Yaro Ramen is releasing a new app that will connect ramen lovers with steaming hot bowls of noodles whenever you hit the button. It will also serve up coupons and showcase new menu items.

The popularity of  ‘click and collect’ has grown among consumers worldwide as it offers them more flexibility in retrieving their online purchases. More importantly, the reason why consumers prefer this last mile method is because they avoid the delivery fee.

A growing number of companies like Japanese fashion retailer Uniqlo are letting customers pick up online purchases in 400 of its 500 stores in China to help tackle problems such as delayed deliveries. Retailers generate foot traffic and sales to offline stores.

67% of shoppers purchase an additional item while collecting their items in store.

It’s no wonder 51% of CEOs plan to offer click and collect in the next 12 months, while investment into same-day delivery only attracts 31% of them.

However, retailers need to keep in mind that to provide a positive experience for consumers using the service, simply relying on existing infrastructures such as the physical store isn’t enough.

The latest report from JDA & Centiro found that among the most common problems in the last 22 months that often occurred with click and collect included long waiting times and unsynchronized inventory between online and offline stores.

Retailers planning to provide click and collect as part of their ecommerce strategies need to allocate enough resources, whether it be data systems or software, to have a clear snapshot of real-time inventory to improve the entire retail process for both on the ground employees that need to fulfill incoming orders and the consumers standing in line waiting to spend their hard-earned cash.

THE BACKGROUND

Asia Pacific really likes their whisky.

The gold liquid makes up 40% of multinational alcoholic beverage company DIAGEO sales in Asia, compared to only 25% of its global sales. One of the brands that sit under the behemoth is Johnnie Walker, the world’s most widely distributed blended whiskies.

The immensely popular liquor started out life in 19th century Scotland when John “Johnnie” Walker began selling it from his grocery shop. It was his son, Alexander Walker, who took the elixir global with a simple distribution model.

Shippers would take the bottled whisky with them on their journeys around the world, sell them, take a commission and handover remaining profits to the firm. Over 100 years later, the brand sells over 120 million bottles across 200 countries in bars, restaurants, breweries and lounges.

Four bottles of Johnnie Walker are consumed every second” – Pittsburgh Post-Gazette 

So the question arises, if in today’s digital world, people can order clothing, groceries, razors and even pets online, why not alcohol?

Companies like Drizly, Saucey, Paneco, Wishbeer and yes, Johnnie Walker, are attempting to offer their own solutions to ensure that consumers can enjoy a drink at any time of the day, but not many have found lasting success.

The Challenge

After shutting down its luxury e-tail site “Alexander & James” after a short four year run, DIAGEO publicly acknowledged that it was struggling to find success in online direct-to-consumer, referring to it as,

A pot of gold at the end of the rainbow that you need to keep on chasing.”

The company recently lost its place to Kweichow Moutai as reigning liquor market leader in China as the Chinese taste shifted to premium brands, especially for gifts and elaborate events.

DIAGEO Online

Moutai’s market capitalisation reached $71.5 billion on the Shanghai exchange in April, while Diageo’s London capitalization is $71.1 billion. Source: FT and Bloomberg.

In light of the company’s closure of “A & J” earlier this year citing that “consumers don’t look for specialty shops online”, the company is shifting focus to sell its products on platforms like Amazon and Tesco.

A partnership with a mass marketplace is appealing for two reasons; (1) it already has a large audience and (2) enables the sale of DIAGEO products online.

“We can raise awareness, but if they can’t buy the products, it’s void. [The partnership with Amazon] gives us that complete circle – we can entertain and educate viewers with how-to guides, and then make it as easy as possible for them to make the purchase,” said Johanna Dalley, World Class Global Director at Diageo Reserve.

“It’s the perfect storm – we are creating content that inspires people to buy our brands, and we can directly look at conversion and click-through rates.”

But what happens when strict regulations in emerging markets like Thailand prohibit the use of photos or celebrities to promote the brand’s lifestyle?

THE STRATEGY

Big C, one of Thailand’s largest retailers, offers a range of beverages from beer to wine online but the website states it cannot display any photos/logos/names of alcohol due to the country’s Alcoholic Beverage Control Act.

DIAGEO Online

Big C product selection for liquor on its website. Thailand has banned the promotion of alcoholic beverages sales but many companies risk the fine.

On the other hand, Wine Connection and Wishbeer, both operate websites in Thailand that contain photos of wine bottles, craft beers and sales. The companies are risking the 150,000 – 200,000 THB ($6,040) in hopes of a stronger payout.

A fair assumption given a recent study found that approximately 30% of Thai people started to drink alcohol after seeing images of their favourite celebrities posed with drinks.

If DIAGEO is willing to risk the fine, which no reports indicate it has ever been enforced, it has a strong direct-to-consumer opportunity in Southeast Asia – especially Thailand, Singapore and the Philippines – because of the region’s growing online adoption and preference for spirits and beer.

DIAGEO Online

Source: Chartsbin

DIAGEO, in particular Johnnie Walker, has long been eyeing emerging markets. Brazil, Mexico, Thailand, and China are some of the brand’s top seven global markets.

How has the company approached selling in these markets?

In Diageo’s case, the company has created a four-part ecommerce strategy:

  1. Developing a strategy and getting its ‘house in order’ (internal restructuring, hiring, etc.)
  2. On-trade and off-trade strategy
  3. Activating ecommerce channels (strategic partnerships with pure players, delivery companies, etc.)
  4. Direct to consumer through individual brand websites

Anyone looking at DIAGEO’s key moves in the online space cannot say the company hasn’t tried.

In 2016, the company announced a partnership with Deliveroo to offer an ‘alcohol-on demand’ service called thebar.com in certain areas in the UK. It’s a similar and popular strategy like Wine Connection’s partnership with delivery company, honestbee, in Thailand.

DIAGEO Online

honestbee home delivery of Wine Connection products.

Charles Ireland, Diageo GM for Great Britain, Ireland and France, says DIAGEO is spending more money on digital platforms like Google, Facebook, Instagram and even dating app Tinder, than traditional media for the first time. The goal is to use videos and other forms of content to educate and raise awareness.

“There is a shift towards content marketing within Diageo more broadly. In terms of monetisation, we will see more partnerships with Amazon from a commercial perspective. Other retailers are content hungry too, and are looking for content for their websites. [We will] provide them with content if it helps people click through to purchase,” said Dalley.

THE FUTURE

In Asia, the demand for alcohol is not the problem when beer sales consistently outpace GDP growth like in Vietnam since 2009. The biggest challenge is lack of awareness and oscillating regulations.

“In terms of direct to consumer [selling], I think there are consumer goods companies that are doing it quite successfully, but we haven’t quite hit a successful formula yet and we’re continually working on it,” says Charles.

Keep walking Johnnie, you’ll get there.

ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest growing market.

“Set up a website and sell goods online.” Having an ecommerce business is not as simple as it sounds. In addition to running effective digital marketing to create demand, a user friendly webstore and great customer service, what’s more important is getting the package delivered to the hands of consumer in one peace.

In this seventh week of LEAP, we introduced an overview operations of ecommerce from hiring the right people and technology to being the right leader for your organization.

1. Customer Experience is Key to Pomelo’s Brand and Customer Loyalty

SALISA LANDY, POMELO REGIONAL VP MARKETING AND PR

For leading fast fashion brand in Southeast Asia like Pomelo, it’s not trends and celebrities that drive returning shoppers but prioritizing customer experience. This doesn’t simply mean only answering customers’ questions  but taking care of even the smallest details, such as the packaging.

“Our packaging was something that got our customers excited. It [packaging] is edgy and instagram-able. It’s what our customers can post on their social media and from there, word of mouth spread.”

Ecommerce Logistics and Fulfillment

Pomelo Packaging

Another winning point for this online fast fashion brand is how Pomelo addresses the most painful point of online shopping – sizing and returns. Because selling goods online, especially fashion items, requires a good fit.

Ecommerce Logistics and Fulfillment

Salisa Landy, Pomelo Regional VP Marketing and PR

Pomelo offered a 365-day free return policy to break the online purchasing barrier of not being able to touch and trial.

Ecommerce Logistics and Fulfillment

2. A Checklist to Ecommerce Operations: Making Your Business Ecommerce Ready

MITCH BITTERMANN, GROUP CCO ACOMMERCE

When building your ecommerce backend, the frequently-asked questions often involve: Where do we start? Or what do I need to have in order to operate my ecommerce business effectively and efficiently?

Ecommerce Logistics and Fulfillment

Mitch Bittermann, Group CCO aCommerce

Mitch shared a checklist of items to make the organization ready for ecommerce.

Ecommerce Logistics and Fulfillment

3. To Lead is To Achieve Something Great Together

CARLOS FRANCAIS, COO LAZADA THAILAND

According to  the Chief Operating Officer of Lazada, to lead an organization, the leader must be able to influence and persuade his team members – especially blue collar workers – to work towards the same goal.

Ecommerce Logistics and Fulfillment

Carlos Francais, COO Lazada Thailand

In this interactive session, Carlos shared this framework to create a shared vision within the company, encouraging the team to fully address its strengths, weaknesses, opportunities and threats.

“People populate your behaviour. When employees are inspired by what you do, and in return, they are productive at their work. This is where innovation begins.”

Ecommerce Logistics and Fulfillment

The next class is on Thursday November 2nd and will dive into how to run a fulfillment center efficiently and explore the right delivery methods in Southeast Asia by the industry expert Kerry Express. Stay tuned for next week’s takeaways!

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand

[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy

[LEAP Week 3] eIQ Insights: Market-Product Fit First Before Anything

[LEAP Week4] eIQ Insights: Central Marketing Group’s Shares Phase II of Digital Strategy

[LEAP Week 5] eIQ Insights: Startups Need to Have an Independent Source of Income to Survive

[LEAP Week 6] eIQ Insights: In Mobile Commerce, App Install is Only the Starting Point

*Introducing the eIQ BrandData series that shares insights to different brand strategies online and how they’re performing on marketplaces across Southeast Asia in collaboration with data tool BrandIQ.

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The first installation of the BrandData series will take a look at the top three diaper brands in Thailand (MamyPoko, Babylove, and Huggies) and provide an overview of their strategies on the country’s top e-marketplace, Lazada.

With the rise of internet savvy mothers in Thailand; a cohort that places value for money and convenience at the heart of their purchasing decisions, it makes sense that more companies targeting this demographic are looking to reach them online.

Thailand’s $200 million baby diapers market is dominated by Unicharm, specifically by its brand MamyPoko, and BabyLove by DSG International. They each offer a total of 15 product lines on their official stores on Lazada, for example, MamyPoko Day, Night Pants, Babylove PlayPants, and SmilePants.

Meanwhile, direct competitor Huggies offers only two product lines on Lazada: Gold and Little Swimmers.

As more than 82% of babies go through at least three diaper changes a day, most families buy this commodity in bulk. Each of the three brands leverage this consumer behavior by providing bundling options for their products and offer a cheaper average price per item the larger the package.

Diapers brands Lazada Thailand

Average selling price and discounts are given for Thailand’s top diaper brands on Lazada TH. Source; BrandIQ

MamyPoko and BabyLove offer the highest discount of on average 26 – 28% off, but it’s important to note that Huggies starts at a lower average selling price compared to them.

What does this mean?

MamyPoko and Babylove have larger product lines, provide more options, and focus on selling their products in bigger packs. Meanwhile, Huggies’ offerings are more concentrated with fewer bundle options compared to the other two.

These two strategies may impact the brands’ performance in search results at the category level if we’re looking at the “Diaper & Potty” category on Lazada Thailand. MamyPoko and BabyLove dominate the first row of the most relevant products in the category.

Diapers brands Lazada Thailand

Mamypoko and Babylove products dominate the first page of Diapers and Potty category in Lazada Thailand

Download the full infographic here.


HOW IS YOUR BRAND PERFORMING ON SOUTHEAST ASIA’S TOP MARKETPLACES?
Deliveree logistics marketplace

Deliveree’s Group CEO Tom Kim and Group Head of New Product Nat Atichartakarn at Deliveree’s Jakarta HQ

The current state of logistics in Southeast Asia is often bemoaned as one of the main challenges holding the region back from its full economic development.

Alibaba founder and chairman Jack Ma remarked that with Indonesia’s geographical state, a comprehensive logistics network is needed to stimulate growth.

His assessment is also applicable to other emerging markets across the region.

But these types of infrastructural projects in the Philippines, Thailand or Vietnam is not an easy, and certainly not, cheap feat. Here are a few examples of current plans in the works:

  • World Bank estimates $500 billion is needed in Indonesia over the next five years to bridge the infrastructure gap
  • President of the Philippines, Rodrigo Duterte, proposed a $161 billion six year plan to improve railways and ports to connect the archipelago’s islands
  • Thailand’s government has also started 20 infrastructure projects worth $50.2 billion to improve the country’s current rail lines

This regional bottleneck has opened opportunities for startups to figure out the cheapest and quickest way to get a package from point A to point B.

Companies solving last-mile headaches for ecommerce companies have attracted a lot of investor money like Lalamove and NinjaVan with $100 million and $30 million funding rounds, respectively.

But a logistics technology company that recently raised $14.5 million is looking to tackle another problem.

“We’re interested in solving bigger, bulkier problems that sit further upstream from your last mile delivery challenges,” explained Tom Kim, Group CEO of Deliveree. “With marketplace technology, we want to fundamentally challenge the way companies approach first and mid-mile bulk logistics.”

Deliveree logistics marketplace

ecommerceIQ speaks with Tom and the Group Head of New Product, Nattapak Atichartakarn, to discover how the logistics company found success in Southeast Asia by helping businesses reduce costs for first and “mid-mile” goods transport and what they plan to do with the recent Series A injection from Gobi Partners.

Logistics but focus is on technology

Through the Deliveree mobile app and web marketplace, customers have access to screened qualified drivers of commercial vehicles to move their merchandise and/or cargo.

The company’s new marketplace model houses 15,000 commercial vehicles consisting of cargo vans, pickups trucks, small-large box trucks, as well as economy vehicles such as MPVs and hatchbacks on its platform — covering three metro cities in Southeast Asia; Bangkok, Jakarta, and Manila (the company operates under “Transportify” due to a trademark issue in the Philippines).

Having started with serving end-customers, the company realized in order to grow its business, it had to focus on serving corporate clients.

“The bread and butter of our business is goods, merchandise, and cargo — bulk movement from outer provinces to warehouses in the cities, factories to distribution centers, and distribution centers to retail stores, or what we call modern trade,” explains Nat.

Now, nearing the end of its third year of operations, the company says it is close to financial break-even in its core markets. Nat credits this success to the quality of technology and drivers that Deliveree provides.

The company’s tech team of 30 developers in Vietnam is responsible for building, managing, expanding, and innovating the company’s marketplace tech capabilities and solutions that focuses on businesses needs:

  • Batch booking toolsets for high volume customers
  • Flexible booking scheduling from immediate to two weeks in advance
  • Drop off package at multiple destinations up 10 locations
  • Real-time tracking of driver and package location
  • In-app chat between customers, drivers, and customer support
  • Cash on Delivery and original document return services
  • Contract logistics option for businesses that need dedicated resources
  • Full commercial insurance

In addition to targeting SMEs, Deliveree also partners with transportation and logistics companies without their own technologies to connect them to new customers on its platform.

“People think these big logistics companies own their whole logistics network, when in fact, many don’t. A lot of them outsource ground transportation elements of the business and they use us as a provider of ground transportation for bulk goods and cargo so we address the gap and needs of the industry,” says Tom.

Capitalizing on quality

Deliveree logistics marketplace

The company takes pride in the high quality of its drivers, achieved by imposing a high standardized screening process, something Tom doesn’t skimp on.

It’s easier to get into most colleges than to get into our driver pool.

“We only invite a third of the driver applicants to training — it’s less than the acceptance rate at the most universities,” says Tom.

Calling it the “best trained fleet on the market”, every single driver must endure six hours of in-class training, which includes customer etiquette, and pass a 50 question final exam with 80% score or higher.

The company also enforces additional training for drivers with low satisfaction scores and regularly do real-time quality checks with a mystery shopper.

While not the most scalable process, Nat says it’s a price the company’s willing to pay.

Growth without quality is more of a step backward for us.

With such high investment in human resources, is the company worried about “leakage” – the shift of user-driver relations moving off the platform?

“There will always be a case or two of customers trying to work with our partners directly, but most of them end up coming back to our platform. Why? Because one of the reasons they come to us in the first place is they don’t want to, or can’t, manage this specific part of the business,” said Tom.

“And with the added value we provide for them, I don’t see why businesses would want to even bother.”

Ride-hailing apps aren’t built for cargo

With the heated war between ride-hailing companies in the region, parcel delivery is one of the added value services that is being offered by Uber and Grab to capture a wider clientele.

But Deliveree isn’t worried.

“These ride-hailing companies have always been doing logistics but they haven’t been doing it right,” said Tom.

According to Deliveree, the services provided are not comparable as the requirements for logistics is radically different than the passenger business.

“If you’re looking at the value of delivery bookings in Uber and Grab, it’s probably not more than a few dollars. Our average booking value is more than 10 times the amount and at the same time, our resources and costs to support each booking are higher than what a passenger app would expend per booking,” said Tom.

Tom also pointed out the security risks highlighted by a recent ruling in the Philippines by the country’s Land Transportation Franchising and Regulatory Board (LTFRB) that banned any package delivery through ride-hailing apps accompanied without a passenger. The reason? Drug-trafficking concerns.

“Trust me, it won’t only be the Philippines that will apply this rule,” commented Tom.

Small ecommerce pie for Deliveree

With the current state of ecommerce in Southeast Asia where fashion still tops all categories in popularity and ordering large items like bicycles or washing machines is still uncommon, the pie for Deliveree’s business is not that big.

“Ecommerce is primarily a business comprised of small things, and we don’t move small things — we move big things,” says Tom.

But Tom believes the company will eventually grab their share of Southeast Asia’s ecommerce pie.

“Our company is not closely aligned with the ecommerce industry today because the items that people buy are still small parcels and it isn’t our specialty because of the challenging economic units,” said Tom. “Ordering anything and everything online is an evolution that will probably happen in the next over ten years or so.”

“This is when we (Deliveree) will likely play a much bigger role in the ecommerce value chain.”

Growing its current markets

With new funding from its Series A round, Deliveree is exploring some interesting growth plans.

The company hasn’t ruled out M&A to grow the business in key markets and although expansion to new cities and countries are in the cards, Nat said that Deliveree is more interested in growing the cities where it is currently operating at the moment.

Deliveree logistics marketplace

“Imagine if Asus, Lenovo, and Acer compete with each other in the tablet market in Jakarta,” said Tom. “When the sales start, there’s a limit to how far the competitors can go because they have inflated costs the further the consumers. If we can bring down the cost base and give them more margin latitude, the competitive playing field will force some of those savings into discounts, sales, promos, even lower everyday pricing and ultimately the consumer wins.”

Deliveree logistics marketplace

“These are the kind of big problems we love to be involved in solving,” concludes Nat.