Adrien Fabry, Phoceis: “Without a long-term project and a budget exceeding €100,000, do not plan to sell via social e-commerce in China”

A further route to sell into China with online retail is social commerce, led by WeChat (Tencent Group). This all-purpose app includes a messaging system, a social network, an online sales platform and a payment system. In Shanghai, the Phoceis agency helps retailers capture a billion monthly users. G.R.N. held an exclusive interview with Adrien Fabry, the C.E.O. of the Phoceis agency, an Asian subsidiary of the Ineat Group.

Through Sophie Baqué. Published on 21 May 2019 à 10h15 - Update on 03 February 2023 à 15h04

Adrien Fabry : We opened in Shanghai in 2013. Auchan asked us to develop its e-commerce mobile application for China. However, our business is not focused on native application development, as WeChat arrived in China in 2012, followed by a phenomenal speed of adoption. WeChat was originally a social network and quickly integrated an array of features for Chinese consumers (online sales platform, payment system) alongside other services. Phoceis joins retailers and brands on China’s social media platforms. We produce relevant content for them as a critical element to express their competitive edge and win customers. We then convince followers to buy and buy again. We only work with two networks: WeChat (1 billion active users / month) and Red which is still very “small” as per China’s ratio with “only” 45 million users / month. In 2017, Ineat Group took over Phoceis.

Sophie Baqué: Do you work with an ROI approach or are you closer to traditional communication tools, where many retailers invest money without being able to measure tangible results?

Adrien Fabry : As we only work with WeChat and Red, we can measure each investment as the acquisition costs of a follower and a sales customer. On these two channels, you can track a “follower” and see if he becomes a sales customer. For all other websites, you lose the contact at some point, so you cannot measure either making or losing money. I have seen many European head offices monitoring their Chinese social media investments by calculating a number of page views and followers. Above all, sales remain the best indicator to measure performance. Phoceis is here to win customers and their money…not only followers and clicks. 

Sophie Baqué: What can brands with “low marketing intensity”, (80% of brands), do in terms of social commerce, or is this arena reserved for well-known “love brands”? 

Adrien Fabry : If you don’t plan to invest at least €100,000 via a long-term project, you should not plan to win sales with social commerce in China. Brands have to be aware that the workload is huge in order to stand out from the crowd. As WeChat is a closed environment, a newcomer will start operating from a blank page. The first step is to recruit followers, then excite and engage them. Finally, ensure they spend money with your brand. Once on WeChat, new brands will compete with an array of competitors, which have already managed all these aspects for some time. If they don’t closely follow their WeChat accounts, they will not be able to access the full platforms’ data. We have previously tried to bring foreign brands in China, which had a very small local awareness and budgets of €20,000 to €30,000. Such projects did not win sufficient new customers. Currently we are discussing plans for a French retailer which specialises in leather goods, whose total budget is €200,000. This involves a launch on Tmall (they will open a Tmall shop to start selling online, in partnership with a Tmall Partner) and on WeChat. This type of budget is what is required to help create and maintain a brand awareness.

Sophie Baqué: What is the acquisition cost of a qualified follower?

Adrien Fabry : It depends on the sectors. Generally, this varies between €1 for “mass market” brands and €5 for upscale and niche brands. Retailers should also be careful. When acquisition costs of “followers” are too low, it can mean that this audience is poorly qualified and few will turn into real sales clients. Brands have to be aware that investing a budget of €150,000 does not mean that they will immediately win 1 million followers: it just means that they will have a coin in the machine to start growing in China. Overall, the main difference between a brand with 5,000 fans and another with 100,000 is that the latter has been on WeChat for longer with more investment. When I arrived in China, I thought that many brands exceeded 1 million “followers” but that’s not true. For instance, I know of a cosmetics brand with a very high awareness level in France, which has only 100,000 “followers” on WeChat. This is very weak.

Sophie Baqué: Why have Google, Facebook and Amazon, as Western competitors of Tencent and Alibaba, not developed in such a horizonal way?

Adrien Fabry : Facebook, Instagram and Amazon are not operating in China. I know the Tencent model well. The Tencent / WeChat ecosystem became such a success because it closed the market for the others by integrating loads of external applications. The goal of Tencent is simple. Customers never leave the platform. I saw this since 2012, with the very first version of WeChat. When I clicked on a link, the web page opened a browser already inside WeChat. When I use Whatsapp in Europe, I sometimes click on a link that takes me out of the app and loads an external web browser. At Tencent, this is unthinkable!

Sophie Baqué: How can Tencent and Alibaba move so fast? Do they make a lot of external acquisitions to take over new technologies as they develop?

Adrien Fabry : That’s not always the case as they have been continually developing new features. Compared to GAFAs*, Alibaba and Tencent made 10 times fewer external acquisitions. They have never invested huge sums, like the US$1 billion for Instagram by Facebook in 2012 or the US$19 billion for Whatsapp in 2014. They invest in start-ups at a very early stage, to take a stake in promising technologies. This is the case of Red (see page 6), a highly-qualified social network mixing Instagram and e-commerce, which has Tencent and Alibaba as shareholders. Tencent also invested in Pinduoduo, which disrupts retail with its collaborative platform. These deals help Tencent and Alibaba building strong partnerships and links into their different apps.

Sophie Baqué: Brands like Adidas, Pizza Hut and Audi are investing in TikTok, the network of 15-second videos popular with teenagers. What do you think?

Adrien Fabry : I am sceptical. At the moment, TikTok (which is called Douyin in China) does not offer a direct and efficient link to move from a “follower” to a spending customer. To me, TikTok is a communication platform, not an e-commerce platform. Fashion brands I work with have put money into TikTok. And I can tell you that it has been one of their worst investments ever. I think that the likelihood that a 12-year-old will remember your brand in 7 or 8 years is more than a risky gamble!   

*GAFAs : Google, Amazon, Facebook and Apple