If you ask someone from Generation Y — more known as millennials — what they’re aspired to be growing up, you are more likely to hear answers involving occupations like doctors, engineers, or lawyers. However, ask people from Generation Z, and you will be surprised by how many of them mention social media influencer.

Why are more people pursuing this career path? Simple. They get paid to do something that they already love to do on a daily basis: posting on social media.

An influencer, someone with a substantial number of followers on social media, can generate a paycheck in the range of from US$124 to US$1,405 for one sponsored post, depending on the follower count.

How come a social media post worth that much? Moreover, why are so many brands willing to invest time and money in influencer marketing? 

The Influence of Social Media

One reason why influencer marketing becomes a powerful marketing tool is that influencers understand what today’s consumers want. Many of these influencers are regular people that gained their followers by curating contents that resonate with many people — earning them the power to influence their audience’s opinion and are more likely to be trusted by consumers.

Tofugear found that 55% of Gen Z consumers bought products due to the content shared by influencers. TBWA\Hakuhodo’s chief creative officer and executive creative director, Kazoo Sato, explained the phenomenon.

Influencers brings an entirely different perspective from ad agency creators. He understands what creates buzz for the smart-phone obsessed generation, and we intend to leverage this sensibility and perspective to involve brands in culture.

As a result, they’re able to devise contents that appeal to the brand’s target customers.

It’s also worth noting that influencers usually have their own niche and have followers that are interested in the same group, allowing brands to target the right audience effectively. Markerly found that those with fewer followers have higher engagement rates, most likely because the audience is interested in the product or the topic the influencer is advocating rather than just being fans of the influencer.

Figure 1: Instagram accounts with fewer followers have higher engagement rates; Markerly

In a region where social media is highly popular like Southeast Asia, where 55% of the population (around 360 million people) are avid social media users, it’s become more critical for brands to gain relevancy among their consumers in this platform.

Figure 2: Social media users in Southeast Asia account for only 55% of the entire region’s population; Hootsuite, We Are Social

Thanks to social media exposure, younger consumers also have an easier time connecting with the other consumers online and trust their opinion more than the ‘official’ brand channels or traditional media, because these people have experienced using it or are experts in the specific field.

The rise of social media usage has also raised the popularity of social commerce in this region. According to PayPal, 80% of Asian merchants use social media to sell online. The number is even higher for the three largest Southeast Asian countries. Thailand recorded the highest percentage of merchants using social commerce at 95%, followed by 87% of Philippines merchants, and 80% of Indonesian merchants.

Figure 3: Social commerce is popular among Asian merchants; PayPal

Case Study: Building a $1 Billion Business through Instagram

One of the most successful examples of influencer marketing is Daniel Wellington (DW), a Swedish watch company established in 2011. During its initial conception, DW is famous for leveraging several smaller influencers on Instagram to promote their product instead of choosing a celebrity to gain the same ‘viral’ effect with lower cost. 

By contacting many of these smaller influencers to post images of them wearing the DW watch in exchange for a free watch, the brand manages to invoke public curiosity and place their products in the eyes of potential customers and have the images speak for itself.

Figure 4: A Daniel Wellington Instagram post by Thai influence bikwansr; Bikwans’ Instagram

The result? Almost 4,700% revenue growth in the three years leading to 2015.

An effect to this extent won’t be as easy to achieve now as it did before as more brands are utilizing Instagram as their marketing channel and the platform has since set up posting guidelines to make it more transparent for users to see whether or not an advertiser sponsors a post. Still, it’s evident how powerful influencer marketing is when done right.

The Key to Influencing

There isn’t one right answer on how to choose the right influencer(s) for brands. However, there are some key rules brands should keep in mind when doing influencer marketing.

1. Alignment with Brand’s Audience

Know your audience. Enlist the influencer that has the same audience as your brand or product is targeting to, to ensure your message falls into the right ears and maximize the promotional effectiveness. One of the brands that did a good job with this was Lenovo.

Brief: To promote its new product line of YOGA 3 Pro and YOGA Tablet 2 Pro computers, Lenovo hired influencers, bloggers, and YouTubers to advertise their product on their platform using images, videos, and blogs that detailed their day using the product and promoted a giveaway. One of the influencers that were chosen was Kileen, a Dallas software developer and fashion blogger that works full time and has two kids.

The rationale behind this influencer: As a mom and fashion and beauty blogger, Kileen’s audiences are active, fashion-conscious women who are interested in fashion or lifestyle products. This match with Lenovo’s target, which wanted to position their YOGA 3 Pro and YOGA Tablet 2 Pro computers as a product that can be used daily for all kind of consumers, including active women.

Result: Although the blog post was only able to attract 62 comments, with other posts from other influencers, the campaign was able to garner 51 million social impressions and rank number eight as trending national topic in the US on Twitter. The giveaway also attracted over 61,000 entries.

Figure 5: A blog post by fashion and beauty blogger Kileen regarding Lenovo YOGA Pro 3; Kileen’s blog

2. The Influencer’s Engagement Rate

Brands should also take into account an influencer’s capability on engaging the audience and whether or not they’re someone your target audience can relate to and trust on, just like what Clinique did.

Brief: To promote better skin care routine among Men audience in general and introduce their new product line for men, Clinique for Men, the cosmetics and skincare brand partnered with 37 influencers from numerous fields, including stylists, filmmakers, lifestyle bloggers, and outdoorsmen. One of the influencers it worked with was Mikey de Temple, a surfer, photographer, and filmmaker from New York.  

The rationale behind this influencer: By partnering with someone unrelated to the fashion industry and more known for his professional works, Clinique was able to display how its new product line is used by regular people as a part of their daily activities.

Result: Despite his post only acquiring 748 likes (around 2.68% engagement rate), the campaign from the 37 influencers was able to garner an engagement rate of 3%, or 3.8 times higher than the post from Clinique’s official Instagram account. The campaign was also able to achieve 2.4 million impressions and over 67,000 interactions.

Figure 6: An Instagram post by surfer, filmmaker, and photographer Mikey de Temple to promote Clinique for Men; mikeydetemple’s Instagram

3. Do Homework on the Influencers

When choosing the influencers, it’s also important to see the history of their professional works to be able to judge their integrity and make sure all parties involved can able to meet all contractual obligations to prevent any future problems. Sadly, many brands failed to do this when they hired Instagram influencer and local photographer Daryl Aiden Yow.

Brief: Numerous big brands like Reebok, Dyson, Uniqlo, and Sony had hired Singaporean photographer and Instagram influencer Daryl Aiden Yow to promote their products on his Instagram platform. However, Mothership.SG exposed how he had been using stock photos from websites like Shutterstock and Pinterest and photoshopping himself in the images to promote their brands. Critically, Mustsharenews claimed that Yow had done this with the brands’ full awareness and approval.

The rationale behind this influencer: With Daryl Aiden Yow’s reputation as a photographer and his production of high-quality images, having him promote products on social media would show how picturesque and good the products are to his 115,000 Instagram followers.

Result: Post the expose, many individuals like APD’s Tim Sharp and Singaporean influencer Wendy Cheng and brands like Scoot and F&N Seasons have slammed both Yow and the brands. This not only damaged his reputation as an influencer but also brought down numerous brands’ name, resulting in contract termination from brands such as Sony and Issey Miyake.  

Figure 7: The number of Instagram posts on Yow’s channel drastically decreased from 1165 posts to 42 posts; darylaiden’s Instagram

Influencer marketing is an effective way to directly reach and attract your target audience without needing to spend millions of dollars on advertisements. However, like any other best marketing practices, personalization is needed when choosing these influencers to make sure you reach the highest level of engagement and in turn, your conversion rate.

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

The big deal about Ramadan in Retail

Once a year, approximately 2 billion Muslims worldwide observe a month of fasting to commemorate their Islamic beliefs. This year, Ramadan will start on May 16 and end June 14, 2018.

In Southeast Asia, more specifically the pre-dominantly Muslim countries Malaysia and Indonesia, family members scattered across the region travel home to celebrate the holy month together. In addition to fasting every day from dawn to sunset, there are other consumer behaviors that have awoken retailers and ecommerce players alike.

Eid al-Fitr, the three-day celebration of breaking fast at the end of Ramadan is similar to Christmas in the West. And what is commonly associated with these holidays? Gift giving, new clothes, and feasts.

While the month is a joyous celebration among loved ones, it’s also one of the largest shopping events in the retail calendar – think of Black Friday and Cyber Monday in North America. It pays to pay attention to the Muslim buying power.

ecommerceIQ was invited to speak at Facebook Indonesia’s event a few weeks ago to share its findings about Indonesian shopping behavior during Ramadan based on its new segment Consumer Pulse. This is what we learned.

The average Ramadan shopper profile

Regardless of online or offline shopping preference, majority of Indonesians will buy more during Ramadan.

Based on our survey results, the average Ramadan shopper in Indonesia is a female, between 31 – 40 years of age and spends the most on items in the fashion and groceries categories.

Ramadan 2018

The more indulgent spending may be explained by the fact that prior to the start of Ramadan, working Indonesians have a major influx of disposable income as they receive their bonus for the year.

Unsurprisingly, the more income made, the more they will spend during Ramadan as shown by our survey.

Ramadan 2018

What is important to note is the middle-class household count in Indonesia is expected to rise to 23.9 million in the next 12 years from 19.6 million in 2016.

The country already holds the fourth largest middle-class count on a global scale.

A growing middle-class means emergence of middle class characteristics – more spend on travel, holidays and gifts for family. This is why companies are spending to build credibility early on as reliable brands and influence the behavior of future generations.

This is also what makes the archipelago such an attractive and exciting market.

Shopping peaks during Ramadan

Given the growing popularity of ecommerce across the mobile first region, what trends can we identify in online buying behavior during Ramadan such as what device are they shopping with and at what times?

As soon as the sun goes down, the spending spree begins. Data from aCommerce Ramadan in 2017 show that mobile browsing on ecommerce sites peak at 4-5am and 5–8 pm when people are sitting in traffic.

Ramadan 2018

While the average web session length is longer on desktops, there is more traffic coming from mobile during Ramadan making a great mobile UX important to encourage conversions.

The data also shows that males tend to browse more than females, but females have a higher conversion rate. While marketers should tailor campaigns appealing to both, converting males can be a bit trickier.

Ramadan 2018

Males tend to appreciate a straightforward and simple online shopping versus social and comprehensive experiences. They also buy based on logical steps (versus emotional) and like to research before buying, which can account for the increase in browsing activity.

Capturing the Ramadan shopper

Based on our survey, the most popular online channels for shopping during Ramadan are Shopee and Lazada Indonesia.

While the top players have moved past the question of whether they should have an official online presence, having a shop-in-shop isn’t enough given the number of sellers available.

Questions brand managers need to ask themselves include: how well do my products rank in search? What’s my pricing strategy? How are my product reviews? How attractive is my brand presence? How quick is delivery?

Consumers in Indonesia shared the top three reasons that would convince them to shop online more often.

  1. Special Ramadan promotions on products they need i.e. food and fashion
  2. Payments option cash on delivery
  3. Same day delivery with no additional fees

Sites that did not feature lower priced items suffered a hit in conversions. Indonesians are price conscious and even with disposable income from their bonus, thriftiness is a major factor in consumption behavior.

While it is okay to mix normal priced items on the homepage, lower priced items should be brought to the forefront. This is a great time of year to flush out inventory.

Ramadan 2018

Logistics and payments remain the toughest challenges in Indonesia ecommerce due to infrastructural immaturity and lack of financial knowledge. Most companies have been smart to outsource the two pain points to improve their shopping experience efficiently.

Ideally, fulfillment partners should have a strong local footprint across Indonesia through hubs/sorting facilities and offer multiple payment options to shorten delivery times and give customers flexibility.

Ramadan retail takeaways

During this period, retailers, brands, companies, social merchants are all vying for the same consumers making competition fierce. Everyone is spending more in hopes to catch more customers.

Because not every company has million dollar budgets to burn, marketers have to be smart with their spend and the first step is understanding consumer habits and preferences.

The Background

Back in 1851, a small apothecary was established in the neighborhood of East Village, New York by John Kiehl. Breaking away from typical drug stores that offered common compounds and nostrums prepared onsite, John chose to open a store that focused on essentials oils, homeopathic and herbal remedies to achieve his objective — keeping the local community happy, healthy, and feeling their best.

The apothecary remained in the family for 70 years until it was purchased by Kiehl’s apprentice, Irving Morse, in 1921 before his son, Aaron Morse, took over in 1950 and added grooming products for men and women to the brand’s product line.

Aaron was also the one who introduced free samples to customers and is still practiced at today’s global cosmetics powerhouse Kiehl’s.

More than 12 million Kiehl’s sample packets and tubes are given away each year.

Fast-forward to 2000, Aaron’s daughter Jami Morse Heidegger decided to sell the business she inherited to L’Oreal for approximately $100 million. The brand had become immensely popular among fashion enthusiasts and skin-care connoisseurs worldwide and impossible for her to continue managing.

“It was like a snowball rolling downhill and just getting bigger and bigger. I created something I couldn’t control” – Jami Morse Heidegger

Jami Morse Heidegger, third-generation Kiehl’s heiress and her husband, Klaus Heidegger
Source: Retrouve

After being acquired by one of the largest cosmetics companies in the world, Kiehl’s expanded to 2,000 locations in 61 countries and was well on its way to the top of the beauty industry. What could go wrong?

The Challenge

Jami always feared her business would become a brand fighting for money, attention and space.

The thought of selling her business to L’Oreal didn’t appeal to her at first because L’Oreal had a reputation in building mass brands like Maybelline and had never managed a niche, boutique brand before.

But after it grew to a size she could no longer handle, she had no choice but to hand the brand over to a corporate looking to compete in the burgeoning specialty market.

Kiehl’s was afraid that under the management of L’Oreal, consumers would no longer view the store as independent and cutting-edge but rather as a revenue-generating corporate machine.

“[The challenge is] to grow and export the Kiehl’s way without changing it. We soon realized that we needed to stick as closely as possible to our business model on a global basis, to create a consistent Kiehl’s experience around the world,” said Kiehl’s General Manager Worldwide, Cheryl Vitali.

How were they going to keep a tight leash on L’Oreal?

Inside Kiehl’s apothecary during its early days. Source: Yahoo

The Strategy

The company didn’t want a flashy marketing budget or fancy model to be representing its brand.

“We want to keep the line [Kiehl’s] very exclusive,” said L’Oreal USA’s former chief executive, Guy Peyrelongue.

In order to appease the wishes of the Kiehl’s family, L’Oreal maintained the brand’s identity and its distribution model while ensuring its stores around the world matched the look and feel of the original apothecary in East Village.

Kiehl’s was on a mission to set strict brand boundaries for consistency and product control. And it worked.

Any one that has ever stepped into a Kiehl’s apothecary will recognize the iconic skeleton, Mr Bones, next to the famous Harley Davidson motorcycle.

“The motorcycles entertained the guys while the ladies shopped — and it was also a very clever way to introduce Kiehl’s men’s products to them,” – Chris Salgardo, president of Kiehl’s USA

Kiehl’s shops around the world look almost identical thanks to the brand’s strict guidelines. Source: Marie Claire

The brand also spends heavily on the development of products and ingredients, almost 3 to 5 times more than competitors. Its contribution to multiple charitable efforts also proved to be a successful way to hook customers to not only buy for themselves, but also feel proud to gift Kiehl’s products.

In Thailand, Kiehl’s introduced the country’s first ambassador and offered free samples together with a 5-minute consultation. Source: mThai

The company’s success in the US made global expansion a next natural step. In line with L’Oreal’s focus on digital marketing and ecommerce to capitalise growing consumption, Kiehl’s went online.

“It [online] enables us to get to know our customers better and interact more effectively with them, while remaining true to the brand’s rebellious and offbeat style” – Cheryl Vitali

By 2013, Asia had topped global sales of natural personal care products. The popularity of natural products was driven by major economic changes and rise in disposable incomes, especially among the Chinese, who had become more health-conscious.

The chart shows the sales of natural personal care products by region in 2013; Asia is the leader in sales. Source: Kiline Group

Southeast Asia also displayed the highest-growing demand for beauty and personal care causing Kiehl’s to invest heavily in performance marketing and its website with the help of ecommerce enabler and e-distributor aCommerce.

Beauty and personal care is expected to grow the most in Asia Pacific from 2016-2021. Source: Euromonitor

A fear many brand managers face is consistency across channels. How do I ensure the brand is rightfully represented at all customer touchpoints?

In the case of Kiehl’s, the company successfully projected its edgy and young vibes through bright colors and flashy images on its website in Thailand and Indonesia.

Kiehl’s website was localised for Indonesian customers.

The brand preserves its mission to make each and everyone of its customers feel good by utilizing technology. Kiehl’s recently implemented artificial intelligence and a text messaging model in its stores and online to keep customers engaged and taken care of.

“We’ve learned the first purchase happens in store, and online we’ve created tools to extend services to make a cycle,” Julia Mavrodin, Kiehl’s associate vice president of e-commerce and digital marketing said.

Through historical data collected from online orders, Kiehl’s can accurately estimate when a customer will run out of an eye cream or facial cleanser and send a text message to prompt the customer to order a new one.

A sample text message that Kiehl’s sets to keep their customers replenished with its goods. Source: Digiday

By introducing a direct channel to converse with customers, the brand is able to track where and when customers buy its products, even at partner retailers like Sephora or Nordstrom.

This allows the brand to stay top of mind and shield customers from buying unauthorized products off of e-marketplace like Amazon at the same time.

To this day, Kiehl’s has remained one of L’Oreal’s fastest growing brands and broke the symbolic $1 billion sales mark in 2016.

The Future

Kiehl’s is looking to capitalise on its brand power in new markets like the Middle East and Latin America to ultimately spread the brand’s legacy and become the number one skincare brand in the world.

“To get there we will need to pay even closer attention to our customers. After all, that has been the secret of our success for the last 160 years.”

*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.

##

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?

THE BACKGROUND

Anyone that has ever logged into Instagram has probably encountered at least one picture featuring a minimalist watch with a NATO strap and trademark ‘DW’ on the dial.

Daniel Wellington Instagram

The classic rose gold-tone watch with the stripes NATO strape

In the six years after its inception in 2011, the relatively young Swedish watch brand Daniel Wellington (DW) has successfully become one of the world’s best-selling watch brands under the $200 price range.

DW was inspired when the founder Filip Tysander met a British man with “impeccable yet unpretentious style” during his travels in Australia. Tysander was inspired to create his own line of watches after seeing the man’s pairing of a vintage Rolex Submariner with an old, weathered NATO strap.

Within three years after its launch, DW sold one million watches worth $70 million and the company is now worth over $200 million.

It is also the fastest growing private company in Europe — recording 4,700% growth in revenue between 2013 and 2015.

What factor contributes to its massive success?

It is almost single-handedly owed to the company’s Instagram strategy.

THE CHALLENGES

Coming from the Gen Y millennial generation himself, Tysander knew personally the pain of finding an affordable minimalist watch as most companies charge a premium for the style.

“I thought there was also something missing in watch design, when it comes to watch that is slim, thin, and minimalistics, that you can wear together with a suit, that is not that expensive,” Tysander said about the opportunity he saw in the watch industry.

So how does one make an affordable stylish watch without looking cheap? On top of that, how does a brand create an identity that millennials want to be associated with?

THE STRATEGY

The company picked a perfect time to start its business, a period right after the economy recovered from the 2008 financial crisis and profits in the watch industry jumped from $3.7 billion in 2009 to $5 billion in 2014.

Tysander also noticed a classic trend in fashion hadn’t yet made it to the watch world – the preppy style so he drew inspiration from Ralph Lauren to match his new NATO straps.

To keep price points relatively low, the company manufactures and assembles its parts in China but the brand maintains a certain level of quality by sourcing the time-keeping parts from Miyota, a Japanese supplier known for its good quality-to-cost ratio.

“Our watches are inspired by the upper echelons of the watch world but at a very accessible price point. It’s fair to say that we want everyone to be able to own a Daniel Wellington,” said Frans Sjo, DW’s business manager for the US.

Indeed, the brand has made it very easy for people to purchase a Daniel Wellington watch by partnering with over 6,000 retailers in 75 countries.

The company also sells its products online, offering free worldwide shipping and returns on not only its official website but also distributing its timepieces in Southeast Asia through popular marketplace Lazada.

Daniel Wellington Instagram

Daniel Wellington ecommerce website with free worldwide shipping

Unlike other upscale brands that are bound by guidelines and can only sell their products in certain boutiques, DW partners with any retailer that will have them – department store, boutique, standalone, etc.

While its omnipresent channel distribution is impressive, the company’s most notable strength is its marketing. The company refused to spend on traditional advertising and turns instead to social media to reach potential consumers.

In its early days, DW gave watches to key influencers on Instagram so they could show it off to their thousands of followers. But the company didn’t choose celebrity endorsers and started with the several smaller influencers to achieve the same “viral” effect at a cheaper cost.

Daniel Wellington Instagram

The company curates its Instagram feed with pictures from customers around the world.

DW has also curated a very stylish Instagram profile itself as a fashion brand and has successfully garnered 3.2 million followers. It also leverages user-generated content (UGC) to engage its customers and drive brand loyalty by featuring user posts with hashtag #DanielWellington.

Daniel Wellington has succeeded in lowering its product’s base cost, and consequently the retail price, while branding itself to be a stylish and desirable brand to a wide demographic.

THE FUTURE

Having excelled in an online channel strategy, DW is now looking to expand its offline footprint to further expand the business.

The company is planning to open 300 flagship stores worldwide within a year, ten times of what the company had at the beginning of 2017. At least 100 of them are planned to open in China.

To increase global recognition (and now that DW has the money), the brand has appointed Kendall Jenner to be its brand ambassador to launch its Classic Petite collection — the company’s first mesh band watch.

Daniel Wellington Instagram

Kendal Jenner is the face of the company’s Classic Petite collection launched March this year.a

“If you go back to 2013, I had no idea the company had the potential to grow to its current size, but today it’s part of my everyday life. I’m incredibly fortunate,” said Tysander in an interview.

With $66 million profit all for himself? No doubt.