Shike (试客) means “testing customer,” and is now a registered trademark and a new business model launched just a few days ago in Beijing. It’s a website, a market research company, and a franchise with 4 shops in Beijing with a plan to expand the network city-wide.

For one yuan a day, you join the Shike club and receive 3 product samples a day. You might receive a drink, a box of tissues, and a sample of luxury skincare. Definitely a good deal. Once people receive the sample, they’re incentivized to give feedback on the product. The more they comment on products, the more points they receive, which translates into discount coupons and more prestigious samples.

The formula is smart and simple. The possibility of testing new products satisfies consumer curiosity while inflicting minimal damage to one’s bank account. Secondly, it gives brands meaningful feedback on their product, and may even create a buzz if the sample impresses Shike members.

Lets not forget the growing popularity of online shopping amongst China’s urban youths. Thanks to websites like Taobao.com, online shopping and product reviews have become a staple for much of China’s internet users. In 2009, 87million people purchased goods online, most of them students aged 18-30. This tendancy will grow exponentially as new youths turn to the internet for all their shopping needs.

Will Shike be the “future of shopping” as the website says? Of course the business is new and only time will tell, but tryvertising and massclusivity are very certainly useful cards to attract young Chinese “taobuyers” generation.

For more from Alessandro De Toni, check out his website.

Armed with this knowledge Taobao (China’s premiere online shopping site) has recently launced it’s own video channel. Upon selecting your video, you will find yourself redirected to upstart video site, Joy.cn and preempting the video will be some brief Taobao ads.

The collaboration of Taobao and Joy is a win-win situation. Taobao can help drive more traffic to Joy – which is competing against more well established sites such as Tudou & Youku. At the same time, Joy’s video hosting capabilities add to the Taobao portfolio, helping it establish itself as more than just an auction website.

Streaming video online is a popular choice amongst Chinese youth, in particular for younger netizens, whom spend much more time online watching long winded TV series’. This segment is already used to the fact that there are ads before videos but will accept this streamlined viewing over TV broadcasts.

However, much like previous web advertising (e.g. pop-up ads), brands must be aware that their customer doesn’t tune out to their attempts at advertising. Companies need to consider how to best seed on websites to reap the largest rewards.

As we all know, red is the national color of China; it is used to represent Chinese tradition, joy, fortune, and an attitude of ‘brave advancement’. Now the Chinese youth, who have inherited this ‘red spirit’, have reinterpreted it and developed their own ‘red trend’.

Taobao recently showcased a page of products from the revolutionary ages of China, which they dubbed the ‘red collection’. The items, which include stamps, food tickets, newspapers, clothes, photos, footwear and so on, are all good representations of the ‘red trend’. The site also shows the origins of the products and how they now are being reappropriated by young people in China.

This trend of retro China has been some time in the making, but up until now this has largely been focused on the ‘haishan’ (navy shirt) and Warrior sneakers. As Chinese youth dig deeper we see even more styles coming into vogue.

Plum Flower was a Chinese sportswear brand popular from the 60’s to the 80’s. The brand has been revived through Taobao, due to the popularity of it’s iconic tracksuit top. It first became popular amongst trendy college students, entertained by the idea of wearing something older than them. Now, spurred by the oncoming 60th anniversary celebrations, Plum Flower products have again seen an upsurge in sales via Taobao.

Of course there is a certain irony, being that the entrepreneurial spirit of the Taobao sellers is driven by sales of socialist curios. However beyond this, what the ‘red trend’ shows is that to be proud of China is not to be unfashionable. Actually, it is a pride that can be worn on the sleeve, the head, the feet, the legs…all over!

It’s not only foreign or wacky snacks that consumers are purchasing off of Taobao, a majority remains traditional Chinese snacks. During the first week of September the total sales of Moon Cakes peaked at over 3 million RMB, an increase of over 120% from this time last year, according to a report from Finance QQ.com. Other traditional Chinese snacks are breathing new life into their brands by capitalizing on the prominence of Taobao snack shopping. Brands such as 知味观 (Zhiweiguan), 杏花楼(Xinhualou), 稻香村(Daoxiangcun), 采芝斋(Caizhizhai) all have set up online shopping platforms.

Young entrepreneurs are also beginning to capitalize on this trend. Zhou Luo, a young man from Shenzhen created theB2C snack website 24小食 (http://www.24food.net) to help satisfy his girlfriend’s love of international snacks. Zhou Lou’s business model is not unique of other international product importers, however through a combination of guaranteed 24 hour delivery and the availability of cash payments, after six months, 24小食 is beginning to see a profit and they have a consumer base of over 600,000. (source: sznews.com)

After successfully navigating around issues of credit cards, and implementing successful schemes such as COD (Cash on Delivery) – online shopping has in fact not only managed to establish a foot hold in the consciousness of young Chinese, it has opened up a new realms of possibilities for those willing to both spend and make money. OEM factories now have the ability to directly reach Chinese consumers as their export demand has greatly diminished during the global recession. In addition, entrepreneurial young Chinese have a low cost solution to starting a business during a time when consumerism and Internet penetration is greatly expanding.

Demographics are surely a factor in online shopping; there are no age limits to who can buy what, but these statistics can give us a definite idea of what sorts of products will be likely to sell better than others. According to netpop research, 13-34 years olds in America represent 35% of the internet whereas in China this same age range accounts for 73% of the internet. Although there is much talk about the youth shopping boom online, there are also online shopping sites, such as Vancl, that are catering to an older 25-40 year old demographic that is looking for basics, such as polos, dress shirts, etc.

Our interviewee told us that low cost goods such as t-shirts sell well due to their cheap and transient nature and that one wouldn’t risk too much in that kind of purchase. However, we also found a market outside of taobao for luxury goods of the streetwear variety. Either way, fashion and clothing are big online consumables, helping young people across China better define their image without being constrained by a local stockist. A good example of this would be in the sales of cosmetics products online.

Projection of Chinese cosmetic industry 2005-2012

China is the second biggest cosmetics market in Asia, with skin-care and hair care products accountings for 38% and 20% of total toiletries and cosmetics sales in 2008 respectively. It is a mass market but one that is yet to reach saturation and that has been only further buoyed by increased online shopping activity. Online shopping has only further increased the activity in this market segment allowing easier entry for overseas brands to compete and giving rise to a rise in quality or notoriety of local brands.

Viable options as to the future of online retail could be greater connection with SNS and online communities. What is widely known about China’s vast BBS communities is the not only the sharing of knowledge but also of opinion and experience. People will check BBS before they buy to check feedback and then return to confirm or offer their own testimony. Perhaps, brave, online sites could offer greater synergy with BBS and SNS to help create a community of both sellers and buyers.

Why did you choose Taobao to set up your own business? Compared to other online shopping websites, what are the advantages and disadvantages of using taobao?
For college students, opening a shop on Taobao doesn’t cost too much money or time. I can arrange my own schedule and still have free time. Also Taobao is well established so it’s more mature, with a good reputation,and a strong customer base. However for new seller, it’s difficult to be succuessful in a short period of time. As a beginner, my credibility is low, it’s hard to win customers’ trust.

How do you figure out what to sell at taobao?
My original idea was to sell electronic products. My family business is related to this industry, it’s quite convenient, I don’t need worry about supply problems but I changed my mind. Because I study fashion design, I would like to gain some experience through my online shop so I can sell my own design products in the future.

What are the most popular items to buy at your shop and why are they popular?
Men’s t-shirts are very popular. The price is cheaper than real stores as well as being cheaper compared to pants, shoes and other items. Normally people only wear the T-shirt for one season, so for most customers its not a risky purchase.

There are some brands, such as Uniqlo and Li Ning, which now have their own stores on Taobao, do you think this will affect your business?
I think it’s quite normal, taobao is a platform that brands can market and promote their products. I don’t think so, I don’t sell big brands’ products, there is no competition between us.

Please take a look at our interviewee’s shop here.

For a while now, streetwear fashion, in particular expensive Japanese brands, have had a strong following amongst young Chinese boys (enoVate newsletter subscribers will have seen evidence of this in our street shots segment). Whether real of fake, high end street style brands such as visvim, clot, neighbourhood are all seen as items of exclusivity and can often be seen being worn by Hong Kong, Taiwanese and mainland trendsetters and celebrities alike.

www.dunk.com.cn is a Beijing based online streetwear retailer. While they are official stockists of certain brands such as nike and adidas, they also resell more exclusive brands, hard to find limited edition sneakers and apparel. Shops such as these give young Chinese men the opportunity to get their hands on goods normally limited to a handful of select stores around the globe.

Original retail values are steep, add to this the re-seller fee and prices can be astronomical. Particularly popular are collaboration pieces such as the clot x visvim christo sandals. Eagle eyed trend watchers will certainly have noticed these bulky and technical looking sandals in all of Shanghai’s and Beijings most popular shopping areas.  The website offers the cheapest pair for a measly 5999RMB, while the most expensive (already sold out) costs a stomach-turning 11800RMB.

Online shopping isn’t only about snapping up bargains or cheap ways to buy common goods. To emulate the styles of idols such as Edison Chen or Li Chen, young boys are willing to part with thousands of RMB. These items may be limited to the purchasing power of a select few but it shows the realm of possibility for luxury brands and the upper limits of the spending power amongst the Chinese youth.

And what is better than Shanzhai YODAs!

This Yoda doesn’t strike this author as particularly wise. Not sure his gaze will strike fear in the galaxy’s evil doers!

Luckily I also found my yoda halloween costume on taobao.

In the past few years, many companies have started to sell their products direct to the cutsomer via online shopping platforms such as Taobao. With the increase of sales, some companies have created their own brand, like 歌瑞尔（Gainreel）, 麦包包（M baobao）.

歌瑞尔（Gainreel）is a clothing company located at Guangdong, it used to be a OEM factory with one thousand employees and 3 billion RMB in annual sales. They provided OEM manufacturing services to 40 well-known european underwear brands. Since marketing online at Taobao, their product has become more and more popular. No longer manufacturing for foreign brands but creating their own.

“M Baobao” is an OEM luggage manufacturer. Due to a slow down in foreign trade as a result of the financial crisis, they decided to create their own brand 麦包包（M baobao）. Like Gainreel, they chose to use the Taobao supply chain, which effectively saved the company from bankruptcy.

Foreign companies such as Uniqlo, P&G and Dell are now also joining the competition. Uniqlo started to work with taobao around April 2009. Due to the slow increase in expanding their retail stores, Uniqlo decided to cooperate with taobao in order to first increase their (online)sales and help their branding in china.

Ten days after launching their Online shop store, their sales were the highest ranked at Taobao. That month the sales on their Taobao store were equivalent to an average Uniqlo retail store. Moreover, the hot sale online does not affect the income of real stores at all. Besides the taobao store, Uniqlo have also establisehd a shopping platform at their official website which uses Taobao’s payment and maintenance system.

Wait, why would you pay for this?! Ah, it’s all in the sale. You, yes YOU the buyer can choose your own 伍分 coin from  personal favorite year!!! Amazing! I know I’ve been craving a worthless coin from the year 1992 and now I’ve found it! Buy it here.

But on to more important information. Did you know, in the year 2008 in 2008, 57 million people gained employment by opening online shops on Taobao. This is a staggering statistic. China’s People’s Daily continues to report that 23-32 year olds made up almost 50% of this number while 18-22 year olds make up 12% of this 57 million. Wow.

Taobao is changing the face of retail in China and clearly the youth are the catalysts behind this movement.