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global commerce insider – china

Singer Drake performs on stage on January 28, 2017, at the Ziggo Dome in Amsterdam, as part of his Boy Meets World Tour.FERDY DAMMAN/AFP / Getty Images

Shop Bonsai is a curated electronic marketplace aimed at millennial men. With a growing consumer base in China, Canadian streetwear can attract a niche shopper

Whether he's fronting up his hometown Toronto Raptors as their global brand ambassador or simply recognized as that kid from Degrassi: The Next Generation, Canadian rapper Drake has made Toronto, and Canada, cool.

And from Saad Siddiqui's perspective, the Grammy award-winner might also be one of his keys for a breakthrough in China.

As the co-founder and chief executive officer of Shop Bonsai – a smartphone app which he describes as a "millennial marketplace" – Mr. Siddiqui has tried to take out the bricks-and-mortar part of the retail experience. His target audience: millennial males.

Toronto-based Shop Bonsai is a smartphone app aimed at millennial men. Shop Bonsai Shop Bonsai

(Photo: Shop Bonsai)

Launched in seven countries in December on an iOS platform – an Android version is planned for later this year – Shop Bonsai's emphasis has been on pairing premium brands, such as Canada Goose or Bang & Olufsen, with daily editorial content.

Of the roughly 10,000 app downloads the company has had so far, one campaign in particular brought them a spike in downloads from China. That fashion editorial saw Shop Bonsai feature some streetwear from Toronto's Get Fresh Company against the bustling backdrop of Hong Kong.

While he was naturally pleased with the breakthrough, Mr. Siddiqui says that he was somewhat surprised at the rise in attention for fashion from "the Six," as Drake calls Toronto.

"People regard Toronto as a hub for streetwear and street style fashion and that was something that was a bit of a shock to me," he says. "I would say it's an offshoot of this Drake culture."

In China, however, the cool factor trumps the Canada factor. According to Matthew Crabbe, director of research, Asia-Pacific for global market research company, Mintel Group Ltd., the Chinese public generally does not make the differentiation between the United States and Canada. And while he adds that the view of Canada is generally positive, it is more geared toward our wilderness and social policy, rather than any specific products.

"If you asked most Chinese where Drake is from, they would … probably have assumed he was from the U.S." Mr. Crabbe says. "I was already aware of Drake, but had no idea he was Canadian."

But while the country's retail market is very different from that of North America, according to Mr. Crabbe, he adds that online retail penetration has a grown very fast, especially when it comes to shopping online via a mobile device.

While any retailer looking to have success in China has to bring something fresh to the market – a unique identity or experience – he says playing to those strengths can reap rewards for an overseas company. Even for a niche company such as Shop Bonsai, which offers some specific brands to a curated customer base.

"Niche is good and can succeed – especially as online and mobile retail can help even tiny brands reach lots of people, if marketed well," Mr. Crabbe says.

Chinese retail preferences play to Shop Bonsai's offering, too. According to Accenture's most recent Global Consumer Pulse Research report, while 77 per cent of Canadians said they have never made an online purchase on a mobile device, only 11 per cent of Chinese respondents could say the same.

In addition, only 36 per cent of Canadian respondents said they were open to disruptors such as Shop Bonsai, compared with 81 per cent of Chinese respondents. As well, while 43 per cent of Canadians said they never access these kinds of sites on a mobile device, only 2 per cent of Chinese were in agreement with them.

The Chinese also have money to spend in this fashion, with the average Chinese consumer's online spending doubling over the past five years to more than the equivalent of $1,855 a year.

But companies looking to take advantage of a growing Chinese consumer base need to offer a clearly focused message.

"There is no doubt every retailer operating in the Chinese market needs to have a clear and actionable mobile-centric e-commerce strategy," says Robert Hah, Accenture Strategy's Hong Kong-based managing director for Greater China.

However, Mr. Hah adds that last year saw a stark change in the Chinese consumers' sophistication around online shopping. He says that Chinese consumers have moved on from chasing after value for money, and have begun to prioritize quality over price.

Consumers' frustrations over returning products that do not match their expectations has led some companies, such as Nike and Chinese electronics company Jingdong Mall, to set up physical stores as strategic showrooms to showcase their goods.

"Having an e-commerce strategy is important," Mr. Hah says. "But being able to shift gears as customer preference changes is key to a brand's survival in this competitive and ever-changing market."

According to Berkeley Warburton, the Toronto-based managing director of advanced customer strategy for Accenture, the heavily curated and personalized experience offered by Shop Bonsai, along with access to the kind of niche brands that millennials now want, may be one of the company's most appealing factors.

That is where sites such as Amazon fall down in the eyes of that audience, she says, because they require customers to sift through product after product to find what they really want.

"We're looking for those personalized, curated experiences; we want someone else to do the thinking for us and present it to us in a compelling way," she says. "We do want choice and control of those choices, but we're overwhelmed when there are too many choices."

In addition, the editorial aspect of Shop Bonsai helps set it apart from other Chinese online retail platforms, such as Taobao and Tmall, according to Mr. Hah.

"We can imagine users being very 'sticky' if the content update stays highly relevant and interesting to them, so the focus should be on tackling the problem of getting their target customers to download and try out the app," he says.

However, he adds that Shop Bonsai needs to tread carefully in distinguishing between editorial features and paid advertorial ones. Mr. Hah says that Chinese consumers generally do not trust brands, they trust everyday users who themselves trust a brand.

"That is why user reviews are so popular in China," he says. "Editorials, if perceived as paid advertisement by brands, will be unlikely to encourage purchases."