers. I think we were rewarded for it. We did 6.18 the previous year, and comparing the same period last year, we had double the sales for 6.18 itself in 2020. The day was our single biggest day ever on Tmall. One of the metrics I look at is that 65% of our consumers were new consumers during the period, so the festival gave us an opportunity to introduce Allbirds to a whole new set of Chinese consumers—so it was very successful. How has Alibaba enabled you to engage with Chinese consumers? Amanda Baldwin: Quite frankly, we accelerated [our engagement in the market] based on outreach from the North America team, with Alibaba saying, “Supergoop! is being talked about; will you partner with us?” We have been trying to learn and understand the market for about four years, so we knew early on that there was interest in the brand. For us as a young company, we have very few markets in which we are going international, so when we do, we are making big bets and we want to really be sure that we are going to be successful. Having that inbound of having proof points was really important. The other thing is that we do have a partner who we work with that is our marketing arm over in China, which certainly helps us navigate things because we are a young team—so we also had a lot of conversations about selecting the right platform for us. Alibaba provides an integrated shopping experience and is a platform where we really felt like we can do a lot of education about our products. As much as Chinese consumers may understand SPF, we realize that there is still so much to teach and educate on, and that is a core strength of ours. Last but not least, we are a cruelty-free brand and so the ability to go cross-border was a make-or-break decision for us, because that is something we would not forgo even if we want to go after a new consumer. Erick Haskell: One of the things that was important to us when we formed a partnership with Tmall is that it is the only third-party platform that we sell on throughout the world—and, as a direct-to-consumer brand, that was important for us. One of the reasons we have been so successful is that the platform does allow us to create a direct-to-consumer-like experience. We feel we are able to tell our brand story on the platform. We control the assortment; we control the pricing; and we do product fulfillment and customer service. It really does allow us to deal directly with the consumer like we do in all of our other channels. As the partnership has grown, where we really built upon that initial success is working with the Tmall team locally in China to enhance our performance marketing—which is what we did for 6.18. The really sophisticated targeting algorithms that Tmall has really helped us hit the right consumers. What are some of the important things for companies to consider in serving the China market today, and what is your outlook over the longer term for retail in China? Tony Shan: We have seen a greater acceleration of digitization for both consumers and businesses. We are optimistic about the continued growth and opportunities in the Chinese consumer market, especially coming out of 6.18. We still see great demand for imported and international products, as global travel is going to be restricted in the near future. Our global platform is going to play an important role in continuing to bring high-quality products from around the world to these consumers at home. For companies to be successful in the Chinese consumer market, they should keep up with the consumer trends—where they are shopping and how they are shopping. Livestreaming, cloud partnerships and social commerce will play major roles in driving brand awareness and consumer engagement. These might not be the typical driving forces for brand growth here in the US, so companies need to adapt their strategies and marketing vehicles to cater to Chinese consumers. [caption id="attachment_113665" align="aligncenter" width="700"] Deborah Weinswig (top left); Amanda Baldwin (top right); Erick Haskell (bottom left); Tony Shan (bottom right)
Source: Coresight Research [/caption]  

Agile Operations: Uncertain Times and Understanding the Consumer

Due to the challenges caused globally this year, what lessons did you learn or tips for success that you can share with other brands or retailers? Erick Haskell: The key learning was the necessity of having full omnichannel capabilities. It was actually quite accidental, but when Allbirds launched in China in April 2019, it was really important to me to have these full online-to-offline capabilities. We figured that, being a brand of the future, we should allow consumers to shop the brand however they want and be able to buy online and have it shipped from store pickup or from source. So, we built those capabilities literally from day one. Covid-19 hit at a time when most of our warehouses were closed. Fortunately, we had just stocked up our retail stores in preparation for a busy Chinese New Year. We were able to continue to fulfill orders from our retail stores, and we had the technology backbone and the operational capability to do that. We really wanted to help. We realized that we are a small, new brand in the market, and somebody on the local China team came up with the idea of providing shoes to hospital workers. So, we shipped a lot of shoes to frontline workers in Wuhan. Frankly, we didn't do anything publicly about it; we just did it as a way to help, and it made us feel really good to do it. I then shared that story with the global Allbirds leadership team, and it ended up becoming a corporate-wide initiative. We ended up doing this literally around the world. It was an initiative that started as a small conversation in China and ended up being a really meaningful, impactful approach to the pandemic globally. Amanda: Supergoop! was in a different position, because we had not yet launched when Covid first started to unfold—so there were a lot of conversations about if to launch and how to launch. We had the benefit of being 100% digital, and our approach was to stay focused on the long term—why were we entering the market in the first place and why that was so important for us. The mission of what we are trying to accomplish always guides us, so it was sort of obvious that we needed to go forward. I think the upside of the experience of launching at this time was that a lot of people were inside and watching beauty livestreams, and so we had unbelievable success out of the gate. That being said, we are prepared to change our strategy on almost a weekly basis. Staying focused on long term but being super flexible about what you are doing day to day is really important. To echo a little bit about what Erick was saying, I think this is a moment that is about doing the right thing because you feel good about it and really protecting your people. I think that's what my other big lesson is—people first, always. With this idea of research and learning and being incredibly agile, how do you adapt to the Chinese consumer, and how has it driven your success? Erick Haskell: About six months after we launched in China, Allbirds did a pretty robust consumer research project; we wanted to learn more about what consumers were thinking about Allbirds and how we are coming to market. We learned a lot in terms of the way we communicate the brand messaging in China. We realized that consumers were not fully appreciating the premium nature of Allbirds products, because we were not adequately explaining the premium nature, for example. We also underappreciated the extent to which Chinese consumers found our natural materials to be really innovative, so it actually caused us to tweak our messaging and really focus on the premium nature of the product and the innovation involved in making products out of natural materials—and we saw a really strong response from consumers. China is such a dynamic market, it is critical to do these touch-bases and speak directly to consumers, especially as a new brand, to understand how they are perceiving the brand and how you may need to alter your messaging for that that particular consumer. Tony Shan: Alibaba does understand that there are brands of all sizes with various strategies and objectives and also at different stages in their exploration into the China market, so we do not have a prescribed path for all brands. We are here to work with brands to tailor their right approach for them. We do have a global team of business development professionals in Asia, Europe, Australia and here in North America as well, who can help in evaluating a brand's readiness and also the approach for market entry. My team of category experts are located in New York, Los Angeles and Vancouver, and we are happy to connect with brands and retailers to explore next steps together. We also have a multi-language website that contains helpful information on our various business solutions, our onboarding process of operations on the Tmall Global platform and more brand case studies as well. We have a robust data in terms of sales performance, emerging categories and emerging brands within our whole Alibaba ecosystem. We can provide a macro overview for brands in terms of what is performing well in the market and how they should think about their pricing strategy and also their promotional strategy—and really work with the brand to figure out the best approach for them.

Audience Q&A: Market Positioning and Logistics

How could US brands best position themselves in China, and how should small companies position their goods for the market? Erick Haskell: One of the decisions that Allbirds made—and I know this isn't possible for all companies to do—was to really commit to the China market when we went in. We built a local team and really strong local capabilities; I do think that is important. When I compare us to other brands that are simply putting product in the market, I found that we have had real traction because we have built that local team with local expertise in Chinese social media and digital marketing. Amanda Baldwin: Find a great partner. I think it probably is unique to everybody's industry. Tmall very early on offered us up some introductions, so I think that is probably a great place to start. Ensure that there is demand in the market for your product and then maybe approach it from that angle. Supergoop! always goes direct to market, except for in China, so this was a unique situation for us. I think it is about trust and people understanding your brand. How are you managing your logistics in the current environment? Erick Haskell: Allbirds has a great third-party logistics partner that works not only in China but throughout Asia, so we were very fortunate to have a fairly nimble supply chain and continue to service orders from our retail stores throughout the crisis. We have also struggled a little bit with some of the inventory issues that Amanda mentioned, but by and large, we have been very fortunate that we've maintained continuous service throughout the crisis. I mentioned earlier that a big learning for us was having these online-to-offline capabilities. We have continued to explore ways that we can allow consumers to interact with the brand in any way they want—that was a big learning that came out of this. We have been like many other brands—experimenting successfully with livestreaming. With the help of Tmall, we've also done what I think are some innovative things in that when we have consumers call in to our customer service team in Shanghai, we are experimenting with Tmall’s technology in connecting those consumers via video chat to our retail store staff, if they have questions about styling and what they should buy. So, this whole period has caused us to really think hard and experiment in ways that we can allow consumers to experience the brand in any way that they feel comfortable. I think this is going to be important for all brands as we go forward.

Final Thoughts

What advice would you give to retailers and brands operating in China in the current environment? Erick Haskell: Chinese consumers are extremely smart and very demanding. I've been in footwear and apparel for a long time, which can be an extremely competitive and sometimes cluttered market. So, especially as a small brand, to break through you really do need to focus on the consumer and focus on what they want and meeting these very demanding needs that they have. Tony Shan: The China market is quite different than the US market, so you really have to think about this market very differently than how you would approach it here in the US. You cannot just take the same strategy and assume that it would work in China, because like Eric and Amanda said, Chinese consumers are very demanding and they want different things. I think from a brand's perspective, definitely look into the market and tailor a specific strategy for China. One other thing I want to mention is just to make sure—whether you're deciding to go into China today or in the near future—to register your trademark today. That is one of the most important things for you as a brand and a retailer: Protect your IP [intellectual property]. Amanda Baldwin is the President of Supergoop!, the first protective skincare brand that puts SPF at the forefront. Baldwin oversees the company’s marketing, sales, product development, operations and finance divisions, and under her leadership for the past three years, the company is on track to grow by more than 7x. Baldwin is a veteran of the beauty industry. Before joining Supergoop!, she was a member of the operating team at L Catterton, the largest global consumer-focused investment fund, collaborating with management teams across the portfolio and serving as the Chief Marketing Officer of StriVectin Operating Company. Prior to that, she led the omnichannel marketing strategy of Dior Beauty at LVMH, Inc. and held several positions at Clinique, part of Estée Lauder Companies. Overview: Supergoop! Amanda Baldwin: The company was founded over 15 years ago by Holly Taggart, who is currently based in San Antonio, Texas. We have a long history of formulating product, and our mission is to go where no SPF has gone before, with a very simple point of view that everyone should be wearing sunscreen every single day and preventing skin cancer. It is truly a mission-based brand: We are about changing the way the world thinks about sunscreen. We have 40-plus formulas and a very unique point of view about clean ingredients and about having different things for different people—being super inclusive in how we approach a category that truly is the number-one thing you can do for your skin.

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Erick Haskell joined Allbirds as President of International in July 2018. He oversees Allbirds’ commercial activities outside of the US, delivering the brand’s direct-to-consumer experience to customers around the world. Haskell previously served as Managing Director of Asia Pacific for Under Armour. Prior to that, he spent eight years at Adidas Group, where he held various roles, including Managing Director of India, and COO and CFO of Greater China. He began his Asia experience in 2005 as Executive Vice President and Chief Financial Officer for the Home World Group, a major Chinese hypermarket retailer headquartered in Tianjin. Overview: Allbirds Erick Haskell: Allbirds is a four-year-old company based in San Francisco, US, with very deep roots in New Zealand. We are a lifestyle footwear and apparel brand, and we make all of our products from natural materials such as merino wool, eucalyptus tree fiber and sugar cane. These natural materials make not only comfortable, high-performing products, but they are highly sustainable—some of the most sustainable in the industry. We have rapidly built an international business. We are currently distributing our products in about 30 countries through the direct-to-consumer model. We launched our China business in April 2019, and we launched not only on Tmall very successfully, but we also launched Allbirds.cn and flagship retail stores. We have been extremely happy with the reception that our products have had in China in a relatively short time.

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Tony Shan joined Alibaba Group in 2017 and now serves as the Head of the Americas region for Alibaba Group’s cross-border business-to-consumer (B2C) platforms, Tmall Global and Kaola. He leads a team of business development professionals in North America working with brands and retailers across all consumer categories to sell into the growing Chinese market. Prior to his work with e-commerce in China, Shan was the Merchandising and Marketing Lead for the apparel and footwear business at Quidsi Inc. He also gained global retail expertise working at luxury fashion brand Coach in global merchandising and planning. Overview: Alibaba’s Tmall Tony Shan: Alibaba Group has a vast ecosystem covering multiple industries and sectors:

• Core commerce
• Consumer services that include marketing, logistics and payment
• Digital media entertainment
• Innovation initiatives

Tmall Global is the largest B2C cross-border e-commerce platform in China. We offer various business solutions for international brands to venture into the China market. Tmall Global has over 25,000 international brands from 92 countries and regions, covering more than 5,100 product categories. Our 6.18 midyear shopping festival wrapped up last week. It was the largest in Alibaba’s history. Imported products continue to be in high demand, with nearly 25,000 brands that participated and launched more than 400,000 new products. This year, we also offered new tools and resources for brands to engage with consumers, especially in the wake of the pandemic. With this pandemic, travel has been restricted, though we are able to bring high-quality goods globally to consumers in China. On Tmall Global specifically, we saw 43% year-over-year growth in GMV compared to last year’s 6.18 event. The overseas fulfillment program, which ships goods from a brand’s home country, also saw an increase of 2x in GMV as more brands are utilizing different platform solutions to deliver the goods to consumers in China. 4,000 brands also saw their GMV double year over year. Lastly, livestreaming has contributed to driving sales and consumer engagement, with 123% increase in sessions compared to last year. The GMV by country ranking was the same as Singles’ Day last year, with the US at number two between Japan and Korea and with Australia and Germany rounding out the top five. Looking at some US highlights, GMV for US brands grew 40% year over year in line with Tmall Global's overall growth for the 6.18 event. We had 25 US brands achieve over ¥10 million ($1.4 million) in GMV and 200 brands that did over ¥1 million (around $140,000).