THE BLOG
10/02/2014 09:10 pm ET Updated Dec 01, 2014

Alibaba May Be Ascendant, But Bomoda Gives Brands Their Own "Open Sesame" For China

In the classic tale, "Ali Baba And The Forty Thieves," the protagonist undergoes a rags-to-riches transformation to emerge as the sole guardian of a secret incantation ("Open Sesame") that grants him exclusive access to an immeasurable, hidden treasure.

How fitting, then, that this story's modern corporate namesake - the Chinese e-commerce behemoth Alibaba.com (NYSE: BABA) - has just experienced the largest IPO in stock market history, and now dominates online sales in the most populous country on earth, handling 80% of all transactions. Certainly, the news of the last few weeks would seem to indicate that Alibaba is now the prime purveyor of a much sought-after "Open Sesame" for Western brands in China.

That is, of course, if brands market their products through Alibaba.

Brand visibility on a dominant online sales channel can, and will, move product. It is therefore understandably tempting for Western brands (including those already engaged in China, and those that still plan to become engaged) to simply peg their future business objectives on a focal partnership with Alibaba. Make no mistake; Alibaba is a force that cannot be under-appreciated.

However, the quest for long term brand health and ever-increasing profit in China dictates that marketers cannot simply abdicate their roles to third parties, but must formulate and continuously evolve their own vision, strategies, and tactics within China's rapidly changing marketplace. To successfully navigate such challenges, managers must develop and maintain a deep understanding of their brands' multifaceted resonance and engagement with Chinese consumers.

Just as Alibaba was dominating worldwide headlines during the last few weeks, a breakthrough, strategic data management tool to understand brand dynamics and impact in China was unveiled by the New York-based high-tech start-up, Bomoda, in its just-released, free report, "Into China: 2014 Bomoda Brand Index - How 300 Western Brands Impact Consumers."

Established in 2012 by one of the founders of Hulu with seed-investment from several marketing and web luminaries including a former CEO of Yahoo!, Bomoda was originally conceived as a curated, Chinese-language e-newsletter and e-commerce portal linking global Chinese consumers to high fashion and luxury brands . According to Bomoda's CEO, Brian Buchwald, the initial rationale for Bomoda's business model was two-fold.: First, the exponentially growing tide of affluent, global Chinese travelers (exceeding 100 million trips annually) presents a unique, and still largely untapped, opportunity for brands to connect with quintessential 'mission shoppers' who are ardent in their pursuit of information about Western fashion and luxury trends and products. At the same time, Bomoda saw vast potential with consumers inside China who overwhelmingly prefer to purchase luxury goods from overseas as a more cost efficient option than buying from retailers inside China - transactions that are subject to steep domestic luxury taxes. Since the company's inception, Bomoda's vision has borne fruit - with a rapidly growing base of Chinese subscribers to its foundational newsletter, and an expanding range of marketing and e-commerce partnerships with major luxury brands and retailers including Gucci, Lane Crawford, Ferragamo, Omega, Estee Lauder, Cartier, and many others.

As Bomoda's operations grew, an opportunity for a new business vertical rapidly emerged. "While we were engaging an ever-increasing range of Western brand and retail partners, it became clear that although many of these clients viscerally understood the current and future importance of Chinese consumers to their business, they still experienced ongoing challenges in maintaining detailed, real-time knowledge of Chinese shopper behavior, and the dynamics of their brands within the Chinese marketplace," said Buchwald. "And, this was not only true for brands lacking their own direct presence in China, but also among professionals with global decision-making responsibilities in companies boasting worldwide operations. In many cases, these executives lamented to us that the regional knowledge within their China units did not always easily flow back into their global organizations."

To answer this need, Bomoda has now expanded its offering by establishing a new China Business Intelligence Service to address critical gaps in China market knowledge faced by Western brand executives. This service centers on a proprietary brand data analysis and management system that benchmarks current brand impact in China, while delineating strategic and tactical priorities for brands to achieve future growth. Bomoda's clients receive reports through a customized dashboard delivered on a daily, weekly, or monthly schedule as needed.

Utilizing this system, the 2014 Bomoda Brand Index focuses on Western brands headquartered in Europe, North America, and Australia - brands which, relative to those originating in Asia, face greater cultural, linguistic, and business challenges in establishing relevancy with Chinese consumers. The 300 brands in this first report have been organized into 'peer sets' based on their primary product lines and pricing, with a total of seven categories highlighted in the findings: Luxury, Accessible Luxury, Contemporary, High Street, Beauty and Cosmetics, Jewelry/Watches/Accessories, and Multi-Brand Retailers (a wide range of other categories - including non-luxury categories - will be addressed in future reports). Unlike many other established brand rankings for China which are wholly based on periodic consumer surveys, Bomoda's data analysis centers on over 250 discrete data points that, together, offer a comprehensive picture of how the target brands interact with Chinese consumers.
Such data includes current social media performance across a wide range of platforms (e.g. not just Weibo and WeChat), search, PR/KOL-reference, degree of mobile engagement, impact of existing brand websites (and corresponding Chinese relevancy), and current e-commerce performance. Bomoda's algorithm then utilizes factor analysis to weight different clusters of these variables, and to ultimately 'score' each target brand on three dimensions: Reach, Engagement, and Experience. What emerges are rankings that reflect actual in-market conditions, versus what consumers report they think, feel, and do in the more 'aloof' context of a market research survey.

While the overall ranking of the 300 brands in the Bomoda report contains a large number of top brands that are known to be already heavily focused on, and active in, China (Burberry, Nike, Coach, Chanel, Gucci, and many others), the report also underscores the rapidly emerging global orientation of Chinese consumers through its ranking of brands which, while still largely inactive in their own marketing efforts in China, are nevertheless already garnering growing Chinese consumer attention.

The Bomoda report offers a master ranking of all 300 brands, followed by a ranking of the top-25 brands in each of the seven categories highlighted. For each category, the report also offers detailed insights, current practices, and data correlations for the three output dimensions of Reach, Engagement, and Experience.

Said Buchwald, "This report, and the customizable analytical services Bomoda now offers, are meant to be both informative and practical. Even if a brand chooses to partner wholly, or in part, with a powerhouse like Alibaba, it should not choose to do so as a 'concession' or 'default' in response to a lack of market understanding. Rather, we want to equip our clients to make the best, informed, strategic decisions. We also hope our data will allow brands to wrest back direct control of the billions in value that is currently transacted through re-sellers on Alibaba and other platforms. In sum, we want to empower our clients to be stewards of their own brand destinies in China."