10 June 2015
China’s Gift Suppliers: The Move to One-Stop O2O Solutions
An Interview with Yang Xinyong, General Manager of Uuzhufu (Beijing) Technology Co Ltd
Established in 2009, uuzhufu.com, a subsidiary of Uuzhufu (Beijing) Technology Co Ltd, is an online gift platform. Operating across mainland China, it positions itself as offering one-stop value-added services to gift shoppers. By adopting the online-to-offline (O2O) mode, uuzhufu.com seeks to provide individual consumers and corporate clients with a variety of gift solutions. Here Yang Xinyong, the company’s General Manager, shares his views on likely future developments in mainland gift industry, as well as his experiences in running Uuzhufu’s O2O operations.
Connecting Up the Cultural and Creative Industry Supply Chain
Uuzhufu’s business model embraces designed-to-order, on-demand gift card/album, branded gift wholesale, and group buy. It provides one-stop gift solutions for more than 3,000 leading companies, including a number of Fortune 500 firms, such as Alibaba, Huawei, Tencent, Lenovo, Bank of China, China Southern Power Grid and FAW-Volkswagen. Currently, Uuzhufu has ties with more than 1,000 suppliers and manufacturers. Its range of products includes housewares, souvenirs, digital products, fashion, luggage and bags, as well as stylish office supplies. With offices in 15 mainland cities, including Shanghai, Hangzhou, Guangzhou, Shenzhen, Zhengzhou and Chengdu, the company had 5,000-plus corporate clients as of March 2015.
Explaining Uuzhufu’s mode of operation, Yang said: “Today, engaging in purely online or offline operation can no longer meet the market demands of the gift industry. As a comprehensive online service platform for gift items, Uuzhufu not only offers the basic ordering of products, but also looks to integrate upstream and downstream resources in the gift industry in order to help build the cultural and creative industries. This attracts a variety of quality suppliers to our O2O platform.”
Addressing the kind of products best suited to the site, he said: “If a designer knows nothing about manufacturing, even the best design cannot be turned into a real product. If a product’s design is outstanding, but the items are not well made, again, consumers will not buy it. Even in a case where both design and production are good, without effective marketing and promotional strategies, a good product will find no market. In view of this, Uuzhufu aims to integrate a range of resources, including product development planning, creative design, customised production, quality inspection and delivery, sourcing and sales, a customer relationship management system, as well as big data, to provide end-to-end solutions for upstream and downstream clients.”
Added Value and Improved Services
According to Yang, while traditional e-commerce embraces the flow of resources, capital and information, Uuzhufu sets out to create a ‘flow of value’ to raise the sourcing efficiency of the companies featured on the uuzhufu.com platform. Corporate clients are divided into small companies and large companies. By consolidating and analysing the gift requirements of small companies, Uuzhufu has designed several solutions packages for these businesses to choose from. When it comes to meeting the demands of larger companies for personalised design and customisation, Uuzhufu has built a “creative design online trading and service platform”. It has subsequently invited design houses, workshops or designers to contribute to the development of the site. Uuzhufu hopes to boost the loyalty of its clients by aiming for informatisation, standardisation, scale of operation and personalisation in every aspect of the gift industry (including sourcing, supply and sale).
To raise the quality of its customer service, Uuzhufu has developed its own client management systems, designed to assist suppliers, business partners and companies in servicing their own users. Explaining the thinking, Yang said: “After breaking down our clients into small groups, we can be more targeted at certain levels, such as design, pricing and service. We can, thus, formulate our marketing strategies more effectively.”
Gift Industry: The O2O Move
The demand for creative cultural supplies and gifts by mainland corporate and individual consumers is on the rise. Given widespread internet access, online shopping is now the norm. This development, coupled with concerted government efforts to support the creative industry and encourage e-commerce over recent years, has inevitably driven the gift industry to embrace e-commerce. In particular, given the expansion of mobile internet usage, an increasing number of companies have been eager to adopt the O2O business model. Today, when a company sets out to find a new gifts supplier, the internet often serves as the primary source for identifying and screening likely suppliers. Yang said: “In the past, traditional gift companies only operated as offline sales channels. In recent years, thanks to the impact of e-commerce operators and the development of new business formats, there are far fewer advantages in relying on traditional business sales alone.”
Initially, Yang positioned uuzhufu.com as a B2B online gift platform. As the business developed, he came to realise that online ordering alone would not satisfy the demands of corporate clients for the customisation of personalised gift products. As a result, he switched to the O2O model of “promote online, take order offline”. In general, he sees there as being three circulation channels: (1) traditional retail shops and specialty stores; (2) e-commerce platforms; and (3) corporate group buy. In his view, e-commerce and corporate group buy will have greater room for growth in the future, with O2O combining the two. He said: “Online, we offer a customisation service for standard products, small designs and small orders. while offline we keep an eye on the demand of large and medium-sized enterprises for personalisation. We can provide them with bespoke solutions once our gift consultants have identified and analysed their requirements.”
All in all, whether it is a physical store or an online platform, attention has to be paid to the client’s demands and perspective. In the long run, efforts have to be made not only to satisfy the existing demands of the client, but also to identify potential future needs. Yang said: “The most important characteristic of gifts is that, while they are derived from traditional culture, they are also influenced by trends. As such, it is necessary to continuously launch new and creative products. Efforts have to be made to offer specific services and different projects according to the needs of clients in different sectors, while providing gift solutions with the appropriate industry features and corporate culture.”
Customer Segments and Touchpoints
O2O, as a relatively new business model, requires continuous optimisation throughout its implementation. If the quality of the suppliers is unstable or their inspections are substandard, it may lead to unreliable product quality. Yang said: “We are very stringent when it comes to screening and choosing our suppliers. Whether they are creative design vendors, manufacturers or brand suppliers we would only choose to co-operate with those that have a good reputation.”
When it launched, Uuzhufu tried to provide both corporate and individual clients with gift solutions. As the demands of these two groups were very different, it was often difficult to take good care of both at the same time. In particular, individual consumers tended to choose standardised creative gifts, while corporate clients required a one-stop customisation service for personalised gifts. As a result, according to Yang, a company should avoid being involved in too many sectors when it first launches. Instead, it should focus on specific market segments and expand its product range or clientele only after a sound foundation has been laid.
Looking to the future, Uuzhufu is now planning to set up experiential stores through franchising, targeting both individual consumers and corporate clients. Private labels and co-branded products will also be launched. Yang said that he is hoping to build a cultural and creative products store business model, allowing customers to sample products and services at experiential stores. At present, Uuzhufu has established a presence on a number of comprehensive e-commerce platforms, such as jd.com, gradually penetrating into the individual consumer market. It also plans to set up a number of its own warehousing centres in Beijing, Shenzhen and Zhejiang later this year. In addition, in order to satisfy consumers’ demand for convenience, uuzhufu.com will also have a presence on the WeChat platform as of this year.
Hong Kong Companies’ Design Edge
As the meeting point of Chinese and Western cultures, the cultural and creative industries in Hong Kong are known for their unique sense of style and have long been at the forefront of developments in many sectors. Yang believes that the greatest advantage of Hong Kong companies lies in their facility for creative design and supply chain management. In the past, Hong Kong companies, concerned about piracy and copyright infringement issues, were reluctant to expand into the mainland market. Today, as intellectual property protection awareness on the mainland is growing, and as the commercial system becomes more regulated, Hong Kong companies should take another look at developing the mainland market. Hong Kong companies can consider co-operating with mainland enterprises, as they have a better understanding of local consumer preferences and the operation of domestic sales channels. The mainland party could take responsibility for marketing and promotion, while the Hong Kong partner concentrates on gift design and quality control. By so doing, the parties can complement each other and expand successfully across the mainland giftware market.