China Report • Jessica's Secret
How Jessica’s Secret became
hot public property
Last month, The Moodie Davitt Report announced a new collaboration with popular Chinese price comparison app Jessica’s Secret. It offers a monthly snapshot of the duty free products most price-searched by Chinese travelling consumers. The Jessica’s Secret Index, in association with The Moodie Davitt Report, provides a key indicator of what’s hot with Chinese travellers. Martin Moodie travelled to Beijing to talk to Jessica’s Secret Founder Mirko Wang (pictured below) and founding investor Michael Tong and discover the secret behind the Secret.
Mirko Wang lives and breathes Jessica’s Secret. The workaholic Shanghai-based entrepreneur has built the Chinese retail price comparison app from a fanciful notion into a vibrant emerging business and has no intention of letting up the pace.
The story of Jessica’s Secret is remarkable. From a start-up four years ago, the service recently broke through the 1.2 million user mark. All over the world, Chinese travelling shoppers can be seen price comparing items in duty free shops using Jessica’s Secret on their mobile platforms.
Its pricing data covers over 40 countries, 400 stores and 15 million SKUs and there is much more to come. Prices are updated every half hour with exchange rates thanks to sophisticated technology linked to a deep understanding of the travel retail sector.
Wang’s interest in creating a pricing app was inspired by his experience as a traveller. About seven years ago he travelled to Europe for the first time, taking in several countries along the way, including Denmark, Germany, France and Austria. Like many first-time Chinese travellers, Wang was keen to purchase duty free along the way but was naive about pricing.
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“When I visited the first country on my journey, I bought one thing,” he recalls. “But when I went onto a second country, I realised that my first purchase had been so expensive. I didn’t know the prices between different countries, so I couldn’t decide which was cheaper for me as a traveller. So I thought, ‘What if there was a website or application that could tell me which country is cheaper?”
Jessica’s Secret was born. Wang, a smoker, always bought Dunhill cigarettes. In China, the price was around CNY130, roughly US$20. When he got to Germany, the price was US$100. “I had to smoke very expensive cigarettes in Europe for a month,” he recalls with a laugh.
Wang came to Beijing from Jilin province (in the northeast of China bordering North Korea and Russia) around 14 years ago, where he worked for an internet company. After a three-year spell with a government department, he then entered the world of private investment, a period that gave him both the opportunity to travel and the funds required to launch Jessica’s Secret.
Like most internet start-ups, the project involved heavy costs, so Wang sought and secured investment from others, including his uncle as well as long-time associate, Michael Tong, a serial investor.
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Having identified and built a concept that he believed would be useful to Chinese travellers, Wang set about the equally complex task of promoting it. Chinese microblogging website Weibo was the key platform and steadily Jessica’s Secret started to get consumer traction as word spread.
In the early days, duty free retail pricing was notoriously hard to find. Only about 20 major retailers offered their prices online as well as certain department stores such as Macy’s. Jessica’s Secret’s first incarnation only carried around 10,000 items of data; today’s version features around 15 million SKUs across domestic and duty free retailers, he says.
As Jessica’s Secret became more popular, mainly by word of mouth, so travel retailers started to take interest. The first was Korean powerhouse The Shilla Duty Free, which saw the rich potential, despite only around 4,000 users having downloaded the app at that point (it recently broke through the magical one million installations mark). King Power International of Thailand – with whom Jessica’s Secret now enjoys a particularly close relationship – was next.
Sharing the Secret: Michael Tong (left) and Mirko Wang with Martin Moodie in early 2019.
By now, many other travel retailers were telling their team, “find out who this Jessica is,” recalls Wang with a laugh. Since then progress has been exponential.
For Michael Tong, the investment in Jessica’s Secret was far more than a leap of faith. He had known Wang for almost four years and noted his success in the financial services sector.
“He talked with me about Jessica’s Secret and I believed that there would be a real demand for such a service. And as more and more Chinese were travelling, there was certainly a demand for more transparency in this business.”
While its major focus has been on beauty products and luxury, Jessica’s Secret allows all product categories to be viewed, provided the pricing information is available. But identifying the need for such a service and monetising it are two different matters. So what was the original monetisation model?
“From the beginning we didn’t know,” says Wang disarmingly. “To be honest we just wanted to have a very useful tool for the consumer side and in the long-term we thought we could monetise it but we didn’t know exactly which way.”
“That’s true, we didn’t know,” adds Tong. “But now we know. We were friends of the consumer and by attracting them to our app, we realised we can make money from the business side by providing services to them.”
Like all start-ups it has not been easy but Tong says the company broke even last year and is well set for growth. “That is not so easy for a company that is only three or four years old, especially an internet company,” he says proudly. “We need a lot of people and a lot of investments.”
A rush for short-term results and inconsistencies in marketing approaches are common errors among brands, said Wang at The Trinity Forum.
“Next year, I think it will be very healthy. We will keep our margins low and put all our income back into product development and marketing to C-side [consumers].”
Revenue has come from several sources. Commission on sales from Chinese shopping after using the app; marketing services to retailers; and related consultancy. Japanese beauty house Shiseido was the first to advertise on the app last year.
Today, Jessica’s Secret has three arms to its operation – the app, consultancy services, and technical solutions. As consumer demand for the app grows, so will retailer and brand investment in advertising, Wang believes.
In January, for example, Aelia Duty Free (a Lagardère Travel Retail brand), launched a promotion on Jessica’s Secret specifically for Chinese shoppers visiting Rome Fiumicino Airport. If they spent €360 in Aelia stores, they get a 10% (€36) discount. The promotion ran until 15 February, the day after St Valentine’s Day.
“We want to create a media buzz so that the Chinese traveller can find the different brand prices all over the world,” says Wang as he talks of his ambitions.
“We want more and more Chinese using our application. More travellers means more brands will want to do promotions with us. And in the future I think Jessica’s Secret will become a platform for pre-order. The world needs a platform like that, because the Chinese have different shopping habits and they love to compare prices. They are very different than say the Japanese, Koreans, Europeans and Americans. I think that’s the future.”
Having successfully rebuilt King Power International’s Chinese-language website (see panel), Jessica’s Secret hopes to do something similar for others. Many non-Chinese travel retailers have wasted a lot of time and money without understanding what they are doing, Wang believes.
Some even use Google Translate for Chinese text, a recipe for disaster, he says. Jessica’s Secret takes the pain away, without creating a financial hole. It allows a retailer the choice of being part of the Jessica’s Secret app and/or having a dedicated Chinese website built. With King Power, Jessica’s Secret does both.
“There are many IT development companies in China, but maybe they don’t understand what travel retail is,” says Wang. “We do.”
Adds Tong: “We understand the position of the foreign retailers, and that they are outside China. This is a very specialised market so for a foreign company to try to sell to Chinese customers when they’re so far away is difficult. Sometimes they don’t have the patience to listen to the Chinese customers… because they’re used to serving people from developed countries in Europe and North America.
“We are lucky to be here, to serve the Chinese people. We want to serve the Chinese people well, make sure they make well-informed decisions about where and what to buy and at what price. After this, we have a big ambition to help other travellers all over the world who have similar demands. They want transparency and efficiency in this industry.”
Jessica’s Secret has already launched an English-language version of the app, and other languages will follow once that is fine-tuned. Russian is a possibility.
The hard yards have been done, now a bright future lies ahead, says Tong. A Chinese venture capital fund called Cherubic has also invested as well as another local partner. Another capital raise is likely this year. “Although we break even, more capital can help us to grow faster,” says Tong.
Such capital will pay for important new projects. Soon a “monetary price tracking platform” for business (as opposed to consumers) will be launched. “We will offer a very specialised professional price comparison platform,” says Tong. “They can include a lot of parameters to compare across continent and focus on one SKU, for example… and a competitor.”
Such a programme is likely to prove more lucrative than the consumer side of the business, I suggest. Yes, perhaps says Wang. In the meantime, he aims to bring even more Chinese travellers to his app – and then other nationalities. “After the English version, we want to develop a Japanese version, a Korean version, a Thai version,” he says with a broad smile. “I want to reach out to all the travellers in the world. That’s my dream. I want to make an app that’s very, very famous.”
In fact Jessica’s Secret is well on the way to becoming just that. The pricing app borne out of a travelling consumer’s frustration is a secret no more.
Turning on the (King) Power in China
Jessica’s Secret has launched a 5% cashback promotion – to run indefinitely – for Chinese travellers planning to shop with duty free retailer, King Power International Group, in Thailand.
The promotion went live in January, offering Jessica’s Secret shoppers an online coupon code to be eligible for the discount when checking out. It applies across the full range of King Power International products on the price comparison site. Shoppers get the 5% cashback ten days after picking up their products in the retailer’s stores.
Jessica’s Secret CEO Mirko Wang tells The Moodie Davitt Report: “Since we launched the promotion, we have already seen many travellers taking part. They just need to sign up and leave their Alipay details in order for the 5% to be returned to their accounts.”
The mechanics of the promotion involves Jessica’s Secret essentially reducing the commission it takes in order to subsidise the cashback. This benefits both Chinese tourists and also King Power International through bigger online sales volumes.
Jessica’s Secret launched the Thai travel retailer’s dedicated Chinese website in October 2018 and also won an award from the retailer for most trustworthy online partner in December.
The previous Chinese website was translated directly from King Power’s English site and was therefore inadequate for Chinese shoppers, a key part of the retailer’s consumer mix. Using the new site features, shoppers can make orders, complete payments, and pick up goods at their departure airport.
Wang says that King Power’s new website shows an obvious improvement in user experience and page loading time.
“The new website has brought a great increase in sales performance compared with the old one,” he says. “Jessica’s Secret also helps to promote King Power’s new Chinese website on mainstream platforms in China, for example, Baidu, Weibo and other OTA channels and the effect is impressive.”
Jessica’s Secret has helped King Power build its visibility with Chinese consumers, which has driven an increase in FIT customers, Wang adds.
Product nicknames to the rescue
Jessica’s Secret also added a more powerful and convenient search function to the King Power website to save users time finding what they want. In particular, familiar names were included for key products. “For Chinese consumers, it is hard to remember the official English brand names, so there are special terms for certain products,” says Wang.
For example, Lancôme’s Advanced Génifique Youth Activating Serum is known as the Little Black Bottle (小黑瓶); SK-II’s Facial Treatment Essence as Fairy Water (神仙水); and Estée Lauder Advanced Night Repair as the Little Brown Bottle (小棕瓶). “Now we’ve added these nicknames to the King Power website search engine, which greatly helps Chinese tourists to quickly find what they want,” Wang says.
Jessica’s Secret also defaulted to using SMS for Chinese tourists to register on the site. “In China, consumers are accustomed to using mobile phones to register accounts… they rarely use e-mail. In addition, smartphones can be used for authentication code logins, resending passwords, and so on. This is a more convenient operation… more Chinese style than using email,” notes Wang. His team also added WeChat, QQ, Weibo and Alipay one-click logins for consumers.
King Power shoppers can now also place orders, check an order status, and cancel orders directly on the website rather than by email which was the previous system.
The Moodie Davitt Report • The Online Magazine • February 2019