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Oliver Hickfang, Partner of 3digitalminds, told cookiesncode some details about his philosophy of fashion mass customization in China. Read the whole interview here:

What are your personal associations with the term “mass-customisation”- what does it mean to you?

When I first time ever heard about mass-customisation I thought, isn’t that just a new commercial buzz word or – even worse – a contradiction in itself? I asked myself, how can a company make money by following a single customer wish on a scalable mass production plattform? Now, some years and some purchases of mass-customized products later I know better: the combination of smart management, smart production processes, the interactive web and last but not least the outsourcing of tasks to the customer makes mass-customization possible. And, by the way, DIY is nothing new but a re-invention of the “do it yourself” movement from the 50s and 60s when the mass effective production took place in the western world and some people just weren’t unsatisfied with style and image guidelines from the industry. The combination of our actual production and distribution knowledge with the creative and social knowledge of the customer will create the best customized products we have seen so far.

Do you remember in which context you first came across it?

As I remember the first time ever I purchased a customized product was some years ago during an Indiatrip where I found a custom tailor for suits. After measurement and agreeing on the style details the suit was ready to wear within 5 days. I had the chance to visit the production place and was surprised about the well organized processes: each tailor was responsible for sewing just very few dedicated pieces of the suit, one tailor sewed all pieces together and one was responsible for the final quality check. The concept of mass production with a personal touch was fully understood.

Do you know why there is this sudden interest in MC and related concepts at the moment?

First: people are sick and tired of wearing boring clothes or possessing mass products which they might find in their friends place as well. A person in an affluent society who basically has everything needs the next kick which is something special, personal, and individual. Second: The social web along with borderless interaction stimulates consumers to exchange and show their creations. Nothing is more appealing and worth talking about than own achievements and nothing is more interesting for friends to share and be proud of. Third: where a demand is also a supply. Companies are aware of the trend for customization and by answering it with products and services they even more stimulate the development.

Why/ in which situation did you decide to employ MC/work with MC- a little background?

Some years ago I had the idea to open a company for mass customized business shirts but a great offer from an international consulting company came across so I skipped that idea. However, I never totally buried that idea. After living in Chinafor some years and experiencing the matchless demand of 1, 3 Billion people with black hair and brown eyes for appearing a little bit more individual I decided to open my own company in the co-creation field.

How did that work out for you- what new challenges did it raise for you and how did you deal with them?

Asian markets, especially China, are highly challenging and demanding. Not only concerning the set up and the running of a company but also the complex cultural background and history which effects consumer’s predispositions. For example, the color white in Europemeans beauty and virginity; in Chinait might be associated with death as well as the number 4. Especially Chinais facing a development from an agricultural based country to a modern industrialised country in now time. While Europeand the USAneeded some decades to introduce landline telephone to every household the Chinese just skipped the landline and introduced mobile smart phones. Very fast developments not seldom have their victims and often the law and reliably regulations stay behind the actual reality. From my opinion the biggest challenge in Chinais having a strong and reliable network, a long term vision and piece of mind.

Source: Social e-commerce in China, mass customization & personalization

In a statement, group chairman Jack Ma said consolidating the platforms’ operations will better attract sellers and provide consumers with more options, further advancing the Alibaba name brand.

The move comes after Alibaba posted stellar second-quarter earnings, which includes a 159 percent rise in net profit.

Five-year-old Taobao claims that RMB 300 million (US$43.8) is traded on its site daily and from 80 million registered accounts, up from 72 million in June. Meanwhile, Alimama, which launched, claims 3 billion total page views and works with 400,000 small- and medium-sized websites. However, media buyers have argued that Alimama has yet to have a significant impact on the Chinese ad networks operated by Google and Baidu.

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Online travel is another remarkable example with successful e-commerce players. Ctrip s the leading the online travel market with a 51.65 percent market share. Elong, Expadia’s exclusive affiliate in Asia and Mangocity (owned by China Travel Online) lag far behind with a 12.48 and 11.10 percent market share.

The China National Tourism Administration numbers the total revenue of the Chinese travel industry 1,090 billion RMB (155.7 billion USD) for the year 2007. Online Travel booking currently has a share of RMB 2.25 billion (0.32 USD).

Market shares of Chinese online travel companies

Read the complete article and an interview with a Ctrip business development manager here.

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And more about Taobao because it’s so impressive. Take a look at their market share in the C2C industry:

Just five years ago, Taobao didn’t hold quite such an overwhelming lead. Eachnet, founded in 1999, was China’s number one auction site with a peak marketshare of more than 90 percent. The site’s popularity attracted eBay’s interest, and eBay bought the company in 2003. But the process of integrating Eachnet into the global eBay platform was characterized by enormous difficulties and took over a year, giving Alibaba the perfect window of opportunity to enter the consumer-to-consumer market with Taobao. In 2004, Taobao already occupied more than 50 percent of China’s consumer-to-consumer market, while eBay stood at about 35 percent. EBay Eachnet invested heavily to strengthen its presence in China but continued to lose market share to Taobao. And in 2006 eBay sold 51 percent of Eachnet to Tom Online, a wireless internet company with services in China.

The complete the picture, take a look at the B2C industry. The market is (luckily) more fragmented but there are great success examples nevertheless:

Read the rest of an great article about e-commerce in China here.

The figures – which confirm China as the world’s biggest online market by number of users – were released by the China Internet Network Information Center. Around 214 million users have broadband access.

The report also shows that China’s hitherto small-scale e-commerce sector is growing rapidly. Around 23.8 million netizens use online payment services, up 72% from last year.

It also demonstrates the potential of mobile as an online channel in China, with more than 73 million mobile web users.

Source: digitalmedia

Tier1 cities:

• In the Tier1 cities like Shanghai, Peking, Guangzhou and Tianjin live only 6% of the Chinese population. They represent 13% of the gross domestic product.
• These cities are a strong competitions in terms of (foreign) investments and some markets are already close to saturation.

Tier 2 cities:

• In the 300(!!) Tier2 cities live 53% of the urban population. They represent 64% of the gross domestic product.
• Definition of a Tier2 city: Cities with up to 6 million inhabitants and a per-capita GDP of 34,000 RMB in average.
• These Tier2 cities offer a constantly increasing consumer market with a yearly income of 3,000 to 6,000 USD per household.
• Seen as a group, the Tier2 cities grow by 15% per year. 60% of them are located close to the coastal provinces in the eastern part of China.

Offline and online sales:

• Supply chains are far than efficient for foreign companies in China. Only 10% of the turnover is sold directly via retailers, whereas 42% of the turnover reach the consumer through three or more interconnected dealers in the supply chain. The result if a lack of insight into the behaviour of Chinese consumers.
• Only very few companies have direct access to consumers and sell their products online. Examples are Anheuser-Busch or Amway.

Some own thoughts / conclusions:

• 59% of Chinese people live in cities (Tier 1 + 2) representing 77% of the gross domestic product. Reversely, 41% live in rural areas (= roughly 560 million people), they stand for 23% of the GDP .
• The Tier2 cities are of growing importance. More and more companies try to open up this huge potential. From my experience, foreign companies have their headquarters in the Tier1 cities to set up business and gain first experience. But the potential to make money lies in the Tier2 and Tier3 cities. And this is not only true for cost reduction in manufacturing but increasingly for sales and market share growth.
• Parallely, the Internet penetration increases and this will sooner or later also bring online marketing and e-commerce along.
• Interesting will be how search engine market shares will develop. Right now, Baidu has a market share of almost 100% in rural areas. In the Tier1 cities it’s market share is reduced to about 40%, Google holds some 40% as well (I wrote an article before how market shares and demographic development interact in China). Anyway, this is a question about years, I suppose. But also makes clear that search engine market shares in China are not fixed yet. A lot of space to move is still available.
• What a potential for direct sales channels and e-commerce! Anyway, still some problems to solve like nationwide use and acceptance of credit cards for online payment, reliable and quick logistics and delivery services, etc. But with young Chinese generations heavily using the Internet already now, participating in social networking and web 2.0 tools, this is a good basis for the development of e-commerce activities. Not to mention the distances in China…

3digitalminds is a full service Internet marketing agency with a focus on web process design, performance marketing, online brand building and online marketing consulting. It has several years of experience in the Chinese online market and many well-known international companies (mainly located in Shanghai and Beijing) trust 3digitalminds to help them grow their online business.

During many online projects in China, both for Western and Chinese customers, 3digitalminds has developed a deep understanding of how the Internet in China works and what Chinese website visitors expect. In the meantime, 3digitalminds has developed to a full-service Internet marketing agency in China and can offer the whole range of online services covering the whole online value chain:

Internet Strategy and Marketing Consulting China

We can consult you how Internet marketing in China will best fit into your marketing strategy and contribute to your marketing goals. Cross-channel marketing, performance marketing (SEO and SEM), blog marketing, web 2.0 marketing models and online brand building are procedures we are familiar with. Moreover, the analysis of your Chinese Internet marketing activities is part of our portfolio. Understanding Chinese consumers is a core factor for successful online marketing in China. It is not only Beijing, Shanghai and Guangzhou anymore, no, the big growth rates come from the Tier 2 and Tier 3 cities like Dongguan, Wuhan, Tianjin, Shenyang, Chengdu, Chongqing, Qingdao, Nanjing, etc.

Design and Web Development

From low-cost and simple to highly complex and sophisticated can we offer web design services. Projects done include the development of car configurators, online loan calculator, online guided tours, Internet communities, corporate websites, Intranet and Extranets.

Chinese Internet Marketing

Online marketing offers comprise search engine optimization (SEO), keyword advertising (SEM), affiliate marketing, banner and rich media campaigns, electronic direct mailings, web 2.0 marketing, blog marketing, mobile marketing.
Constant optimization of online campaigns are an essential part of our service. We put high value on optimizing return-on-investment (ROI) of the online marketing budgets and have good experience in performance marketing and online awareness building.

Research and Monitoring

Successful online businesses rely on regular monitoring and optimization of their web presence and online marketing activities. Services we offer are website heatmaps/eyetracking, focus groups, A/B tests, dropout rate / funnel analysis, clickpath and navigation analysis.

The services of Internet marketing online agency 3digitalminds China in detail:

Online Marketing services

• Search engine marketing (SEM)
• Search engine optimization (SEO)
• Bannering and media campaigns
• Affiliate marketing
• E-Mail Marketing
• Mobile Marketing
• Virtual world and ingame marketing

Web design and online process optimization
Optimization of the online purchasing and brand funnel for lower user jump off rate and higher conversion rate.

Internet research
Find out what users think about your products and services and learn from the user’s point of view how they perceive your products and services.

Online strategy consulting and marketing consulting
A successful online business needs to follow a clear strategy. Both for itself and how the Internet business can be integrated into your existing offline business.

What you can expect from online marketing agency 3digitalminds Shanghai and Beijing

• Many years of experience in conceiving and realizing websites, configurators, calculators and informational tours.
• Creativity in online brand communication and a didactical approach for preparing complex matters (customer/brand experience).
• Successful creation of user-friendly, accessible online systems for navigation and interaction (usability/accessibility).
• Overview about current online trends and needs of online target groups. When specifying the parameters we try to meet the needs of the target groups as closely as possible (using plug-ins, Java, browser types, resolution etc.).
• Comprehensive technical know-how such as the implementation of online content management systems (CMS). We also advise you when you wish to select a CMS.
• Useful documentation of design guidelines in an online design guide. (Extent depends on project complexity.)
• Support during system activation.

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