As the ecommerce trend continues in Southeast Asia, a wave of the new generation of moms is joining the party. These moms are relying more and more on online to help them embrace their role as a parent.

Millennial moms expressed their dependency on online for their shopping journey, especially for the Mom & Baby category, during an ecommerceIQ panel session in Jakarta earlier this month.

ecommerceIQ surveyed 1,144 Indonesian moms with results showing that 66% have attempted to purchase Mom & Baby products online. Shopee was voted as the most popular e-marketplace for this category, followed by Lazada and Tokopedia.

Mom & Baby Indonesia Online Shoppers

aCommerce Group CMO Sheji Ho on stage presenting the findings from ecommerceIQ’s report: Digital Profile Mom & Baby Shoppers in Indonesia.

Indonesian actress and Miss Universe 2007 finalist Agni Pratishta was one of the panelists at the event. She agreed with the findings and also mentioned that most women visit numerous websites to find the best deals.

“I have a group chat with other moms where we exchange information regarding which e-marketplace is having a sale right now,” admitted Agni.

Agni was joined in the panel session with the Head of Marketing Baby Care from Softex Indonesia, Wenny Damayanti, and aCommerce Group CMO Sheji Ho to shed light on the current landscape comprising Mom & Baby online shoppers in Indonesia.

What else did we discover from the event?

Panel session during ecommerceIQ event in Jakarta with Agni Pratistha (middle) and Wenny Damayanti (right).

Indonesian moms shop cautiously online

When Indonesian moms were asked about their favorite online shopping platforms, brand websites did not feature much in their answers, with only Mothercare Indonesia appearing on the radar at a score of 4%.

Digging deeper, the result is most likely related to the type of products they are more likely to buy online in this category. Following general ecommerce trends in the country, Baby Clothing (49%) ranked as the most popular product purchased online in this category, followed by Baby Gear (23%) and Toys (18%).

Mom & Baby Indonesia Online Shoppers

Top products purchased online in Mom & Baby category in Indonesia; ecommerceIQ Mom & Baby Customer Survey in Indonesia (2018)

Meanwhile, perishable goods like Baby Personal Care and Baby Food are less popular and the cause of it is rooted in the main reasons why Indonesian moms don’t shop for this category online.

Mom & Baby Indonesia Online Shoppers

Top reasons for consumers to not shop for Mom & Baby products online; ecommerceIQ Mom & Baby Customer Survey in Indonesia (2018)

More conviction is necessary for consumers to purchase perishable goods online; moms require full assurance of product quality, and one way to avoid buying counterfeit products in the e-marketplace is to purchase only from brands’ official online flagship stores.

The top three consumer-favorite platforms all benefit from their official brand-dedicated portal inside their platform.

Mom & Baby Indonesia Online Shoppers

Tokopedia’s dedicated page for brands’ official store; Tokopedia

The importance of word-of-mouth in the digital world

Brands should always take cues from its consumers to adjust and hone their retail strategy. These include instilling customer confidence to overcome the reservations mentioned above. Wenny revealed that internet habits of millennial mothers provided the driving force for Sweety’s shift to digital.

“These moms are constantly searching for information online. TV commercials alone are no longer sufficient. Modern day moms use the internet to talk to their friends, surf for product information and read customer reviews before deciding which products to buy. Sweety took these cues onboard and redefined its online strategy,” explained Wenny.

Sweety’s official flagship store is offering online exclusive offer on ShopeeMall Indonesia.

Product reviews are a key aspect for Indonesian moms to overcome the wariness of doing their shopping online, as seconded by Agni

“Reviews are the make or break point for me when I shop online. When I see a product in e-marketplace with no review, even if the price is right, I wouldn’t risk buying it most of the time.”

Unfortunately, leaving a product review is not a habit mastered by Southeast Asian consumers yet, especially compared to consumers in developed ecommerce market like the US. And most of the time, Southeast Asians are prone to leave only bad reviews as a way to express their dissatisfaction and to caution other consumers.

Brands must concentrate on encouraging satisfied consumers to be more proactive and do the same. Some brands have utilized user-generated content platforms like ReviewIQ to help with the problem. Nivea, for example, achieved an increase in the number of positive reviews with the help of ReviewIQ from real consumers for its flagship store on Lazada Thailand.

“At this stage, brands still need to incentivize satisfied consumers to help generate good, organic reviews,” says Sheji.

How should Mom & Baby brands go about online?

Sheji stresses the importance of brands understanding the nature of their products and their primary objective to determine the optimal online strategy.

“If your products fall into the luxury category, you might as well sell it on your brand website to retain the full control of your channel. However, this strategy requires you to invest extensively in bringing in traffic,” advised Sheji.

But having a website also means owning a proprietary media channel that can be used for marketing and educational purposes. Brands like Sweety and Frisian Flag, for example, use their sites to connect offline promotion with the online audience as well as equip consumers with detailed product information.

For most brands, however, if the objective is to diversify sales channels, then opening an official flagship store on an e-marketplace like Shopee or Lazada is sufficient and also easier to maintain, while providing access to a broader online consumer base.

Drawing on her extensive experience in promoting Sweety to e-marketplaces, Wenny opined that prioritizing e-marketplace sales avenues is paramount for success. Especially in Indonesia where consumers are presented with many options, and competition between e-marketplaces is high, brands often feel the needs to have ubiquitous footprints.

Wenny summed up, “Choosing the right e-marketplace is an important step in the online expansion. Selection must consider the available audience, while also ensuring that the e-marketplace’s infrastructure is compatible with the business.”

Get the full report of Digital Mom & Baby Shoppers Profile here.

Customer service goes beyond a smiley face and a friendly personality. In the world of ecommerce, where there is a lack of human touchpoints, customer service plays a vital role. When done well, it can help you increase your Average Order Value (AOV), boost your conversion rate, and create brand loyalty.

But gone are the days when customer service translated to 24-hour hotlines. In this day and age, customer service often comes in a form of live chat, recently popularized by all the hype around AI-driven chat bots.

In order to craft an effective customer care strategy, it is important to benchmark the level of customer service in the marketplace. To do that, ecommerceIQ conducted an experiment to test the responsiveness and effectiveness of brands offering live chat on Lazada Thailand.

Methodology

We randomly picked three brands from each category offered on LazMall, sampling a total of 27 brands across Lazada Thailand.

Each of the brands was asked the same single question – “How long does it take to deliver a product from your brand?” – during two time periods: during lunch time and after work. These are typically peaked online shopping hours, translating into peak load hours for live chat operations too.

Results: How Do Brands’ Customer Service Perform on LazMall?

From our observations, 25.9 percent of the brands offer a real-time response through Lazada live chat. 22.2 percent replied within 30 minutes, 22.2 percent replied within the first hour, 11.1 percent replied within 6 hours and 24 hours, and 7.4% of the brands did not reply at all.

It is also noted that the categories that are the most responsive are Electronics & Mobile and Home & Lifestyle.

Since our sample covers after work, off-hours too, this allows us to identify brands that have configured auto-replies for their live chat. Only 37 percent of the brands tested had auto-replies enabled. Setting up auto-replies is easy and a no-brainer in this day and age when everything is on-demand and 24/7.

ecommerceIQ’s observations about the responsiveness of live chat on Lazada Thailand

From our observations, 25.9 percent of the brands offer a real-time response through Lazada live chat. 22.2 percent replied within 30 minutes, 22.2 percent replied within the first hour, 11.1 percent replied within 6 hours and 24 hours, and 7.4% of the brands did not reply at all.

It is also noted that the categories that are the most responsive are Electronics & Mobile and Home & Lifestyle.

Since our sample covers after work, off-hours too, this allows us to identify brands that have configured auto-replies for their live chat. Only 37 percent of the brands tested had auto-replies enabled. Setting up auto-replies is easy and a no-brainer in this day and age when everything is on-demand and 24/7.

Xiaomi’s automatic reply which indicates the working hours and apologizes for the slow response in both Thai and English.

Most brands do add some human touch to their chats, such as using stickers and offering detailed information. But that is not enough to make an impression and the current live chat offering from brands are far from using live chat at its maximum ability.

How can Brands Improve their Live Chat on E-Marketplaces?

With these findings, brands should start paying more attention to their customer care strategies. We spoke with the Ms. Ratchaneewan Vichaisorn, Head of Customer Service at aCommerce, an end-to-end brand ecommerce enabler in Southeast Asia. Here are her suggestions:

1. Equip your Customer Service / Chat Agents with Product Knowledge

As the agents operating your live chat are an extension of your company’s brand, it is important that they receive adequate training for your products. This is especially the case for Mobile & Electronics and Beauty categories as product knowledge are often the deciding factor for shoppers in Thailand.

According to Ms. Ratchaneewan Vichaisorn, Head of Customer Service at aCommerce, during non-campaign periods, 35% of the inquiries through live chat are about products, while the number of inquiries about products surged to 45% during campaign periods like 9.9. (See how to prepare for the annual online mega sales here.)

2. Leverage the Opportunity to Up-Sell and Cross-Sell

Based on their product knowledge, your agents should be able to provide recommendations of similar products or complementary products that consumers may be interested in.

Brands can also take this opportunity to inform consumers of upcoming promotions to keep them coming back to buy the next time too.

3. Collect Data and Monitor For Customer Feedback

Talking directly to your customers is a great way for brands to collect data and feedback from end users. This information can then be used to improve a brand’s products and services. Because live chats are automatically logged, the chat histories can be mined for patterns and insights.

4. Promote Your Brand

Your customer service agent should be encouraged to offer more information about the brand to improve the relationship between the brand and the consumer. Towards the end of the chat, inform the customer about the channels that they can follow your brand for content, updates, and promotions.

These are a few tips that your brand can adapt to improve your customer service. If you’re interested in a similar audit for your own brand or a consulting session to improve your live chat operations, please contact us via hello@ecommerceIQ.asia or fill out the form below:





 

 

The fourth quarter is always the busiest season for retailers and brands across the world, Southeast Asia is no exception. The wave of mega sales typically observed offline during Black Friday in December have moved online thanks to prolific marketplaces like Amazon, Alibaba and Lazada. These campaigns now occur consecutively on 9.9, 11.11, and 12.12 (September 9th, November 11th, and December 12th) and cause headaches for brands new to ecommerce.

Businesses must plan ahead well in advance with multiple partners to hit their annual online revenue targets as up to 40% of GMV can be generated in the last three months of the year.

To help brands make the best of the shopping season, these are 10 strategies based on experience working with e-marketplaces, talking to ecommerce enablers, and data from some of the biggest brands across Southeast Asia.

While this guide is most applicable to enhancing performance during the upcoming “mega online sales campaigns” held by players like Lazada and Shopee in Southeast Asia, brands can increase chances to maximize sales and minimize costly mistakes with the findings.

Let’s dive right in.

1. Promotions & Merchandising

Getting this part right may sound trivial but it’s the main ingredient for a successful sales campaign. If the product offering clashes with offline deals and/or pricing is weak, no matter how much is spent on marketing, there will unlikely be high sales volumes

This is akin to achieving product-market fit prior to scaling your business.

So how should brands approach this? Well, what are brands trying to get out of these mega sales – revenues or general visibility/awareness?

In the case of the former, brands need to secure prime real estate on a marketplace such as the homepage or category page, which are typically allocated based on attractive discounts, online traffic and cash vouchers.

In order to drive revenue, exclusive “doorbuster” deals are especially important when top competitors – official and grey market sellers alike – selling similar or identical items are dropping prices.

Mass market brands are free to offer discounts, whereas premium market brands cannot use discounting as a viable strategy (channel conflict) and should look at adding value via bundling and exclusive GWP (Gift With Purchase). These tactics work well without having to tarnish the brand in the long-term.

In the case of visibility/awareness, more budget should be allocated to advertising and promotions to drive traffic to an upgraded shop-in-shop design to make a good first impression on new shoppers.

Brands can also utilize data tools to evaluate their positive in a competitive landscape (examples include BrandIQ) and benchmark competitor SKUs, promos and pricing ahead of the online sales festival.

ecommerce holiday strategies

BrandIQ Marketplace Analytics & Digital Shelf Monitoring

Planning and approval of the pricing strategy for end year – final list of SKUs, pricing, bundles and GWPs – will take the longest time. The brand then needs to share this plan ahead of a ‘freezing period’ to let marketplaces like Lazada and Shopee evaluate and approve the campaigns. And relative to the e-marketplaces other seller applications, it will allocate site visibility.

2. Inventory & Stock

Once SKUs and pricing is set, brands need to ensure there is enough physical stock to meet the forecasted demand.

This requires scrubbing historical data, if available, and use proxy data points like offline channel sales if not.

With a forecast in place, products are ordered and inbounding slots at partner or brand fulfillment centers are reserved and dedicated to online sales. This should all be completed at minimum two weeks in advance.

Lastly, brands should set up automatic ‘out of stock’ triggers to receive emails and SMS whenever a product sells out. This can also be applied strategically to competitor SKUs too through tools like BrandIQ – this allows ecommerce store managers to respond with targeted pricing promotions whenever a key competitor SKU runs out.

ecommerce holiday strategies

Price change triggers in BrandIQ

3. Traffic Acquisition

A common dilemma faced by brands during sales season is whether or not to double down on marketing spend.

CPCs (cost-per-clicks) are typically higher during a period when other brands are prioritizing and spending aggressively on marketing. The idea behind this is returns tend to be higher too because of higher conversion rates resulting from more competitive SKUs, pricing and bundles.

If a brand can afford it, it’s recommended to increase spending during the sales season. In addition, a “warm-up” or teaser campaign prior to the big launch is also recommended and actually required by marketplaces like Lazada.

Brands also perform better when leveraging an existing customer email database or mobile phone list or building them using formats like Facebook Lead Ads well before the shopping season, when CPCs are still relatively low.

ecommerce holiday strategies

Facebook Lead Ads to build up email database ahead of the sales season

With this targeted database, brands can drive traffic during the sales campaign by sending emails or SMS to the list with promo codes to be used online during targeted dates.

While barter deals are more effective for brands to gain better on-site visibility, it’s also recommended to allocate budget to marketplace paid ads such as Lazada Sponsored Products and Shopee My Ads. These ad formats are still affordable compared to Facebook and Google ads and help acquire users when they’re already in a shopping mindset. They also help brands stand out on category pages as well as competitor product detail pages.

ecommerce holiday strategies

Shopee My Ads

But when multiple brands are fighting for the same site banner placements, exclusivity and doorbuster deals are prioritized by marketplaces over sponsored ads.

Beyond the typical Facebook and Google paid ads to drive traffic, brands can also look into non-conventional channels such as Quora Ads and Shopback. CPCs and CPAs (cost-per-acquisition) are often lower due to less competition.

4. Traffic Activation & Conversion

Driving traffic is not enough; they need to convert into sales. To do this, brands have several levers to pull.

First, upgrade to an official shop-in-shop format if not yet done already. Commission fees will increase but this format goes beyond just a badge as it improves product search ranks and peace of mind for shoppers worried about authentic goods.

Maybelline Official LazMall Shop-in-Shop on Lazada Thailand

High-conversion shop-in-shop layouts. Source: aCommerce Shop-in-Shop Design Gallery.

The typical customer journey on marketplaces goes from the shop-in-shop homepage → category pages → product detail pages (PDPs).

The product detail pages is where customers need to be incentivized to “add to cart”. PDP optimization requires descriptive and rich product titles, images, body content, etc.

ecommerce holiday strategies

NIVEA product detail page optimization

One important element of PDPs are customer ratings and reviews. Unfortunately, most reviews on marketplaces in Southeast Asia tend to be few and often, not very helpful. To acquire more high quality reviews, either connect the brand.com product reviews/ratings to the Lazada product page or if no brand.com exists, leverage tools such as ReviewIQ to generate more reviews for certain SKUs on Lazada and Shopee.

ecommerce holiday strategies

NIVEA customer reviews generated via ReviewIQ

Another driver for conversions is live chat offered by both Lazada and Shopee. This is a great opportunity to increase conversions, especially for more expensive or complex products that require product detail exchange between the buyer and the merchant.

With an estimated one-third of ecommerce transactions in Thailand happening through Instagram, Facebook and LINE, users have come to expect live chat in other B2C channels as well.

ecommerce holiday strategies

Lazada Thailand live chat

ecommerce holiday strategies

Shopee live chat

For brands selling directly to customers via their own brand.com sites, an abandoned cart email should be active to regain lost revenue as well as retargeting pixels to drop cookies for a retargeting campaign during and right after the mega sales period.

5. Customer Service

From a CS perspective, brands need to prepare their customer service team on best-selling product details, pricing and overall campaign. In addition, having a master FAQ document or wiki that’s circulated ahead of time will allow CS teams or a dedicated agent to operate more efficiently during the campaign period.

If allowed, brands may want to scale up CS staff with temporary labor accounting for the increase in demand during the sales period. This should be tied back to the demand forecast. Platforms like Helpster in Thailand and Indonesia offer brands an easy way to quickly ramp up temporary staff.

6. Monitoring

A large and often negative impact on a brand’s performance online is the abundance of grey market sellers that undercut product prices.

As marketplaces aren’t incentivized to remove grey sellers selling authentic products and will only delist pirated goods, brands can only focus on improving their own product selection, search rank and educating its consumers on its official online channels.

In addition to raising concerns to the marketplace on removing counterfeit goods, brands can use BrandIQ to track grey market SKUs or other brands that impact its promotions, e.g. Mimi Poko vs. Mamy Poko:

ecommerce holiday strategies

Mimi Poko on Lazada Thailand

7. Packaging

Packaging seems mundane in comparison to the other sales levers but it’s a customer touch point to increase repurchase rates. In addition to an eye-pleasing design and quality of the packaging itself, promotions via flyers or vouchers to drive follow-up actions such as cross-sell and up-sell.

ecommerce holiday strategies

Pedigree box design

8. Fulfillment & Delivery

Customers value packages to be delivered in a quick and efficient manner.

ecommerce holiday strategies

Lazada customer chat with merchant complaining about expected delivery times.

For brands to succeed here in the last mile, we recommend the following:

  • Organize the warehouse set up at least one week ahead of time – reserved inbound, outbound slots – to ensure delivery to customers within SLA
  • Give the warehouse the estimated order volume factoring in marketing, promotions, and competition well ahead of time
  • Prepare enough packaging material such as carton boxes, bubble wrap, packing foam, etc. to meet forecasted demand
  • Align with 3PLs to ensure its capabilities to pick up and deliver packages given the high volume
  • Prepare an on-demand delivery resource in case of over-capacity, e.g. LINEMAN, Grab Delivery

9. Business Operations

Ecommerce is a cross-functional, team-based effort, especially during the mega sales period where tight-knit coordination is the difference between hitting record highs or dropping the ball:

  • Set up war room dedicated to a cross-functional team that manages all operations during the campaign period. Prepare food because it’s going to be long stretches of day and night and weekends as 9.9 and 11.11 both happen on Sunday
  • The team needs to proactively monitor active campaigns during the day to ensure everything is synced properly, e.g. stock, price, etc. and may even needs to reply quickly to customer chats if CS is overwhelmed
  • Marketing and store managers to check all campaign landing pages after launch. Last thing needed is money spent on driving traffic to 404 pages
  • Debrief / post-mortem for the next big sale (right around the corner)

10. Website Stability

To avoid mishaps such as Amazon’s very own Prime Day meltdown, these tips apply only if a brand is running its own brand.com site, not marketplace shop-in-shop:

  • 2-3 weeks prior to peak period, perform a load test (also known as a stress test) to determine the traffic limits of your existing infrastructure setup. This will arm you with the knowledge of server limits and determine benchmark for an upgrade
  • Upgrade server processing power and network bandwidth 24-48 hours ahead of campaign day to be able to handle the spike in traffic
  • Test promotions, for sanity and determine if any loopholes
  • Enforce a code freeze period (no deployments) to reduce the risk of introducing bugs from new features during or prior to peak period
  • Prior to, communicate to web support teams to be readily available and on standby for peak trading. Hope for the best, prepare for the worse

But regardless of the above, performance will be determined by the right online channel for your brand or product category. Based on ecommerceIQ research, Shopee is a preferred platform by consumers for female-oriented categories like fashion and mom and baby items, whereas Lazada is preferred for categories such as electronics and home appliances.

Sign up here to download a Holiday Flash Sale preparation report.

Brands without inhouse ecommerce capabilities tend to work with ecommerce enablers to optimize their online performance. Contact us for a free consulting session: hello@ecommerceIQ.asia

We conducted an online survey (“Mom & Baby Shopper Survey”) in February 2018 to understand the shopping behavior of Indonesian females (N=1,144), specifically mothers, when buying items in the Mom & Baby product category i.e. diapers, milk formula, toys, etc.

The results revealed whether these women preferred to buy baby products online or offline, how much they spent on average per order, what item they purchased on a frequent basis, their age, the family household income and what would convince them to increase shopping frequently.

The survey sheds light on the following topics:

  • What factors are causing consumers in the Mom & Baby category to continue to buy offline rather than online?
  • What aspects of ecommerce marketplaces are most important to Indonesian female shoppers and which marketplaces are most popular?
  • What items do Indonesian female consumers prefer to shop for online in the Mom & Baby category?
  • How do Mom & Baby category consumers start their online purchasing journey?
  • What is the shopper profile and annual spend of Mom & Baby shopper in Indonesia?

Chapter 1: The Online Potential for Mom & Baby Brands in Indonesia

The birth of a baby is a life changing event for a household in regards to its finances, hours of sleep received per night, and especially, the ongoing adjustment to becoming parents.

For every minute that passes, approximately 250 babies are born into the world.

Indonesia is a country with a population of more than 260 million and on average, 2.44 births per woman in 2015/2016 – the fourth highest among all Southeast Asian nations. It is approximated there are 1.6 million births per year in the country.

Figure 1: The average number of live births per woman in Southeast Asian nations. Source: Statista

To care for each new life, parents need to invest heavily in categories like diapers, milk formula, toys, clothing, education and especially, time. Over the next eight or ten years as the child grows older, starts school and requires different products and nutrition, certain shopping habits in the parents have already cemented.

This includes what brands they trust, what products they will recommend to friends and family and which channels to buy them from.
As the median age of new mothers in Indonesia at first birth is 22.8 years of age, younger than found in Thailand, Singapore and the Philippines, she is commonly already digitally savvy.

Indonesia is predicted to have the fourth largest middle-class consumption on a global scale by 2030.

ecommerceIQ

Figure 2: Middle class consumption around the world. Source: The Emerging Middle Class in Developing Countries, Brookings Institution

Considering the country’s middle-class household count is also expected to rise to 23.9 million in the next 12 years from 19.6 million in 2016, retailers are looking to capture common characteristics of middle class consumers – more spend on travel, holidays and family.

The purchasing power of Indonesians will also rise for the next two years as the country’s gross domestic product is expected to reach US$1.7 trillion by 2020 (Figure 2).

ecommerceIQ

Figure 3: Forecasted GDP of Indonesia is expected to reach US$1.7 trillion in 2020. Source: The Economist, World Bank, Badan Pusat Statistik Indonesia.

This is why companies are allocating massive budgets to build credibility with customers early in the journey of motherhood and more importantly, influence the behavior of future generations.

Not only does Indonesia house 132.7 million internet users, 1 out of 4 of the internet users in the country is a mother (Google & Kantar WorldPanel Indonesia). The number is expected to rise over the next three to five years as the majority of the population are females aged 10 to 19 years of age (Figure 3), meaning Indonesia can also expect a rise in new mothers.

ecommerceIQ

Figure 4: Indonesia’s demographic by age and gender. Source: Central Intelligence Agency

All of this makes the Mom & Baby category a highly attractive and rampant industry in Indonesia in the coming years.

How can companies capture new mothers and help them adapt to parenthood?

Sign up here to receive the full report of Digital Mom & Baby Shoppers Profile in Indonesia.

If you’ve been in Thailand and toured its popular landmarks, it’s most likely you have passed by a store packed with Thais and tourists alike buying bags and bags of…well, bags. Crowded stores filled with unmistakable colorful patterns distinguish NaRaYa from other locally produced labels and its popularity among Chinese, Japanese and South Korean tourists speaks volumes.

The famous brand can be found at over 20 domestic stores scattered around Thailand and 13 international branches and after 30 years in the retail business, shoppers can finally go online to buy NaRaYa products.

ecommerceIQ sits down with the decision makers at Narai Intertrade Co,. Ltd. to understand what plans they have for 2018 and what their definition of successful retail is.

Obstacles to a fruitful online journey

For a brand that has enjoyed immense popularity among women in Asia across all age groups, it seems the company is actually late to the retail game given the prevalence of ecommerce in Southeast Asia.

A few factors explain why it took NaRaYa so long to finally focus on digital.

Narai Intertrade Co,.Ltd., the parent company of NaRaYa, is a family owned business established in 1989 and is the manufacturer, distributor and official retailer of its own brand, making the supply chain a tangled web of complexities.

But a common obstacle that keeps manufacturers and distributors from going direct to consumer is channel conflict. By selling online, the brand would be competing directly with its partners in other markets.

“Initially, we wanted to focus on selling traditionally in our physical stores, and on being a wholesaler for our overseas partners,” shares Mrs. Wasna Lathouras, President of Narai Intertrade Co.,Ltd.

“Doing ecommerce would mean cannibalizing our partners.”

“If you notice on our website, you will be directed to the online websites of our overseas partners such as in Japan. If we were to go online, our cost would definitely be cheaper but reduce the opportunity of our partners to market and sell our products in their local markets.”

So how did they get around upsetting current partners?

Simple.

“We launch ecommerce in markets where none of our dealers exist.”

Channel conflict aside, the owners share a few factors that drove them to tilt the scales in favor of ecommerce. One, it was hard for the company to ignore the pressure to sell online, especially as the executives took to social listening to understand the needs of its customers.

“We have really high demand for our products from customers that don’t live in major cities in Thailand. Being online, everyone with a mobile phone can get NaRaYa products in a few days,” says George Hartel, the company’s Chief Operating Officer. “It opens a new market and opportunity for us.”

Two, they found a partner able to handle multi-channel retail and provide enough flexibility to expand across the region when the company was ready.

Left to right: aCommerce Group COO Peter Kopitz, Narai Intertrade Co,.Ltd. President Mrs. Wasna Lathouras, Assistant CEO Mr. Pasin Lathouras, COO Mr. George Hartel

“Both NaRaYa and aCommerce need to grow together. That’s why we need to have our backend and distribution center ready for offline distribution, while aCommerce will take care of the online distribution,” says Mr. Pasin Lathouras, Assistant Chief Executive Officer.

Three, they realized what online could mean for new retail opportunities in the US, India and China markets and expansion even within home market Thailand.

“I would say that 80% [online revenue] will come from overseas, and 20% from Thailand,” shared George. “This is because Thailand is a tourism based country and ecommerce is relatively early in Thailand so primarily people are still shopping offline.”

And four, given their existing footprint, could they reach retail’s pinnacle, omnichannel?

“We are starting an evolution with pure ecommerce in the beginning and in the future, we could roll out an omnichannel experience, for example, tourists can preorder at the airport and deliver to hotels.”

But George is very clear in stating: “We are not substituting offline with online.”

NaRaYa offline also gets a makeover

The evolution of retail isn’t a sign that companies should close down shop and open webstores. What the headlines and trends instead point to are the expectations of a new shopper generation.

What factors will nudge Thais to spend their newfound middle-class income?

Shoppers waiting outside the mall with their bright yellow NaRaYa shopping bags.

Part of creating a wholesome and attractive brand is greatly affected by the user’s sensory engagement in brick and mortar stores. As one loyal NaRaYa shopper put it,

‘Every time I visit NaRaYa, it makes me feel relaxed and free to choose my new bags with quality staff, if you want any help you can talk with them.’

Enter the rise of ‘smart stores’ and new technologies bridging offline and online channels like RFID tags, smart mirrors in change rooms and even robots handing out cards to act as virtual baskets in Sephora’s case.

While Thailand’s commerce industry is not ripe for robots, NaRaYa has plans to heighten its in-store shopper experience.

Mrs. Lathouras shares details of the brand’s newest two-floor flagship store at ICONSIAM, scheduled to open in October of this year and estimated to span 1,450 sqm.

Not only will the flagship introduce four new brands, making a total of seven sub-brands available for long standing fans, it will also incorporate a cafe serving local tea.

The cafe will accommodate customers waiting for friends and family browsing in stores and offer a palatable drink menu suitable for its typical Asian shopper.

The care placed in the customer experience is vital to building any successful business but creating a memorable shopping experience doesn’t come cheap. The company plans to spend up to 2 billion THB ($64M USD) on its distribution channels, existing and new, to not only expand its presence offline but also modernize its traditional brand image.

ecommerceIQ

New Lalama product line by NaRaYa freshen the brand

“We want to rebrand our look and feel to be less housewives and domestic. We want to look modern and international but remain a luxury affordable brand.”

The company’s soft launch online will be on Lazada Thailand next week and offer an initial 300 SKUs, while the official launch scheduled for May will look to imitate what is seen in physical stores.

“NaRaYa wants global recognition, ultimately. Of course, it is a dream to see NaRaYa in fashion capitals but we are very conservative when it comes to our goals,” closes Mr. Pasin.

Coffee is the second-most traded commodity in the world after crude oil. The ubiquitous drink commands a sizable US$100 billion market globally, with exports accounting for US$20 billion.

But as traditional coffee drinking markets in the West exhibit signs of stagnation, Asia is stepping up to fill the void. Indonesia, India, and Vietnam are ranked within the top five fastest-growing markets in the world.

 

Part of the reason behind this spurt is product innovation in the value chain. The number of new coffee products in Asia rose by 95% between 2011 and 2016, offering consumers tantalizing choices and catering to local palettes.

Specifically, it was the growing role of coffee pods that spurred and accounted for 26% of global coffee retail innovation in 2016.

“As emerging market consumers develop their taste for coffee, innovation is stepping up a notch as drinkers trade up from instant to fresher-tasting coffee […] pod and capsule sales will [continue to] increase,” says Johnny Forsyth, global drinks analyst at Mintel.

This presents a rare opportunity for FMCG brands to cash in. Tea has generally been the caffeinated drink of choice across most of Asia but a combination of glitzy marketing, an increased footprint of global coffee brands like Starbucks, and “cafe socialization” is changing habits.

Nescafe Dolce Gusto doubles down on Asia

The Dolce Gusto machine was first introduced by Nescafe in 2006 as a cheaper alternative to its premium Nespresso offering. The mechanics are similar; consumers insert ‘pods’ of coffee to make instant drinks like cappuccinos, latte macchiato, espresso, and hot chocolate.

Sales of the machines have been rising steadily in Asia due to Nescafe’s social media campaigns to engender brand loyalty.

The company launched its first Southeast Asian customer relationship management program in Singapore. The email marketing campaign segmented users based on their individual profiles and alerted them about offers, new flavors, and seasonal products.

“From the highly-engaged Facebook following, we know that consumers enjoy that the brand is sophisticated but not too serious […] It has allowed us to develop a new, innovative programme which really engages members,” said Will Adeney, VP of marketing analytics for Ogilvy One.

More recently, in Malaysia, Nescafe deployed social listening strategies to further entrench Dolce Gusto as a fan-centric brand. The company learnt coffee drinking wasn’t an activity done in isolation; connoisseurs loved to document it on social media with a prodigious amount of hashtags. Engagement from followers was robust.

Key themes and hashtags linked to coffee in Malaysia.

This helped Nescafe develop marketing campaigns around user-generated content. Its fans were already posting brand images on social – why not give them an enhanced platform?

Nescafe leveraged user-generated content along with its own collateral.

Why does this matter? Because according to Nielsen, the most credible advertising comes from people we know and trust.

83% of people have faith in the recommendations of friends and family.

Another interesting caveat: 53% of millennials indicated that user-generated content has influenced their purchasing decisions.

To tackle developing markets like Thailand, Nescafe launched a subscription commerce campaign powered by ecommerce enabler aCommerce. The offer, first introduced in August 2016, enticed consumers to sign up for a yearly subscription of coffee pods with the perk of a free Dolce Gusto machine.

Consumers only needed to pay via credit card, which would be billed automatically every month for a total of 12 recurring payments. It was a novel concept in Thailand, which still mainly relies on cash-on-delivery as its primary payment mechanism.

But the success of the campaign prompted the global coffee behemoth to launch another similar subscription campaign, this time revolving around Nescafe Gold & CoffeeMate.

Blending online & offline

Coffee drinking in Asia may be accompanied by a blitz of social media activity, but there’s a large offline component, too. It’s a way for friends and family to bond, building meaningful experiences and connections along the way.

It’s because of this factor Nestle has relied on pop-up campaigns inside shops and department stores. Visitors to a Tokyo mall last month were greeted by Pepper, the famous humanoid robot, who proceeded to ask them if they wanted a coffee.

An embedded tablet helped determine the size, type, and strength of the beverage and payments were facilitated via Alipay.

The timing of the campaign deliberately coincided with Chinese New Year celebrations and was designed to grow the brand in mainland China, where Starbucks is aggressively promoting its stores.

Another campaign in Australia placed expertly-trained staff across large department stores in the country to educate potential customers about the benefits of Dolce Gusto machines.

This particular promotion targeted Mother’s Day, typically one of the busiest retail days in Australia.

In 2013, Credit Suisse analysts estimated that about 55 % of Nestle’s coffee sales came from developing markets.

Such continued product innovation and catchy campaigns probably mean the figure is much higher now.

To tackle new and competitive markets like Southeast Asia, the best retail strategy is a blend of online strategies like subscription commerce to capture Internet-savvy consumers and traditional offline customer touchpoints to win over the world’s next population of coffee drinkers.