Why does Luckin Tea work with these web celebs?

Luckin Tea became an iconic independent brand in September. Meanwhile the brand announced Xiao Zhan as its ambassador. But who is Xiao Zhan? 

Born in 1991, Xiao currently has 19 million followers on Weibo, China’s version of Twitter. Following his debut in a TV series this July, Xiao became one of China’s most well-known figures. Popular among female students and young graduates, he is an example of the booming number of influential Chinese online celebrities. Other tea beverage brands like Heytea have likewise used online celebs to create social media buzz in an effort to attract customers to their stores.

Exponential growth in the Chinese online celebrity economy is a result of China’s skyrocketing internet infrastructure and e-commerce. By May 2018, total followers of online celebrities reached approximately 588 million. Such celebrities can meaningfully influence followers’ purchasing decisions in categories ranging from clothing to diapers. Video is one common means by which celebrities present products and is estimated to value RMB 79.7 billion by 2020. Live-streaming, which is widely used to show shopping trips or user experiences of featured products, is projected to reach RMB 112.09 billion in 2020. 

Given China’s flourishing online celebrity economy, celebrity endorsements are surely wise business investments for Luckin Tea. This holds true from the perspectives of both the customer and the celebrity.

Customer Side

According to QuestMobile data, showed that Luckin had between 9 and 10 million active users during Q3. For the tea brand, its key customers are youths born in the 90s and 00s. They are the internet-generation who grew up alongside China’s internet development. They enjoy online and mobile shopping. They rely on information from the internet to do their homework and make purchasing decisions. Online celebrities strongly influence this demographic just as TV commercials did to the then-young generation decades ago. Young people follow and buy whatever is trendy and is affordable. That’s why they are willing to line up for hours just to get a drink. 

Young people under the age of 30 in China have more disposable income thanks to the increased higher education rates (see chart below). Without the burdens of raising children and paying down large loans, they typically have more flexibility to spend their money. They spend money on things that represent their identity and lifestyle. A tea beverage is a perfect choice for an individual treat or office happy hour aimed at team member bonding. It’s all about sharing their personal life. It might take up to 15 minutes to drink, but 30 minutes could easily pass as consumers take selfies with the drink, photograph the drink, edit the photos, prepare captions and hashtags, post, and then interact with their friends on social media platforms. 

Young people have higher income relative to older generations in China compared to the US. Photo from The Atlantic 

Making customers stick to one particular tea brand is challenging. Making high quality and tasty tea is important, but not enough to differentiate a product. Online celebrities often create implicit trust and are a source of assurance for young customers of the quality of featured products. Customers can afford the products and get the same experience as the celebrities. Making these young people recognize and become loyal to a 3-month old brand is not easy, but Luckin Tea caught the market trend, reacted quickly, and picked the best fit celebrity.

Celebrity Side

Online celebrities commonly work in similar fashion around the globe. They post their seemingly natural but arranged daily life. They may post photos of a breakfast provided by an oatmeal brand, showcase their #OOTD (outfits of the day) from a particular apparel brand, use makeup of a well-known cosmetic brand, walk into a new tea beverage place, work out hard at a gym, and go to a bar to hang out with friends. By documenting their day, influencers drive followers to e-commerce or offline stores via live-streaming, videos, blogs, podcasts, or others. Yet there are also differences between Chinese online celebrities and those of other countries. Chinese celebs can instantly drive sales faster and more frequently due to the well-established e-commerce ecosystem. Chinese influencers are likewise supported by behind-the-scenes e-commerce teams. 

Luckin Tea’s selected celebrity, Xiao Zhan, is among the cast of a hot web TV series called Chen Qing Ling (or The Untamed in English) produced by Tencent. The series is based on a web novel with a wide readership among young people, particularly young females. Broadcast of the TV series commenced in June this year. Because college and high school students enjoy flexibility in how they spend their summer break, Xiao’s popularity quickly soared. According to the Baidu Index, search volume skyrocketed after the TV series started. Some days, netizens searched his name up to 300,000 times.

Photo: Baidu Index

We ought not underestimate online celebrities’ influence on fans to ultimately drive sales. Such figures are active on many mainstream social media platforms like WeChat, Weibo, Douyin (TikTok), and e-commerce sites such as Little Red Book and Taobao. These celebrities interact with fans and advertise products online on a “full-time” basis. In addition to the normal use driven by purchase demand, Taobao users sometimes simply open the app to view entertaining videos posted by online influencers. Zhang Dayi, a well-known online celebrity, for instance, helped sell products valuing more than RMB 100 million during just half an hour on Alibaba’s annual Double 11 sale on November 11, 2017. 

Luckin Tea’s use of Xiao is highly strategic. Based on the success of previous ambassadors, it will not only bring new customers to the company’s tea beverages; it will also generate new opportunities for themed mugs, tumblers, and totes. For Luckin, taking advantage of the existing influence of online celebrity and building upon an established population of target customers is a smart business decision.

Fang Yuan

Fang Yuan is our columnist. She used to live in New York and is originally from Shanghai. She is a Certified Passive House Consultant and works on sustainable building consulting. She believes that technology helps people and the environment if it is being used mindfully.

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