A change in Reckitt's sales tactics led to 12 consecutive quarters of double-digit sales growth in the country
By Natasha Khan
Several years ago, China-based executives of Lysol maker Reckitt leveled with their boss. More consumers were skipping supermarket runs and buying household staples while they scrolled on their phones, the executives said.
Could they have some funds to get ahead of the trend?
Chief Executive Kris Licht figured they were talking about China's equivalents of Amazon.com and Walmart+. "But no," Licht recalled in an interview, "I was told that e-commerce was a yesterday technology."
The result: a pivot in Reckitt's China sales tactics, one that has propelled 12 consecutive quarters of double-digit sales growth in the country and helped the British firm weather a sales slowdown in established markets.
What the CEO's colleagues said Reckitt needed to jump on was the rapid rise of a different venue for shopping in China. In what's known as social commerce, people scrolling through their social media apps for entertainment end up buying after seeing an ad.
Reckitt's success capitalizing on Chinese consumers' shift points to how Western firms that once counted on China for growth can still thrive there, though local competitors have made it a tougher place to do business. It's also an example of how social media and shopping are converging.
After its China team's tête-à-tête with Licht, Reckitt pulled out the stops to go to the social media apps where many Chinese wind up shopping.
The company built 18 studios inside a five-story building on the outskirts of Shanghai. On videos broadcast from there, employees sell Veet hair removal cream, Lysol's international equivalent Dettol and other Reckitt goods on China's popular social-media platforms.
In some of the studios, company staffers join guest actors and influencers making quick comedies and mini-dramas about domestic life featuring a Reckitt brand.
"This is the way forward," Licht said. "Those that don't figure this out will be left behind."
Some 800 million of China's 1.4 billion people now each day use social media like Douyin, the Chinese version of TikTok, and apps like Kuaishou. The users spend an average of about 90 minutes a day scrolling through short videos, Reckitt estimated. Key for consumer-good companies: Half of them have bought items on the platforms.
Social commerce is starting to catch on in the U.S., where shoppers are now buying products by clicking links in TikTok and Instagram videos, and watching live-shopping streams on apps like Whatnot.
"We all have the experience of finishing the day, relaxing on the sofa, watching videos and clicking 'buy' without thinking too much about it," said Vivien Huang, Reckitt's director of marketing in China. "Next thing you know, you wake up with some new products at your doorstep."
It was around 2022 that Reckitt's team in China sought Licht's support getting Reckitt to invest in social commerce.
The team initially struggled to hire influencers or agencies with the right experience, so staff did it themselves. Out of a conference room converted into a makeshift studio, customer-service staff answered questions on video about the chemical composition of disinfectants.
Sales shot up, boosting the company while it grappled with stagnating sales in the U.S. and other developed markets. Reckitt's emerging-market sales grew 8.5% to 2.23 billion pounds, equivalent to $2.95 billion, in the first half of this year, compared with the same period a year prior, while inching up 0.8% in North America and falling 3% in Europe.
The company's success in China makes it an outlier among big Western brands. After years of rapid expansion, consumer companies from Starbucks to LVMH to Nike have stumbled as consumer preferences have shifted and competition from local brands has increased. Also cutting into sales of Western firms are the economy's slower growth.
Reckitt's China livestream strategy "enabled its brands to hold their own against steep local competition," said Sky Canaves, an analyst at Emarketer. "It's part of a broader commitment to deeply localizing its brands, and positions digital as the primary sales channel, rather than relying on traditional store distribution as the foundation."
From the company's Shanghai studios, crews broadcast live on the apps for 12 hours a day, while shoppers bombard them with comments and questions in a chat that dominates part of the screen.
The Reckitt hosts respond rapidly, a sort of interactive infomercial. A team monitoring the livestreams guides the hosts and adjusts the featured products they talk about in real-time.
In other studios, short dramas and skits are filmed. The videos, which are often under a minute, might depict a scene from a living room or highlight a domestic dispute. In one, a parent argues with their teenager about smelly shoes -- and Dettol comes to the rescue.
The short-form video team drove 40 million new customers to Reckitt last year, drawn by videos they produced that the company said were viewed 15 billion times.
Reckitt predicts social commerce will catch on in some form in the more than 100 other countries where it sells its products, and has begun replicating its China playbook in markets including Brazil, Mexico and Malaysia.