Bencross is the home-furnishings disruptor that grew this hitherto undeveloped market in China and Bencross CEO Sheldon Li shares how the brand and the Chinese consumer have evolved since the company was established six years ago.
This article is part of a Spotlight series on what marketers can learn from DTC disruptors in China. Read more
- Before Bencross, home furnishings and storage furniture – except for IKEA – were a sub-category that did not exist in the market.
- One bestselling item is a gold-coloured aluminium coat hanger that Chinese consumers say makes their homes look classy.
- A brand has to form a certain trend or culture so that elements of its products can connect with people's hearts.
Established in 2015, Bencross is a home-furnishings disruptor providing middle-class consumers with cost-effective Nordic design. Why did you choose to start such a brand and what insights did you have? What did the market lack at the time?
The English name of the brand is Bencross. “Ben” is Chinese pinyin for a part of my daughter’s name, meaning to follow your own heart; “cross” is the combination of Chinese local culture and foreign culture.
It took a long time for the brand to be conceived because I didn't have a good idea for its main product or service. In my case, I used to be in the export industry at Li & Fung and investment holding company New World Development in Hong Kong. At work, I came into contact with a lot of international brands.
2010-2014 was the first wave of this home decoration industry when a lot of foreign investors scrambled to enter this field. I think it was due to the development of smartphones, which led to consumers being able to access goods via mobile that were previously inaccessible.
Home furnishings and furniture in the Chinese market, except for IKEA, were in a sub-category that did not exist. For example, products for home storage were similar to plastic boxes, which were not only “low-class” but also too functional, so we wanted to update the segment from a decorative point of view. In foreign countries, this field is quite developed, like Bath & Body Works in the US. At that time, I thought this field might have a promising future in China, as the aesthetic senses of Chinese consumers improved.
I started to slowly get familiar with supply chains and retailers, and found the opportunity to develop this new brand. The category was still very new at the time, so I was able to make an impact. Of course, the products we picked at the beginning were more homogeneous in the market. We made some innovations that allowed us to stand out in a niche area very quickly. Strictly speaking, China's home-improvement culture is less about DIY and more about enhancing their at-home lifestyle.
Our brand mission is to help consumers improve their overall home environment. Since 2015, we noticed more and more consumers are willing to indulge in drinking wine or having flower arrangements at home, which is a manifestation of the demand of "pleasing oneself". Many of our products are both functional and attractive, with the main goal of creating a good living environment and thus making people happy.
Chinese consumers who have a home-loving mentality, as many of them revealed in our research interviews, consume for the convenience of their families or to lift their mood. No matter what difficulties they have gone through outside, they will keep their homes in a very beautiful condition.
Would you classify design-driven brands like Miniso as a competitor?
They are not our competitors because this market is very segmented. From the retail point of view, the home storage category ranks very low in offline channels in China, so companies like Miniso gradually removed this category. They are “lifestyle” and we are called “home improvement”, so these two industries are fundamentally different.
Sheldon Li, CEO, Bencross
Essentially, we hope that our brand will be able to combine advanced ideas from home furnishings in Western culture with local homeowners’ needs, and such a combination will lead to our products looking different.
Products that reflect only a single culture (say, Chinese or Japanese) are actually very difficult to succeed because it is difficult to be unique in a sea of competing, commoditised products. There is another extreme of, culturally and ethnically speaking, fetishising imported products, which we don’t want to do.
Who is your target consumer in 2021 and beyond?
One target segment is the upper middle class, which is the group above the middle class.
Because of their low purchasing power, it is difficult for the younger generation to become regular consumers of our products. They may need to mature and start a family before they can slowly understand the design elements of our products, so we have not targeted consumers who are too young.
The upper middle class maintains a relatively high income and pursues products that are unprecedented in the market. Correspondingly, in terms of colour, they tend to like gold. For the past 5,000 years, our country's understanding of the colour of valuables has not changed much and the same is true all over the world. However, considering the current state of the online e-commerce market, we design in such a way that the process is not too complicated and the cost is not too high.
For example, we made a coat hanger out of aluminum and coated in gold (coat hangers are usually made of plastic or wood.) The metal hanger makes the Chinese feel it is a bit more expensive, while its gold color symbolises richness. To balance functionality and lavishness, we added some anti-slip material to the hanger. Feedback from consumers state that such hangers are very textured and make the home look high-class.
Since the production of this hanger started in 2015, sales soared from 10,000 pieces in 2015 to 500,000 pieces in 2020. It is such a basic product but it has changed the general consumer perception of home improvement. Hangers are not only able to store clothes but can also give their homes a richer look. In addition, customers think that such hangers are more suitable for very expensive clothes. Whenever they open their closet, they feel happy.
Now we are constantly creating such a brand image, so that customers feel Bencross products are adding value for them and to their lives. For example, our cabinets are transparent, so consumers can get joy from being able to display their possessions.
What is your pricing strategy?
When we started, we were about 10 times the price of similar categories. After a few years, many people slowly started to copy our stuff, and now the smallest price difference is probably around three times.
Was the initial 10x pricing decisive? Was it because it was a sufficient threshold to maximise returns on a new investment across different stages of the product lifecycle? Or to discourage potential competition from the outset?
Actually, we have no real competitors. Although there are many imitations of our products, they are basically “instagram-friendly” ersatz products. They just look good and have high ornamental value but they can't be converted for real consumption.
We do market-leading innovations.
If and when you reach a bottleneck selling online, will your next step be to go offline?
We have already done our best for our online customer base. Since I come from an offline background, I know it's hard for our category to survive offline.
For our next step, we will try to expand some specific categories that are suitable for both online and offline sales, and ultimately help the brand gain more visibility through various channels.
We can also expand the Bencross brand awareness with fringe categories presented in offline channels. Take aromatherapy, for example – it belongs to home improvement but it’s also a lifestyle product, so it’s more ambiguous and flexible.
What other adjustments are you planning in response to the market’s changing dynamics?
We have actually been struggling between satisfying ourselves and satisfying the market.
In 2017-2018, we made products based on our own preferences for the category. We had less insights into consumers than we have now, so before that, we thought we only needed to satisfy the consumer types we wanted. But after a year or two, we found that there is a gap between consumers' understanding and ours.
Around 2019, after talking to a category leader at Tmall, we made some changes and started to develop products with data as our guide.
However, in the second half of 2020, we found that being too “market-centred” was making us lose direction. Suppliers were asking us to make more functional products, such as quilts and storage bags, but these are not our strengths.
So we've been discussing which direction to take. In fact, we still want to stick to our original path, which will allow bursts of creativity. If we dive headlong into being overly market-oriented, we will lose our motivation to be creative.
Our positioning now is that furniture should be a decorative item that can also keep the home tidy.
In addition to the data provided by Tmall, are there other channels you are using for a deeper understanding of the new Chinese consumer’s evolution?
After some experiments, my belief is that consumer acceptance and sales volume are related to economic development. Many Chinese have just entered a state of being wealthy and can move up in society by acquiring assets. They now need to sniff out their new identities. The best customers of Bencross know how to match their products with their wishes and can also appreciate nature but such customers are relatively rare.
Our brand colour was not gold when we started. Our products were initially made of wood and bamboo but the market capacity was too small, so we decided to transform.
Take Europe and the United States for examples – the ordinary middle class in those markets is unlikely to buy golden home furnishings but will go for products with a more peaceful and serene feel. There is nothing wrong with liking expensive and luxurious things, even if some of them look tacky. The world will always have such people. For now, for us to survive, we definitely have to think about this demand and compromise in the Chinese market.
As society changes, there will always be a mismatch between consumption power and good taste. Some people do not have the ability to distinguish between “good” and “exquisite” products. Also, some Chinese consumers do not care about the proper pairing of two furnishing objects. For example, they will put a Bodhisattva on a tray. Consumers are not bound by where the furniture “should be” placed. They are very individualistic and are sometimes not at all concerned with the decorating style of their homes. Strangely enough, when we observe home-loving people showing off their home arrangements online, we found that their homes do have individual objects that are out of place with the rest.
Investing heavily in advertising and promotion can be prohibitively expensive for many emerging-growth companies. What is the proportion of Bencross’ investment in brand-building and R&D, versus sales and marketing?
The brand has been product-oriented from the beginning, so product-based research and development accounts for most of our investment (10% of budget). Marketing expenses are very little so far but we are gradually increasing this proportion to 3% of our budget. We don't do hard advertising, we rely purely on content marketing.
I'm ashamed to say that there is very little weight given to marketing. This year's proportion is 3% based on our capital of RMB 80 million, so the marketing budget is just over RMB 2 million. We also spend on Taobao Zhitongche, a pay-per-click performance marketing tool for Tmall and Taobao sellers, and the total expenses may add up to 10-20 million per annum, but I classify this as traffic generation rather than marketing and branding.
Most of the emerging brands that have appeared in China during the past two years are traffic-driven. We are the opposite and want to establish ourselves as a long-term brand for the next 10 to 20 years. So, in the short term, we will sacrifice a lot of traffic.
All roads lead to Rome. All paths can build a brand. However, if only one single path is taken, the brand runs the risk of heading for a total collapse. In the case of many disruptor brands in the cosmetics and beauty category, for example, a marketing-led, traffic-driven approach can help brands scale quickly.
I also hope that our brand has the ability to do such marketing. However, the point of marketing is to support the development of the brand and the real brand is still supported by its services and products. If these are not in place, any results achieved through marketing will eventually return to square one.
That said, the problem with most designer brands like us is we pay a lot of attention to our products and not on customer accumulation, so it’s difficult for them to sustainably grow, business-wise.
For “traffic brands” such as Perfect Diary, the proportion of research and development in its financial report will determine whether the product is strong enough to support the brand in the future. If its growth path cannot be sustained, it will eventually regress by five years and become a short-lived meteor.
Fortunately, we have now found a suitable channel to promote the homeware and home improvement category – Xiaohongshu (Little Red Book). We will also start attending offline trade fairs from the second half of this year.
Apart from the amount spent on R&D, what other factors can prove that the brand is really thinking about long-term growth?
Based on my observations, I think it is necessary for a brand to form a trend or a culture. Take Nike as an example – it has created a spirit of sports. Therefore, a good brand not only needs to gain sales but also needs to sell the culture that supports the product and the brand behind it.
There will always be companies and competitors with stronger marketing capabilities, design capabilities, and R&D capabilities. Unlike the high-tech industry, it is difficult for any consumer goods company to occupy a dominant position forever.
However, once a brand has formed a certain trend or culture, what consumers are buying is not the product itself but the elements of these products that can connect with people's hearts.
Are some of your content marketing strategies in Xiaohongshu also developing in this direction?
We were thinking of making a film with Zhou Dongyu a while ago. Through this video, we hope that when the audience sees our product, all their worries or feelings of irritability disappear and we can bring real comfort to target audiences. When consumers buy Bencross, they not only get a useful product, they can also feel the warmth of a brand that pays attention to their family’s happiness. The family supports everyone from the elderly to the children and is the smallest and most important unit of society and a country. Therefore, I hope to express the warmth of Bencross in this way.
Can you share your experience in crafting a media or influencer strategy?
Relatively speaking, we don't like livestreaming because it’s chasing GMV without deeper cultural meaning.
All our content will be based on the happiness that the product evokes and we hope that content is co-created with bloggers who are free to inject their personal and original styles, rather than being product-centric.
We do not use platforms such as Douyin and Xiaohongshu as channels for product launches. There is no need for us to hold product launch conferences on platforms where the content is put out. Specifically, we don’t want the blogger to help us introduce our golden hanger but to focus more on emotion, function or variety.
Therefore, most of the bloggers we work with have relationships with us as “good friends”. Even if the bloggers do not recognise our products as suitable home improvement solutions, we will accept that because they have the right to their own opinions. In fact, many bloggers have made good suggestions and helped us improve our products.
Furniture products are consumer durables and they cannot be treated the same way as fast-moving consumer goods, because consumers need a longer time to make decisions and you have to give them plenty of time to slowly grasp the product information.
You advocate slow, quality life; you are not bothered by the fragmentation of media, or the impetuous environment of livestreaming. What is the approximate consumer lifecycle? Specifically, how long does it take to get from seeding all the way to repurchase and loyalty?
Take our golden clothes hanger for example – it’s about three to six months. A set of hangers costs 200 yuan. One set of hangers cannot meet the wardrobe needs of consumers, so they often need to buy between 150-500 sets of hangers and most choose to buy in batches.
Therefore, repurchase rates of a single product may take place within a year after renovation or refurbishment. After one year, repurchase rates will plumme, because the basic layout of a new home is fixed by then.
You used to work in conglomerates such as Li & Fung, New World, K11, etc. During this period, you must have witnessed the calibre of the largest and most admirable brands. Which systems and methodologies from major brands can be applied to small emerging contenders?
Many small brands may not pay much attention to proper financial or regulatory oversight when they start but we try to balance the two from the beginning.
We also got rid of the shortcomings of many large companies, such as too many Powerpoints, too many decision-making processes and institutional frameworks.
In our company, everyone can do what they think is right. Everyone has many ideas that may be right or wrong but the magic weapon is testing the idea. After the implementation, there may be many lessons learnt and chances for reflection. Big companies are more formulaic in their marketing strategies, rather than looking at what's right or wrong, and what's efficient or not. It is the big no-no that we need to be wary of.
Of course, I can appreciate that large companies choose to do this because they are at a different stage of development. If we had a larger volume of business, there would certainly be some sacrifice in efficiency. It would be best if we could achieve the standardised management practices of a large company and still be efficient. But I don't think that's likely. I think it's a false premise, the equivalent of asking a part-time worker to think like the boss.
We started out rough but past experience in large companies has taught me when to standardise and when to use a grassroots approach. This has allowed Bencross to take a lot fewer detours than some of our peers.
Did you fund everything yourself? Was there other financing?
Yes, it was my own money. In terms of financing, there were investors who wanted to come in last year but I haven't taken them on yet because they were expecting too much from the business. The investors are holding us to a “Perfect Diary-worthy” standard but I think the “Perfect-Diary perfect startup” standard is too ideal. It is difficult for the home improvement industry to move in such a direction because the Chinese are not yet at that stage of literacy and it will take at least another 10-15 years before China’s GDP per capita doubles.
We have unlimited possibilities for growth at Bencross. On the downside, we're going to grow very slowly. But even if we stay put at where we are at present, we are still a very solid, small but beautiful brand.