For smaller brands in Southeast Asia dipping their toes in ecommerce for the first time, it’s usually easiest to start selling on an online marketplace such as Lazada, Wemall or MatahariMall before fully investing in a brand store. Being on multiple marketplaces can help new brands build brand awareness without having to stretch small budgets.

Smaller merchants often lack the in-house capabilities or industry know-how to successfully drive an ecommerce website of their own and a marketplace gives a young brand increased visibility that will eventually turn into conversions.

However, it can become difficult to manage a presence in a marketplace because each comes with its own set of regulations and restrictions. There is limited space in a ‘shop in shop’ for a brand to sell itself, which is why it’s vital that all product content is optimized to attract the interest of a browser. How?

Product content refers to product descriptions, size and quality of visuals, user generated content all the way to customer reviews. These components drive the user further down the shopping journey. Research conducted by Shotfarm shows that poor product content can harm your brand, majority of shoppers abandon their online shopping carts because the product isn’t what it appears to be, which is due to inaccurate or missing product images (26%) and product content (30%).

Charles Gourlaouen, General Manager of Channel Management at aCommerce, Southeast Asia’s leading ecommerce service provider, shares insights for helping brands compete with other merchants on leading marketplaces in the region.

The three product content staples:

1. Creating strong product descriptions (titles, content, benefits)

Fig.1 : Best practice for content optimization

From Fig.1, brands can see the ‘checklist’ on what marketplaces recommend to include when posting an item for sale. Often overlooked, it is crucial to include details such as shipping time, supplier name and warranty to legitimize the brand and give the potential customer a degree of trust.

Instead of simply describing the product, let’s say a phone, by color and size, include the product’s key functions such as the dual LED flash and having a fingerprint identification sensor. These details can make a product more valuable to a potential customer and differentiates it from the countless similar items that are also being sold on the marketplace. If a shopper needs to leave the page to search for more information, you are adding an additional step before purchase.

According to insights from Lazada, improving the product quality score—Lazada’s big data algorithm output that determines how high a product should rank on Lazada—would drive almost an immediate  3 to 5% increase of the conversion rate in Southeast Asian countries. The components of product quality includes content (title quality & richness of content), reviews and performance (click through rate & browsing time etc.)

How to create an effective title

Different categories have formulas that work best, depending on what kind of product they are. For example, laptop titles should be written as:

Brand + Model Number + PC Type + (Processor speed + MB of RAM + Hard Drive Size+ Optical Drive), but for cutlery, it should be written as Brand + Line + Size+ Product Type.

Below are examples of both:

  • Sony VAIO PCG-FRV25 Notebook (2.66-GHz Pentium 4, 512 MB RAM, 40 GB Hard Drive, DVD/CD-RW Drive)
  • Calphalon Professional Hard-Anodized 8-1/2-Quart Saucier with Lid

 

Use bullet points

Bullet points simplify your information, breaks it down effectively, and doesn’t make a potential customer have to reread your block paragraph three times – a key to a good user experience.Fig.2

Fig.2 is an example of how to effectively roll-out product descriptions on Lazada. By splitting a product’s key attributes into sub-headings and listing its details by bullet points, the reader has an easy time to digest the information.

Constructing strong product copy

When trying to persuade a browser to purchase your product, it is advisable to lead with its benefits. A browser may be less inclined to purchase if all they read are technical specifications, color options and so forth. A curious browser would want to know why they should buy this product, what will they get out of it?

For example, if you’re selling a multi-device charger, build a picture of going somewhere with three devices and the added convenience of being able to charge them all at once.

The main content body should be informative but kept short and concise. Product descriptions should not be treated as a blog. (see fig.3).

Fig.3 La Roche Posay on Lazada, product content

Premium skincare brand La Roche Posay includes a wealth of product centric content to educate potential consumers. For example, it includes tips & tricks and insider information about the product type being viewed. The brand also includes skincare advice from medical professional and skincare experts to legitimize its product.

It is also advisable to curate original content rather than replicate existing or generic copy. Reusing a manufacturer or competitor’s product content will hurt your brand’s rankings when it comes to search engine results.

Strong product content versus weak product content

Strong

What makes this content strong?

  • Detailed, personalized product description
  • Key breakdown of product features with description
  • Supporting images to showcase product features (more than one)

Weak

What makes this content weak?

  • Long, disjointed product title
  • Disjointed sentences with spelling errors
  • No content, just specifications of product. The description is not engaging for potential buyers

2. What makes a good product image?

Read any brand guideline provided by a marketplace like Amazon, Lazada or MatahariMall and it will specify that a brand should optimize product images for the best results. At aCommerce, brand commerce experts take clients through each marketplace’s specific criteria to ensure product photos meet required image clarity and dimensions.

A way to tackle a high cart abandonment rate is through optimized product images.

Quick pointers to optimizing product images on Lazada

  • If possible, always include multi-angle view of product
  • If possible, always include a zoom option
  • Can have up to eight images for one product
  • Image measurements: the main product image must have the size of at least 600 x 600 pixels and at most 2000 x 2000 pixels.
  • Secondary images must have the size of at least 450 x 450 pixels and at most 2000 x 2000 pixels.
  • At least 85% of the frame should be filled with the product image
  • No text, borders, reflection or additional logos on the image
  • Image is clear, sharp and not pixelated
  • Item should not be cropped
  • Product against a clean white background

Fig.4 Maybelline offers multi-angle product views on Lazada

One of aCommerce clients such as Maybelline cosmetics effectively showcases its product content on Lazada. From multi-views of its products, it also offers a zoom function that allows a customer to have a close up look at product texture, particularly important when buying something such as cosmetics.

A particularly good brand page would also include the available colors of the product and additional images of the product packaging.

3. Leveraging authentic user reviews to enhance brand reputation

We’ve all been guilty of being influenced by product reviews. No matter how convincing a brand’s testimonial of its products, we tend to be receptive to other people’s opinions. 25% of those surveyed in PwC’s research “Total retail SEA 2016” showed that respondents always read product reviews before making a purchase.

In a survey conducted in the United States, 88% of respondents admitted to trusting a review like they would a personal recommendation. Positive reviews and rankings can increase your brand’s product ranking, hereby increasing your influence in a marketplace.

For smaller brands, who’s to say that you did not ask a friend or a family member to put in a good word about your product online?

There are certain ways for a brand to establish a good relationship with its customers. For example, a smaller brand with a growing following should concentrate on establishing a strong following in the beginning. After a purchase, a brand can email the customer with a review request.

Another tip to generate authentic reviews is to reach out to influencers on social media or encourage the usage of brand-centric hashtags such as #MyKiehls. These reviews can be re-posted on your page (if the marketplace allows) to enhance your brand’s visibility on social media channels.

Marketplaces are usually the first step to a digital strategy and increased brand visibility for online sellers. Despite its benefits, being on a marketplace means that a brand, no matter how big or small, would have to share the spotlight with competitors alike. For new brands lacking ecommerce expertise, it is particularly important to ensure that your brand stands out through effective, trustworthy and legitimate content. Win the marketplace.

INSIGHTS PROVIDED BY CHARLES GOURLAOUEN, GENERAL MANAGER, CHANNEL MANAGEMENT, ACOMMERCE

Since its launch in December last year, Facebook Live has presented everyone an opportunity to share a live moment in real time, and this feature has become an important addition to the world’s largest social network. As with other products, Facebook has been pushing people to use Facebook Live, either by inspiring to launch an out-of-home awareness campaign or more directly adding a live button on the app’s homepage. The social network also ranks live videos higher than other types of posts to encourage users to interact and ‘be in the moment’.

Facebook Live – Be in the moment

Despite all the effort, brands and publishers in Southeast Asia seem to take a wait-and-see approach as for now they don’t produce many live videos as can be seen on the Live video map. Lack of ideas and expertise in creating this new type of content which differs from traditional promotional videos are the main factors that have hampered adoption of Facebook Live in the region.

On the other hand, Southeast Asia’s Facebook merchants who use the social network to showcase and advertise their products are in the forefront. They’re taking advantage of live videos to engage with customers and sell products in new ways.

How to capture the shifting consumer attention?

As 50% of consumers feel increasingly overwhelmed by brand marketing messages on social media, consumer attention and engagement is scarce. According to Facebook, people spend three times more time watching a video when it is live compared to when it is not broadcasted in real time.

With this change in mind, brands should capitalize on campaigns in the format of a high quality live video. Here are three ways Facebook merchants in Thailand are capitalizing on Facebook Live:

1. Host an auction in real time

One prevalent example how the live video feature is being used is to host in real time an auction of new or second hand fashion products such as bags, dresses, or even items like electronics.

The way it works is similar to a typical auction, just when the auction is hosted on Facebook Live, the bids are submitted as comments. When the broadcast ends, the merchant and the winner arrange the details of the payment and delivery.

2.  Showcase products and answer questions in real time

A number of merchants also use Facebook Live to demonstrate their products. Customers in the comments section can ask questions about the price or details of the product for the seller to answer.

Similar to hosting a live auction, broadcast viewers who want to purchase products can send a Facebook message directly to the merchant to arrange payment and delivery.

3. Attract viewers with games, prizes, Q&A sessions

Hosting interactive games or quizzes and giving away prizes for sharing a Facebook Live video with friends is also a tactic used in Thailand to attract more viewers and followers.

The owner of cosmetics brand B’Secret Chonnipa Wisedsuranun is a live broadcaster who has successfully leveraged this strategy. One of her Facebook Live videos generated over a million views and almost as many comments.

She uses live video to engage with her customers and build a fanbase by asking viewers to share her live video during which her cosmetic brand is mentioned throughout. To incentivize customers to share the video she gives away prizes like iPhones, cash, gold, and more. This technique allows her to garner a huge amount of viewers and fans in a short period of time.

By doing so, she also creates awareness of her products without paying a dime to Facebook for advertising.

Chonnipa also often uses Q&A games where viewers who answer correctly in the comments section to a question she asks win a cash prize.

Facebook Live provides brands and retailers an alternative way to grow their followers, engage with a wider target audience, and drive sales without directly paying money to Facebook for ads. Businesses that still rely primarily on Facebook ads will eventually experience growing advertising costs due to the nature of auction-based advertising that makes bidding more expensive when there are more advertisers.

In contrary, businesses that can effectively leverage this interactive video format are likely to capture the  attention of consumers at a lower cost.

BY KORAVUT PAVITPOK, ACOMMERCE INTERNET MARKETING MANAGER

 

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Let me preface this by saying that I truly believe that at least half of success in business can be attributed to luck, with the other half being execution. Although it is fruitless to try and document something as idiosyncratic as luck, I will discuss what I believe were the key principles that allowed us to scale our business to where it is today.

As a quick primer, Althea.kr is a Korean Beauty ecommerce business. We were founded in Malaysia in July 2015 and in the past year have expanded our operations to Singapore, Philippines, Indonesia, and Thailand. Within one year, we were recognized by Forbes as the largest Korean Beauty website in Southeast Asia with an annualized revenue run rate of $10 million.

Luck aside, I think we can attribute our ability to grow so quickly to three principles – focus, localization, and financial discipline.

1. FOCUS

What differentiates Althea from many ecommerce businesses is that we exclusively focus on one niche – Korean Beauty (K-Beauty). In the past 10 years, the K-Beauty industry has experienced CAGR of 33.8% and a significant amount of that demand comes from Southeast Asia.

We estimate that the addressable market for K-Beauty in the region alone will be $8 billion by 2020.

althea southeast asia

Google Search Interest – ‘Korean skin care’

Side note on why K-Beauty is popular

To understand why K-Beauty is so popular, it helps to understand the unique dynamics of the Korean market. It comes down to the fact that Korea is a small country with a condensed, demanding and fickle population.

Companies are constantly under pressure to innovate and create new products in order to meet the differing demands of consumers and to stay relevant. In traditional beauty companies, it takes approximately two years to create a new product, whereas Korean companies do so within months. One of the best examples of this hyper innovation is highlighted in the unique ingredients used in K-Beauty products ranging from snail mucus, horse oil to egg whites.

Despite the high demand for K-Beauty, it is extremely difficult for consumers to purchase K-Beauty products in most parts of Southeast Asia. The first challenge is the limited selection – there are over 10,000 K-Beauty brands in Korea but less than 100 of them are available in Southeast Asia.

This is because the demand in Southeast Asia, although growing, is still small relative to Korea’s domestic market and their main export market, China. On top of this, the available brands usually only offers a limited selection of their top sellers, not the whole product line.

The second challenge is pricing. In other parts of the world, K-Beauty is known as a value for money product, but because of distribution agreements and import duties in Southeast Asia, customers often pay up to 100% more for the same product.

For example, Laneige sells its Water Sleeping Mask for 28,000 KRW in Korea but it costs approximately 35,000 KRW if a consumer purchases the same product in Singapore.

Althea-southeast-asia

althea-southeast-asia

At Althea, we saw that the vast price discrepancy represented an untapped opportunity. By hiring a specialized team of K-Beauty experts in Seoul to work with brand owners and distributors to build our assortment and negotiate pricing, we have scaled our assortment from 300 SKUs to 3,000+ SKUs. For brands that we have direct relationships with, they see Althea as an easy way to enter five different markets that have diverse languages, culture and regulations.

Our pricing is comparable to what customers would pay in Korea, and we can generally deliver across the region to most areas within five working days. This has established us as an authority on K-Beauty, which has two main benefits:

1. The majority of Althea traffic and transactions come from unpaid channels (Direct and Organic Search results)

2. It significantly improves cost per order (CPO) –  in our more mature markets, we are getting marketing spend ROIs in excess of 25x

althea-southeast-asia

*Blended CPO over the last 12 months in one of Althea’s more mature markets. Source: Althea cost per order, internal data

2. LOCALIZATION

Even though K-Beauty is considered a universal product, it is still important for us to localize our service and offerings. We localize every consumer facing aspect of our business and operate a different website for each of our specific markets. From changing web addresses to suit local domains such as my.althea.kr for Malaysia and th.althea.kr for Thailand to having website content in the local language.

For our marketing campaigns, we engage 150-200 top beauty influencers in each country to act as local brand ambassadors. We benchmark our pricing by market to ensure we have the cheapest prices in each country we operate in.

Payments has always been a hurdle in ecommerce, we cover most major options ranging from credit card, local bank transfer, over the counter, and cash on delivery, which is crucial to success in Southeast Asia, due to low credit card penetration.

Our logistics operations work with 15 local last mile couriers and five local return centers to facilitate ease of deliveries and returns and we’ve adopted our customer service operations to offer social network support in each market.

Althea’s localization efforts: 

  • 5 websites
  • 4 languages
  • 750+ beauty influencers
  • 70+ payment options
  • 15 local last mile couriers
  • 5 local return centers

3. FINANCIAL DISCIPLINE

We are fortunate enough to be a part of the beauty industry, one of the only industries that has maintained its margins for 100+ years. Our product margins are multiples higher than a typical ecommerce business. Combined with the inherent stickiness of the products and a highly engaged customer base (18-34 year old females), our customer LTV is attractive.

These factors mean that we can afford to be aggressive with our customer acquisition cost (CAC) and other customer centric costs. While we invest aggressively in marketing and customer service, we practice strict financial discipline in all other aspects of our business. This means that while we do business in six countries, we only operate two offices and one central fulfillment center. We have one office in Seoul, which has 10 full time equivalents (FTE), and is responsible for sourcing, logistics, HR, and legal.

Our second office in Kuala Lumpur has 20 FTEs that handle development, marketing, finance, and customer support. This asset light model has allowed us to enter a new market once every three months since launching.

We generate significant savings by not duplicating functions across local offices, and in turn we re-invest those savings into growing our business.

By adhering to these three core principles – focusing on a niche category that we can execute well, localizing all customer facing aspects of our business, being efficient with our capital and a little bit of luck, of course, we were able to enter five markets and build a $10 million a year business within one year. Looking forward, we hope to expand our business to the rest of Southeast Asia as well as the greater APAC region.

althea-southeast-asia

The Althea team at their one year anniversary party

BY DAVE CHANG, HEAD OF MARKETING & EXPANSION AT ALTHEA

Southeast Asia in 2010 started to experience an ecommerce boom with the likes of Ensogo, Rocket Internet’s Lazada and Zalora, Groupon, etc. It seemed to be at the height of its peak with money pouring in, mergers and acquisitions happening every day, and Amazon finally moving in to capture the region’s potential but amid these buzzworthy headlines, down rounds plagued startups such as Lazada, were sold for scraps like Zalora Thailand, or shut down completely, such as Ensogo.

What happened? Smaller startups began venturing into other fields providing human resources (Getlinks), car wash services (Wash Mobile), recruitment (JB Hired), agriculture (EverGrow), hardware (DriveBot), and more. It seemed that startups were shifting focus to offer niche services to carve out their own demographic in a saturating market but could they sustain themselves?

A Sustainable Model: Fintech

Across the region and even in once-upon-a-time unicorns such as Flipkart and Snapdeal, news reported large reductions in hiring, peaking salaries, and a slowdown in capital flow shadowed the once profitable businesses VCs banked hard on. The customer behavior in Southeast Asia, more specifically trust, is simply not mature enough.

It also cannot be denied that a capital and inventory intensive model requires deep pockets. After running a successful ecommerce company in Thailand for three years, I realized it was necessary to go back to the basics, to start a business model that encompassed the three components of sustainability:

  1.       High margins
  2.       High customer lifetime value (LTV)
  3.       Low customer acquisition cost

A business with these characteristics usually has a strong foundation and presents a good investment opportunity because it shows promise for profitability down the line. While ecommerce does have low customer acquisition due to the nature of retail and lower commitment products, such as retail and consumer goods that are being sold, it severely lacks in margins and customer LTV (lifetime value).

Margins are often eroded away by high operation costs, packaging, shipping, and inventory while LTV is nullified by heavy competition as most ecommerce companies do not have exclusivity on products and pricing. After all, it isn’t in the best interest of product owners and manufacturers to only distribute their products through one single channel.

Fintech on the other hand, a recently booming industry, does not suffer from these disadvantages. Like most tech companies, there is no inventory to hold, the margins are much larger and once you have acquired a customer, you have an 80% renewal rate for at least the next four years (Bangkok Insurance’s internal data). By building better fintech, it would change the behavior of consumers in Southeast Asia and eventually fuel the growth of ecommerce in the region.  

fintech-southeast-asia

Lack of Innovation: More Room to Grow?

Fintech is ripe for entrepreneurs because existing legacy players such as Viriyah and MSIG in the market lack innovation. Companies like Bangkok Insurance, HSBC, and other traditional financial institutions are only beginning to realize the magnitude of the tech wave that has hit the world.

As the saying goes, it is hard to steer big ships, and ships seldom get bigger than the companies that make up our financial industries. These companies earn a vast majority of their profits from traditional channels, leaving the unexplored to opportunistic entrepreneurs like myself with Frank.co.th and many others who have managed to convince investors for support.

A recent report from Accenture found that global investment in fintech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate with an increase of 215% to $1.48 billion in 2014. Globally, fintech startups have raised investments totaling $19 billion according to a insight report published by Citibank. This has begun to eclipse other startup sectors as it continues to grow.

Challenges of Fintech

The next big thing does not come without its own challenges. Fintech startups need to realize very early on that there are many rigid regulations which were not created with innovation in mind. For example, in Thailand, selling insurance online requires a business to report to at least three different governing bodies all of which have their own set of rules to abide to. This increases admin work for small companies and also requires legal knowledge that most new companies lack.

Companies are also not allowed to call a customer to confirm purchase as that would be considered “telemarketing insurance sales” and requires a different license. One of the biggest challenges for fintech companies is encouraging users to trust young companies with their financial information, savings, and future to adopt its products and services.

It takes time and a lot of marketing dollars to explain to customers who you are and why they should trust you with their money. These challenges do get easier as more startups enter the space and educate their audience through smart marketing initiatives.

Rabbit, a company based in Thailand, is the first integrated online/offline payment platform in Thailand accepted in multiple retail stores, restaurants and used for public transportation. Its partnership with LINE earlier this year means over 5 million users are slowly allowing their financial information to be connected to some sort of a tech platform.

“This joint partnership [Rabbit LINE Pay] will strongly support government policy in driving Thai people into a cashless society,” says Nelson Leung, chief executive officer of BSS Holdings, the operator of Rabbit card.

Influence from neighboring countries such as Singapore and Malaysia, a lot of which have already set up country specific ‘sandboxes’ to trial for fintech regulations, are also moving towards a cashless society to drive the realization that there is a need for innovation in the financial sector.

Ecommerce is a big marketbut until the shopping habits of Southeast Asians are shifted to online spending habits, it can never reach its full potential. The emergence of fintech and its supporters mean that by building the fundamentals, companies in the entire ecosystem can benefit from its success. 15 years ago, people would call a travel agent and ask them to book a ticket. And now? When was the last time someone called a travel agent to book a flight or hotel room? Behaviors change, but it takes innovation and time.

BY HARPREM DOOWA, MD & CO-FOUNDER AT FRANK.CO.TH

Minimarkets, a store that sells food and sometimes other goods, in Indonesia have been hailed as the “killer” of supermarkets since 2012. Its rapid growth has been largely driven by the increasing numbers of Indonesia’s middle class, where the demands for products and convenience have steadily grow hand-in-hand.

Despite the slight slowing down of the country’s economy in 2015, minimarkets’ growth didn’t show any signs of the same nature. According to the latest report by Fitch Ratings, about 1,200 additional new stores—from Indonesia’s two largest minimarket operators; Alfamart and Indomaret—opened their doors in 2015 for business throughout the archipelago, and the rating agency also expects an additional 1,000 stores to be open this year.

Such significant growth and performance for the retail format are not at all surprising given that the high demands are matched with the low operational capital commitment that the minimarket format has. They can penetrate areas that are of lower traffic with more ease than its hyper and supermarket counterparts.

Moreover, the substantial rise in the number of minimarkets might also hint at a change in customer shopping behavior within the field of modern retail formats.

Looking at the current trend, is it possible that Indonesians are shifting their grocery shopping habits from the bulk-purchase at hyper and supermarkets to smaller but more frequent buys at minimarkets?

To answer this, we pulled information from our single-source panel and receipts data to see if a shift in Indonesians’ shopping behavior is really happening. To provide a more current and up-to-date information, all data are based on real-time receipt figures taken from January 2016 to August 2016.

Mini is Big!

To look at purchase patterns across the different retail formats, we decided to look at the customers’ share of wallet where it shows which portion of their spending goes. The graph below is the total Indonesian share of wallet starting from January 2016 to August 2016.

It shows that not only do minimarkets dominate the shoppers’ spending, its size is also growing from below 50% to hitting the 60% mark in August. So, as minimarket’s percentage rises, supermarkets and hypermarkets have steadily been losing its share when it comes to their fraction within Indonesian shoppers’ wallets. Hypermarkets and supermarkets lost over 10% total market share in just 8 months.

Snapcart minimarket

 

From the data above, it can be concluded that there is a shift in purchase behavior in Indonesia. Has the shift in shopping habits of Indonesians spread throughout the country? Or is it only focused in just one part of the archipelago?

Looking at the number of minimarket chains in and outside Java as recorded in our data, Java has more chains. This number also corresponds with the fact that Java is home to about 140 million Indonesians, which is significantly more than half of the entire population of the country.

Snapcart minimarket

With this fact at hand, we look at the same data sets while adding Java and ‘outside Java’ lists as new variables. Shown on the graphs below, share of minimart wallets in Java has risen from 45% in January to just below 60% in May, then falling to 55% in June but rising again to 59% in August. It’s surprising that the share of wallet of minimarket outside Java is in fact higher than the ones in Java, despite having a lower number of minimarkets.

Looking at the share of wallet outside Java, it shows that people outside Java are spending more at minimarkets than Java residents, as its share of wallet never falls under the 50% mark. In fact, minimarkets’ share of wallet outside Java has significantly risen to around 66% in August.

Snapcart minimarket

Snapcart minimarket

What drives the shift?

There is a shift in consumer spending from the supermarkets and hypermarkets to minimarkets, but why? Is the shift of purchase to minimarkets driven by convenience? Or do other factors play a role in the rise of minimarket share? We look into the discount rates and the price perception of minimarkets.

Among all the modern market formats, minimarkets claim the deepest discount rate.

Taken from the receipt data, the graph below shows that the discount rates in minimarkets never falls under the 20% mark throughout January to August 2016.

At the same time, hypermarkets have the lowest rates with discounts reaching the 20% mark for their products only around February, March, and June, and supermarkets reaching above 20% average discount rate only around the first three months of 2016.

Snapcart minimarket

When looking at the percentage of promoted products to total basket size, Value on Deal (graph below), it shows that a good amount of items within the hypermarket and supermarkets shoppers’ baskets (above 10% of the total number of items) are filled with discounted products.

About 10% or less of the minimarket shoppers’ baskets are filled with promotional items. This could mean shoppers buy in minimarkets because of a cheaper price perception due to the depth of discount rate but once they have made a purchase, they actually buy products that aren’t discounted due to either product affinity or impulsive purchases.

Snapcart minimarket

With these facts in mind, could price perception really drive the rise of minimarket shopping? To find out, we conducted a survey comparing 14 different product categories for each retail format on the price perception of each category.

The 14 product categories we are looking at include; baby care, baby food, beverage, breads and pastries, cereals and grains, confectionary, cooking needs/condiments, dairy, health, household care, personal care, preserved food, snacks, and spread.

We asked over 3,000 respondents about the average price of each category in minimarkets in comparison to super and hypermarkets. The results showed that respondents agreed that the prices in minimarkets for most categories are identical with super and hypermarkets, with the exception for baby care and baby food categories.

To Conclude

­

The main driver for the shift of Indonesian shoppers from hyper and supermarkets to minimarkets may simply be due to the convenience factor. Minimarkets’ low capital requirements allow it to penetrate and exist in rural areas, making it the only viable choice for customers in such environments.

While price perception might not play an important role in the behavioral shift, minimarkets’ deep discount rates may be important bait for shoppers to make purchases at their stores. Furthermore, when looking at the percentage of promoted products to total basket size, only 10% are discounted while the other 90% of the content within the minimarket baskets are filled with products that are not discounted.

This proves that minimarkets could be a more effective outlet for your brands’ product categories, whether to include it as a key channel or to continue with this strategy.

This article originally appeared on Snapcart.asia’s blog on 4 November. Find it here.

One of the most interesting parts of my job is going on regular courier rides with some of my employees. A few months ago in Thailand, I sat in one of our DHL courier vans as it made its rounds at speed. As the week progressed, my time in the van with my front line employees and customers reinforced my thoughts on the growing complexity and huge upside of ecommerce in the region.

Southeast Asia is a hotbed for online trade. By 2020, more than 480 million people in the region will be online. At the moment, 3.8 million new users get connected to the internet every month.  Ecommerce in the region is expected to be worth US$88 billion by 2025.

There are high volumes of deliveries across the countries: Thailand, Malaysia and Vietnam have more than 150,000 B2C parcel deliveries a day and still only represent between 3-5% of all retail sales in their respective countries.

It is a huge and growing ‘pie’ for new and existing e-tailers. Whilst it is a great time to be an e-tailer, the opportunity also comes with some challenges. Customer requirements are becoming more complex as are the channels that merchants have to keep up with them.

One of the biggest signs of this trend is the way Southeast Asian customers interact with brands.

Among digital shoppers, 80% use social media to research products and interact with sellers. Shopping via mobile devices has also become the norm, especially for those who live outside metropolitan areas, 85% outside the major cities use their mobile phones for online purchases.

As ecommerce becomes more prevalent, customer expectations will continue to rise. They will have less tolerance for delays and be frustrated at lack of choice.

When I spoke recently to one of our partners, Hans-Peter Ressel, CEO of Lazada Malaysia, he remarked to me: “When customers buy from us today, they are looking for a seamless shopping experience. As e-tailers, we can’t afford to skimp on our logistics capabilities.”

It’s important to continuously offer fast, convenient, and reliable delivery options, because this is what customers are expecting today.

So, let’s take a step outside and consider what exactly is it that Southeast Asian customers wants after they hit the ‘check-out’ button. What makes them tick? What do they like? What frustrates them?

From my journey walking the ground in our facilities, to sitting in our delivery vans, I’ve noticed three things that customers in the region want from their e-tailers today:

1. Variety to match their diverse needs

The ‘on-demand’ economy has given customers many options and their expectations have changed considerably as a result. Not only do customers want faster delivery options, but a pre-determined and agreed delivery window. Customers also expect payment options catered to their needs because payment preferences vary across different countries depending on their maturity. In several developed cities like Singapore, customers can pay via credit card. However, when it comes to the 60–70% of people in Indonesia, the Philippines and Vietnam who are “unbanked”, cash on delivery still reigns supreme.

Customer demands have diversified, and so should the services e-tailers offer. They must become more sensitive to on-the-ground feedback from customers to be able to adjust their offerings to suit their needs.

Don’t treat deliveries as a cost center: in the long run, a great delivery experience will pay dividends.

Brewer’s Top Tip: Approach the delivery process as part of the value chain. A variety of payment and service options, coupled with excellent service, can create ‘raving fans’, or emotionally engaged and loyal customers who drive up repeat visits and basket size.

 

2. Hassle-free deliveries

Today’s busier and multi-tasking lifestyles mean that customers have little time to spare and short attention spans. Deliveries have to suit the consumer’s schedule, not the e-tailer or delivery company. One of the best ways e-tailers can add value to their customers’ lives is to offer a variety of delivery options.

Apart from the traditional home or office deliveries, they can make use of what is now the fastest growing delivery method in Europe: parcel lockers, service points, and convenience stores. These facilities are located in areas that customers frequent, so they don’t have to be stuck waiting for delivery staff to arrive. More pick-up options will make the collection experience much less disruptive to their daily lives.

Brewer’s Top TipPartner with a delivery company that can provide alternate delivery options (and not just one), without skimping on order visibility for customers.

 

3. Tools for more control

When it comes to deliveries, customers want to be empowered. They want the best experience possible—from the moment they make their purchase to the point of delivery when they receive their package. 60% of digital shoppers in Southeast Asia rank “experience” as a bigger factor than “price”, which only influenced 45% of those surveyed.

It is important for e-tailers to provide a sense of control and comfort if they want customers to keep returning. They can empower customers with the ability to track and trace their purchases every step of the way. This capability can be performed via a variety of methods, such as online portals or SMS notifications that allow customers to access updates on the go.

Brewer’s Top Tip: Give consumers control as part of your operational process flow. To really go the extra mile, ensure your partners have the IT capability to allow customers the flexibility to change their minds about where and when to receive their order.

At DHL eCommerce, we have already helped hundreds of e-tailers circumvent the challenges I have described. There’s never a better time to build choice, convenience, and control into e-tailer offerings that both e-tailers and consumers can delight in. These demands will continue to grow as ecommerce expands.  Our passion is in knowing more about the diverse consumer needs across the region and tailoring ecommerce logistics solutions that fit the requirements of each market.

 BY CHARLES BREWER, CEO AT DHL ECOMMERCE