How a Customer-first Digital Strategy Delivered Sustainable Growth for a Premium Brand
When discount competitors threatened margins, PurCotton, a premium cotton brand, chose excellent customer service and long-term investments in digital technology over price wars – achieving US$700 million revenue and growth of 17 percent in 2024.
Premium brands across different sectors are constantly vying to maintain their position in the marketplace – but that can be difficult. Brands often face cutthroat competitors that win customers through lower prices, forcing brands to decide between lowering their own prices or doubling-down on quality as a differentiator. Many brands choose price, sacrificing long-term profitability for short-term revenue.
PurCotton, a premium cotton lifestyle brand founded in 2009, chose differently. When aggressive discount competitors emerged in 2018, they committed to a customer-first digital strategy. The result? Despite challenging market conditions, PurCotton achieved 17 percent revenue growth in 2024, reaching nearly US$700 million with over 61 million members under their loyalty program.
Building on quality foundations
PurCotton’s founder, Li Jianquan, spent more than two decades in medical-grade cotton production before he established PurCotton. His motto: “Quality before profit, brand-building over speed.”
From an established, enterprise-facing business to a novel, consumer-facing brand, Li has been crossing the river by feeling the stones. Instead of expanding rapidly through franchises, PurCotton opened company-owned stores in targeted malls across China. The approach meant absorbing early financial losses but provided complete control over customer experience, a foundation crucial for digital transformation.
The turning point: strong sales, shrinking margins
After weathering four years of upfront investment, the brand began to gain momentum, as China’s growing market demand for cotton tissues had surged from 240 million sheets to 23.26 billion—a 100-fold increase in six years.
By 2018, PurCotton’s revenue had climbed to over US$400 million. However, critical challenges emerged: rising inventory costs, slowing customer acquisition, aggressive discount competitors, and margin pressure from cheaper alternatives flooding the market.
Rather than responding with price cuts, PurCotton recognized an opportunity to strengthen customer relationships through data-driven insights and improve online and offline operations with a fully digitized system.
Small steps, quick runs
PurCotton partnered with Tencent Cloud to begin the digital transformation process. Instead of rushing through a complete business overhaul, they embraced incremental improvements, delivering both immediate value and long-term capabilities.
Starting in 2019, they collaborated with Tencent Cloud to develop a Customer Data Platform (CDP) with Marketing Automation (MA) capabilities to gain deep insights into the demands and preferences of their customer base. In 2021, the jointly developed Marketing Cloud 1.0 was launched, successfully integrating data from 28 million users at the time to provide a consistent user experience.
“Many companies hesitate to invest without quick returns. This is a long-term foundational project – we must continue investing,” said PurCotton CIO Xu Xiaodan.
The power of personalization and customer insights
By 2024, PurCotton’s Marketing Cloud had evolved to version 4.0, enabling sophisticated customer segmentation and personalized experiences through over 400 unique customer segments. The core value lies in gaining deeper insights into customers, understanding what they care about, the channels they prefer, the products they like, and identifying related purchases that may follow.
Key insights emerged. For example, they discovered that shoppers who purchased loungewear were also likely to buy socks and underwear within 15 days. This insight helped trigger timely nudges that encouraged follow-up purchases.
Data analysis revealed another critical insight: PurCotton’s flagship cotton tissues were losing market share because customers didn’t understand the quality difference between 100 percent cotton and synthetic alternatives.
Armed with these insights, PurCotton launched a “cotton vs. non-cotton” education campaign across social media, e-commerce sites, and stores. During the annual Singles Day shopping event in 2024, their cotton tissue market share recovered to 70 percent.
“Marketing Cloud 4.0 gives us a powerful edge: clear audience segmentation, topic targeting, product recommendations—it enables precise matching and engagement.”
PurCotton also fine-tuned inventory and displays based on each store’s foot traffic patterns and weekday vs. weekend behaviors. The results spoke for themselves:
- Conversion rates increased fivefold
- Repeat purchases rose by up to 40 percent
A path for sustainable growth
PurCotton’s experience shows how premium brands can compete effectively by:
- Aligning digital investment with business goals: Incremental approaches ensure each investment builds sustainable competitive advantages.
- Using data for better decision-making: Strategic insights enable value-based differentiation, creating meaningful customer engagement opportunities.
- Prioritizing customer understanding: Deep insights reveal education opportunities and relationship-building that transcends price competition.
- Building for continuous iteration: PurCotton’s “small steps, quick runs” philosophy enabled continuous adaptation as market conditions evolved.
As PurCotton prepares for the next version of Marketing Cloud, their mission remains unchanged: deeper customer understanding leading to better service.
For companies under pressure to grow, the message is clear: transformation isn’t about speed. It’s about direction. And when every step is guided by insight, growth is built to last.
This story was a result of a visit to PurCotton by Professor Li Xi from the University of Hong Kong for a research tour, who engaged in an in-depth discussion with Xu Xiaodan, CIO of PurCotton.
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