Appearance matters — which is why there are more people purchasing beauty items each year in Thailand. The country’s Cosmetics and Personal Care market is expected to grow 7.7% annually, and with the changing lifestyle that the country’s increasing internet penetration brings, more Thai consumers are turning to online to purchase beauty products.

Why do Thai consumers buy beauty products from online stores

Data from ecommerceIQ Beauty Survey Thailand 2018 shows price is an important factor as 25% of the total 1,874 respondents answered discounts as the top reason to shop beauty products online. Free delivery (24%) followed closely as the second reason.

Figure 1: Reasons why Thai consumers prefer buying beauty products online; ecommerceIQ Beauty Survey Thailand 2018

As the rule of thumb in developing markets like Southeast Asia, including Thailand, consumers tend to be price sensitive.

The Bank of Thailand (BOT) reports that the average salary in the country is approximately 13,789 baht, in line with our report where 35% of our respondents’ monthly income is less than THB 18,000. As such, it’s no surprise why most Thais prefer things that are either free or low-priced, especially for items that aren’t daily necessities.

Figure 2: Average wage categorized by occupation (in baht) in Q2 2018; Bank of Thailand

In addition to price and free delivery, having a wider product selection (19%) is another reason for consumers to purchase beauty products online, most likely due to the lack of offline footprint outside the Metro area. And unlike brick-and-mortar stores, consumers can view and compare a wide array of brands offering similar products in one sitting, allowing them to purchase the cheapest item available in the market in no time.

What beauty items are purchased online?

In general, Thais mostly shop online for skin care products (31%) and color cosmetics (31%), possibly due to high product availability and exclusivity online. Understandably, color cosmetics are mostly purchased by female, while males and third-gender individuals mainly purchase men’s grooming products online.

Figure 3: The category of beauty products purchased by Thai online consumer, depending on gender; ecommerceIQ Beauty Survey Thailand 2018

There are a couple of reasons why color cosmetics are popular among Thai online shoppers. First, there’s sufficient product information for color cosmetics available on the internet, whether it’s from beauty bloggers and vloggers, or product reviews from the consumers.

Figure 4: Search results for make-up tutorial videos on YouTube; YouTube

36% of our respondents say the lack of touch and trial is their main reason why they don’t buy beauty products online. Therefore, the availability of comprehensive product information online might help them overcome the need for having to try it out beforehand.

Figure 5: Top 5 reasons why Thai consumers don’t buy beauty products online; ecommerceIQ Beauty Survey Thailand 2018

Another reason is because color cosmetics are usually priced on a much lower range than other beauty product categories. For price-sensitive societies like Thais, they’re more likely to only shop on affordable products like color cosmetics. This is also supported by our survey findings where over 50% of Thais only spend less than 1,500 baht for beauty products.

Figure 6: The average order value Thais are willing to spend on beauty products in both online and offline channels; ecommerceIQ Beauty Survey Thailand 2018

Where do most Thai shoppers buy their beauty products?

For online purchases, most Thais choose to shop on Lazada (30%) and Shopee (27%), the two biggest ecommerce platforms in Southeast Asia. In line with the top reasons to shop this category online, the two websites are chosen for the many discounts they offer (34%) and because consumers find it convenient to shop on these platforms (35%) as they’re already familiar with the sites.


Figure 7: The online channels Thai online consumers usually buy beauty products from; ecommerceIQ Beauty Survey Thailand 2018

Figure 8: A price promotion banner on the homepage of Lazada Thailand

What does this mean for beauty brands in Thailand?

Generally, Thai consumers aren’t loyal towards a specific brand and are willing to try out other brands. Over 57% of consumers cited looking for variations as the main reason they are open to trying other brands — giving brands the opportunity to always grab more market share.

Figure 9: Factors that drive Thai consumers to change personal care brands; ecommerceIQ Beauty Survey Thailand 2018

And with most Thais using online platforms such as social media and brands’ websites as the place to learn about new beauty trends and products, leveraging online channels have become more important than ever for brands to attract more consumers.

Figure 10: An example of a Thai beauty influencer on social media; Wonderpeach’s Instagram

Figure 11: Social media is the number one destination for Thai consumers to learn about the newest beauty trends; ecommerceIQ Beauty Survey Thailand 2018

However, having a presence online will do brands no good without knowing what consumers actually want. Our survey results indicated that the first thing Thai consumers consider when choosing beauty products is the function (25%), followed by price (22%) and product reviews (17%).

In this context, function means the type of product, for example anti-aging, whitening, or acne-treatment. In Thailand, for example, beauty products with whitening agent is the most popular because of the local beauty perception.

Figure 12: Snail White Body Wash in various ingredients and functions; Snail White Official Facebook

Figure 13: The key features Thais look for when buying beauty products; ecommerceIQ Beauty Survey Thailand 2018

At the end of the day, what matters the most for consumers are good products that bring good results, and product reviews have become an increasingly important part of their decision-making process as it comes from real consumers.

Brands can take advantage of platforms like ReviewIQ to help them connect with real reviewers to leave product reviews after purchase on their official store on e-marketplaces like Lazada.

Figure 14: Using ReviewIQ, Nivea has successfully increased the number of reviews from their consumers for their shop-in-shop on Lazada Thailand.

Over 30% of our Thai respondents are loyal to one brand when choosing products from the beauty category. This shows that as long your brand is offering the right products at the right price and quality, consumers will be less willing to use products from other brands.

The full report for Online Beauty Consumers in Thailand will be out in November 2018. Subscribe to our weekly newsletter and be the first to know.

Are you a beauty brand looking to expand online in Southeast Asia? Contact us at hello@ecommerceiq.asia for expert ecommerce advice on growing your brand.

In this day and age, a mobile phone can do more than making a phone call; it records the time, takes pictures, orders meals and even measures your heart rate. Who needs a watch these days?

You may be surprised to learn that even though 81.4% of Thais own a mobile phone, many still wear wrist watches.

Mobile phone user penetration in Thailand; eMarketer.com

What do Thais Look for when Buying a Wrist Watch?

Out of the 877 Thai respondents, 94.9% wore a watch and more than half (56.0%) owned three watches or more. Data from the ecommerceIQ Wrist Watch Survey Thailand 2018 indicated that watches remain a necessary accessory among Thai consumers with demand still high despite a large number of smartphone users. Statista reported a total of 25.75 million smartphone users in Thailand but the days of the wristwatch are not yet over.

Apart from the obvious reasons to tell the time (62.5%), 13.5% also wore a wristwatch as an accessory. Male respondents especially mentioned that wearing watches was the easiest and classiest way to look good. Around 8.6% cited that wearing a watch reflected their status and style and helped to boost their confidence.

For this reason, design was naturally the most important factor that Thais considered when buying a wristwatch, followed by price and brand name. Brand name also reflected status and personal style. For example, Rolex is still highly regarded as a prestigious timepiece brand in Thailand. Wearing a Rolex advertises high income and social status.

Price, naturally, is another high-ranking factor. Watches are deemed as expensive accessories and not something to be bought on an impulse. Thais only buy new watches every few years (58.7%). Most respondents indicated that they were comfortable to spend around 1,000-30,000 baht on a wristwatch.

Factors that Thai respondents look for when buying a watch; ecommerceIQ Wrist Watch Survey Thailand 2018

The top three watch brands preferred by Thai respondents were Seiko (25.6%), Casio (21.6%), and Omega and Rolex (10.9%).  What do we learn from this ranking?

  • Seiko is a Japanese company that revolutionized the industry and is known for its long history of watchmaking. Prices range from 5,000 to 30,000 baht and the brand is popular among 20K-50K baht income earners.
  • Casio offers a diverse product assortment and brands including G-SHOCK and Baby G. Casio are known for their affordable but attractive designs.
  • Rolex and Omega are popular among consumers aged 40 and above. These two brands are preferred by the older generation, while youngsters opt for IWC or Tag Heuer as luxury timepieces.
  • Daniel Wellington, is a hipster brand that rose to popularity fast and won the hearts of the younger generation. Up to 75% of respondents aged 18-25 wore this brand. Tag Heuer is also popular amongst the 31-40 age group.

When asked about the media channels they used for news and information about timepieces, 48% of the respondents stated that they received news from social media with 33.7% using brand websites.

In Thailand, 74% of the population are active social media users, as reported by ETDA 2017. Thus, it does not come as a surprise that social media was the main channel respondents used for news concerning watches. Brand websites offer more genuine and trustworthy news about the brand itself.

Media channels that Thais use for news about wrist watches; ecommerceIQ Wrist Watch Survey Thailand 2018

Where do Thais Buy Wrist Watches?

Despite the heavy usage of the Internet to consume news, 76.7% of Thais still buy wrist watches from offline stores. The most popular offline channel used by 55.5% of the Thai respondents was Central Department Store because of the store’s credibility.

Like most department stores in Thailand, Central Department has a dedicated section for wristwatch sales. Apart from their reliable reputation, buying a wrist watch from Central Department Store is very easy and convenient. Up to 19% of the respondents looked for convenience and a holistic service, especially regarding after-sales service when buying a watch. Every Central Department Store has a ‘Watch & Clock Clinic’ that offers after-sales service for watches bought from the store.

Watch & Clock Clinic at Central Department Store, Pinklao Branch

Only 23.3% of the respondents bought wrist watches online. Lazada received the highest scores in terms of an online sales channel where Thais buy watches. The second preferred option would be the brand website, due to its credibility.

The online channels Thai respondents choose to buy watches from; ecommerceIQ Wrist Watch Survey Thailand 2018.

 

Similar to other product categories, the top reason cited for opting for online channels was because of convenience; ecommerce saves time and is hassle-free. On the other hand, some Thai respondents refrained from buying wrist watches online due to a perceived lack of credibility in the sellers and/or marketplaces. Offering a warranty and after-sales service are also factors that some online sellers fail to provide.

Reasons why Thai respondents bought wrist watches from online channels; ecommerceIQ Wrist Watch Survey Thailand 2018

It is also interesting to note how wrist watches are listed by Lazada and Shopee websites as each has a slight difference. From our observations, watches are only found in the ‘watch and glasses’ category on Shopee, while Lazada lists watches under: Electronic accessories, women’s fashion, and men’s fashion. This provides users with more exposure to the products and hence higher conversion to sales.

On the Lazada website, users are able to see watches listed on the e-marketplace more frequently and in more sections than at Shopee. Lazada, watches can be found under Electronics as wearables and accessories, which is also categorized into male, female and child timepieces.

Shopee, on the other hand, only offers watches under the watches and glasses category, and does not categorize watches for different demographics like Lazada.

How Can Watch Brands Take Advantage?

Watches are deemed as a luxury item by Thais. More often than not they are bought as an investment. Thais look for credibility and confidence from the seller, as well as a warranty proving that the timepiece bought is authentic.

It is not enough to list your products on a marketplace and engage in advertising campaigns. Rather, brands should focus on establishing confidence among consumers. One way to ensure this is to be listed as an official seller on LazMall or Shopee Mall, as well as including a clear statement about warranty and after-sales service conditions.

For luxury timepiece manufacturers, an e-marketplace may not be the ideal strategy as it may conflict with the brand’s positioning. Luxury brands should focus on providing beyond-expectation services and ascertaining that information is clearly visible on their websites.

As watches are still mainly sold offline, now is the right time for brands to give omnichannel a try. Take Burberry for example. They created the Burberry Retail Theatre that streams live runway shows into a number of their stores worldwide and through their other online channels. In the Retail Theatres, customers can browse live streaming collections on iPads and purchase items online immediately.

Burberry’s Runway to Reality campaign allowing consumers to order items from the runway in real-time

However, high-end or mid-range Thai timepiece brands should not ignore the power of social media. Daniel Wellington sets a great example through owning its own social media game. The company reduced spending on traditional advertising and turned instead to social media to reach potential consumers through use of the hashtag #DanielWellington. This also leverages user-generated content (UGC) to engage its customers and drive brand loyalty.

An Instagram post was created with #DanielWellington as #DWPickoftheDay and #DWPickoftheMonth

By taking your brand digital, you are embracing an endless supply of consumer data. As Shadi Halliwell, the creative and marketing director of Harvey Nichols stated,

“Data is a conversation; the more data you have on someone, the more conversation you can have.”  

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:





     

     

    Ecommerce has been snowballing for more than six years in Southeast Asia but yet only recently, was there any progressive movement in taxing digital transactions.

    Government bodies in Thailand, Singapore and Indonesia understand the importance of taxes on ecommerce sales (products and services) in order to capture a piece of the fast growing segment and more importantly, level the playing field between its brick-and-mortar peers.

    But implementing new tax regimes proves difficult given Southeast Asia’s “diverse and uncertain legal environment” explains Steven Sieker, head of Asia Pacific tax practice group.

    Under existing taxation laws, only local players and not foreign companies across markets fall within local tax regimes.

    “The main point is to try to tax multinational companies that are not registered in Thailand for their online business,” said Kanchirat Thaidamri, tax partner for Deloitte Thailand.

    “Online is simply a reflection of what exists in the offline world: small stores don’t report all their taxes in the outside world” – Jason Ding, partner at Bain & Co, China

    Below is a snapshot of the state of ecommerce tax regulations across six major APAC markets:

    Ecommerce Tax in Indonesia

    ecommerceIQ

    In 2017, Finance Minister Sri Mulyani stated the government wanted to “level the playing field between businesses that operate online and those offline, which must add 10% Value Added Tax (VAT) to the price of goods purchased”. While the tax rate is still unknown, it is expected to be lower than 10%.

    The ecommerce tax, when implemented, will cover four types of platforms: online marketplaces, classified ads, daily deals and online retail that operate in the local markets but will not be levied on sales through social networks (mainly Instagram and Facebook).

    Impact? Bolster the growth of social commerce in Indonesia, a country where social media platform usage is one of the highest in the world and weaken incentive to sell on e-marketplaces like Tokopedia and Lazada. Applying a 10% VAT rate to the online sector would bring in approximately USD$1.34 billion in additional tax revenues.

    The Indonesia Ecommerce Association (idEA) was discussing a 0.5% VAT from each marketplace seller at the beginning of the year with the Finance Ministry – nothing has been implemented.

    “If the tax regulation restricts ecommerce platforms – making selling in Bukalapak complicated because of the tax – there will be an exodus of people who would prefer selling on Instagram and Facebook, which is uncontrolled and not chased for tax because they sell through the back door,” – Bukalapak co-founder and chief financial officer Muhamad Fajrin Rasyid.

    Timeline for implementation? Public trial in 2019.

    Ecommerce Tax in Thailand

    ecommerceIQ
    In July earlier this year, the Cabinet approved a proposal to collect 7% VAT from foreign ecommerce platforms deriving annual service income exceeding THB1.8 million (US$56,000). These businesses must sign up as operators under the VAT system to report to the Revenue Department.

    The Nation reports the taxes apply to those selling goods and services on Internet platforms as well as the operators of Internet platforms such as Google, Amazon and Alibaba. Companies with an overseas presence and earning income from advertising/website space rental from Thailand are also subject to a 15% withholding tax.

    Impact? Operators such as Facebook and Google could pass on the additional costs to its sellers and ad buyers, likewise with  JD Central, Lazada and Shopee customers. Smaller players could be deterred from doing ecommerce if the business cannot sustain these taxes. Currently, vendors outside of Thailand are liable for 7% VAT only if value exceeds THB 1,500 (USD$45.76).

    Timeline for implementation? Government needs to forward the draft VAT bill to the Council of State (the government’s legal advisory body) before submitting to the National Legislative Assembly for a debate. Early 2019.

    Ecommerce Tax in Philippines

    ecommerceIQThe country is the only market out of the region with an ecommerce taxation. The 12% VAT on total value of online transactions of more than USD$37,310 came into effect in 2016 and is applicable to store owners as well. For transactions lower than the threshold, a 3% VAT is levied instead on online transactions.

    Impact? Any person or entity who, in the course of trade or business, sells, exchanges, or leases goods or properties, or renders services, and any person who imports goods, is liable to VAT. The government has its own challenges enforcing these taxes on different online business models as shutting down websites only leads to another one being created under a different IP address.

    Ecommerce Tax in Malaysia

    ecommerceIQAs of late 2017, there is a mechanism under Malaysia’s current GST model that taxes online services provided by local companies to Malaysian consumers, but currently is not applicable to foreign service providers.

    Impact? The implementation of the digital tax may mean that foreign service providers serving Malaysian consumers will be charged with tax. The service provider can pass on the tax to customers by adding it to existing prices.

    Timeline for implementation? The country is likely to follow the steps of its close neighbour Singapore.

    Ecommerce Tax in Singapore

    ecommerceIQCurrently, any online purchase in Singapore under SGD$400 (USD$290.17) is exempt from GST. The government did not include ecommerce tax in the budget released in February 2018 but the Ministry of Finance (MOF) said “B2B imported services will be taxed via a reverse charge mechanism, while B2C imported services will be taxed through an overseas vendor registration model” according to the Strait Times.

    Impact? Decrease in shopping overseas as prices could increase with the introduction of GST on ecommerce goods and services from overseas.

    Timeline for implementation? While many thought the new GST would be implemented in the 2018 budget released February this year, the government has tabled a concrete tax for ecommerce until 2020. Starting January 1, 2020, consumers will pay GST when buying online services from overseas, which includes music, video streaming, apps, online subscriptions, and digital B2B services such as marketing/accounting).

    Ecommerce Tax in Vietnam

    ecommerceIQ

    Vietnam is one of Southeast Asia’s most attractive and also nascent markets. Foreign ecommerce firms must have local representative office registered in Vietnam and pay VAT of 10%. Individual residents without an established ecommerce company in Vietnam will be subject to tax if they have annual sales revenue over USD$4,300. As of now, there isn’t heavy enforcement in place but there are plans for higher scrutiny by the National Assembly next year.

    In November 2017, Vietnam’s government also released a proposal for all cross-border payments to be made through domestic gateways via the National Payment Corporation of Vietnam.

    Impact? Not much concern in regards to Vietnam’s attractiveness as few companies have managed to ‘crack the local market’ and ecommerce contribution to total retail is still relatively small compared to other markets. The cross-border payments funnel will increase the tracking of tax liabilities by the National Payment Corporation of Vietnam.

    Timeline for implementation? Late 2019.

    Difficulties implementing an ecommerce tax in Southeast Asia

    Apart from climbing over the layers of government and overcoming pressure from big corporates, and complaints from SMEs calling foul play, regulators also face the large task of enforcing such new reforms, especially concerning tax on digital services.

    Products are easily tracked through physical movement in the country but services are intangible.

    Axcelasia Inc Executive Chairman Dr. Veerinderjeet Singh shares: “The problem with foreign online companies is they will charge 6% GST on customers for the purchase and delivery [in Malaysia], but how will the Customs collect that amount when they don’t have offices in the country? How do you regulate that? And if they miss a few payments, how will you impose a penalty on them?”

    Between now and 2020, when most implementations across Southeast Asia are expected to take root, Internet platforms and operators have little influence on the new tax policies but it’s the customers and the shift in their behaviour that will be largely impacted.

    In the words of Senior Minister of State for Law and Finance Indranee Rajah, “keep shopping while you can”.

    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

    I put out a survey two weeks back about ecommerce enablers to find out the sentiment towards these companies in ASEAN, if brands actually use them (why or why not), and areas where they believed partners could improve.

    The answers I received were not what I expected.

    60 percent of respondents reported using an “ecommerce enabler”, but given their answers, most didn’t understand the difference between a marketplace and an enabler.

    ecommerceIQ

    Very simply put, ecommerce enablers are service providers that help a brand execute its digital strategy through a one-stop solution. This solution encompasses content production, web platform optimization, performance marketing, technology to integrate all digital channels, all the way to customer care, fulfillment and/or delivering it to the end customer’s doorstep.

    Ecommerce enablers provide a client with whatever it takes to sell successfully online.

    Popular examples in Southeast Asia include: aCommerce, iCommerce, etc.

    Lazada, Shopee, 11street are not ecommerce enablers, they are the platforms for businesses to sell on. Sure, they might lend a brand an account manager who periodically checks in but their goal is to push for lower product prices and exclusive channel promotions.

    The marketplace is neither charging the business for this service or providing special treatment – if a better performing merchant comes along, it catches you later.

    This is why Alibaba’s Tmall has its own list of Tmall Partners – specialised agencies that build functional stores for businesses on the Tmall platform. Tmall itself is not the enabler.

    The same goes for marketing platforms such as MailChimp, payment gateways like Paypal and delivery companies like Kerry Express or NinjaVan – they may not be ecommerce enablers but they are important pieces of the ecommerce supply chain.

    This distinction is vital to the growth of ecommerce in Southeast Asia, especially as most global brands – Samsung, Unilever, L’Oreal, etc. – are choosing to outsource their ecommerce BUs to other experts.

    Why? Because inhouse teams aren’t sure how to structure themselves. Over 65 percent of global marketers feel teams are “somewhat integrated” or “broken out by channel”. For ecommerce to work, Marketing needs to align with Sales, and Service.

     

    ecommerceIQ

    But ecommerce isn’t a magical band-aid capable of fixing all problems – especially not corporate silos.

    Aื FMCG industry leader recently asked me, “what is something you would do to improve my brand’s digital strategy?”

    My reply?

    “Establish internally what the business wants from ecommerce, who’s in charge of this division and the resources the business is willing to dedicate before even bothering to bring on an enabler. Without internal alignment, it becomes one inefficient mess and everyone ends up pulling hair.”

    After working with some of the world’s top brands – Unilever, Microsoft, Reckitt Benckiser, Payless, Samsung – I’ve been fortunate enough to see how these well-oiled machines function and why it doesn’t necessarily work for ecommerce.

    The beauty of digital is that it’s instantaneous, which is the complete opposite of how decisions are made in these enormous corporations. It’s new, it’s disruptive.

    Online moves quickly and requires constant care because a store that never sleeps means inventory, pricing, recommendations, customer support need to be up to date 24/7. It gets even more complicated when the ecommerce enabler needs to manage a brand.com and a marketplace shop-in-shop (SIS).

    What often gets overlooked by brands is the shift in power.

    Dangling more visibility over the thousands of grey market and official sellers on its site, a marketplace will push aggressively for more deals, more exclusivity, more vouchers, now, now, yesterday, while the brand pushes back with the same tenacity, touting “channel conflict”, and scrambling to squeeze funds from other departments.

    The brand finally ends up throwing paperwork at the problem two weeks past the deadline.

    Who wins?

    No one.

    Certainly not the enabler.

    How is it in 2018, we still don’t know how to do ecommerce?

    As a marketplace, its job is to offer the best deals and shopping experience to customers to grab market share. It does this by subsidizing prices, and by nudging its merchants to sell more and offer exclusives.

    As a brand, its job is to sell to as many customers as possible, keep its distributors civil, maintain brand consistency across channels and mitigate the amount of friction between departments. It does this by offering the same promotions to each channel partner, allocating resources in a democratic fashion and following processes to a tee.

    As an ecommerce enabler, its job is to work with its client and ecommerce partners (marketplace, 3PL, payment gateways, etc.) to increase GMV by optimizing digital channels. It does this by executing on behalf of the brand a strong digital strategy, which sometimes means bartering with the marketplace for more visibility for its clients.

    Ecommerce enablers are by far nowhere near perfect. Imagine a marriage counsellor trying to find compromise between two hot-headed and egotistic partners refusing to budge but still looking to have a long term relationship.

    Oh, and sessions aren’t once a week, it’s an uphill climb everyday. This respondent hit it on the head when describing what they did not like about its enabler.

    “Not mature business yet.”

    While the concept of ecommerce is not new in the world, the execution, talent and best practices are still nascent in Southeast Asia.

    Customers in APAC need education on ecommerce, a company’s ecommerce team in APAC needs education on how to work with other departments, and marketplaces in APAC are still figuring out how to be more like Alibaba and Amazon, two companies with over 10 years operating experience.

    An ecommerce enabler is supposed to have all the answers. While a challenge to take on, especially in Southeast Asia, it’s a hot business with a lot to gain, and probably why ecommerce enablers have popped up all over Southeast Asia and India.

    And it’s been somewhat positive for respondents using an enabler as majority would recommend it to a friend or colleague.

    “Getting an ecommerce enabler should definitely be considered, regardless of what stage a business who wants or is doing ecommerce is in.”

    “Allows me to focus on my core business capability and rest assured online segment is still moving along.”

    ecommerceIQ

    Now what?

    Now that the distinction has been made between a marketplace, a payment gateway, a marketing tool and an ecommerce enabler who ties them all together, a business needs to decide whether it needs marriage counselling.

    Is it more cost effective to invest and build a team to manage digital channels inhouse or outsource it to a third-party partner? The survey respondents listed reasons why they work with an enabler:

    “Aligned with brand principal interest and cost effective”
    “Short time to market, revenue growth”
    “Strong communications, effective operations”

    Now you’ve identified you need one, how do you choose an ecommerce enabler?

    • Assess the experience of its leaders – do they have a strong track record in high-performing digital businesses?
    • Assess the existing clientele – are you in a similar tier/size/industry?
    • Assess the company’s own digital footprint – their performance marketing will be telling of the performance marketing they do for you
    • Assess the scope of work – is the enabler incentivized to sell more for your business?

    And now take a look at your own business and decide whether it’s ready to commit to ecommerce. Is there an efficient approval process in place for resource allocation and commercial sign off for digital channels? Is there a C-level stakeholder responsible for P&L?

    If not, time to move fast because in the digital world, it’s either give all or risk losing a lot.

     

    Want to build an ecommerce strategy in Southeast Asia or speak to an enabler? Send an email to hello@ecommerceIQ.asia or fill out the contact form below