What is BNK48?

BNK48 is a Thai idol girl group modeled after Japan’s AKB48. Consisting of 52 teen idol members, the Thai group recently rose to prominence and is currently into its second generation.

Who are the most popular BNK48 members?

With so many members, we looked at ecommerce analytics to rank them by popularity. Popularity here being measured using the following proxy metrics from the BNK48 official store on Shopee Mall. Data was provided by ecommerce analytics and reviews platforms BrandIQ and ReviewIQ, respectively.

  • Number of likes
  • Number of reviews
  • Average rating (out of 5 stars)

 

Specifically, we looked at ‘debut photoset’ SKUs as these have a version for each of the BNK48 members.

Results

Based on the number of Likes, the top 5 BNK48 members are:

Based on the number of Reviews, the top 5 BNK48 members are:

Based on Average Rating, the top 5 BNK48 members are:

To be frank, average ratings are probably more a sign of product quality rather than the specific member’s relative popularity. However, we’ll include their average ratings here just for reference.

The top two members are Bamboo and Minmin, both tied with a 4.8 average. They are followed by 12 members tied for second place with a 4.7 average.

[table id=8 /]

Disclaimer

This study was performed with the following limitations in mind:

  • BNK48 second generation has a total of 27 members, but the debut photoset SKUs available on the BNK48 Official Stop on Shopee Mall only covered 22 members
  • Data was collected and analyzed on September 10, 2018. Any other date may have shown or show different numbers
  • Quality of the actual debut photoset product may have influenced the number of purchases, therefore the number of reviews

Takeaways

  • Previously, few tools existed for brands to monitor and analyze the general consumer sentiment. With the increasing popularity of social media, brands started to pay more attention to metrics such as ‘likes’, with tools available to track these metrics
  • However, with ecommerce becoming a bigger part of our daily lives, brands should also look at ecommerce platforms like Lazada and Shopee as a rich and dynamic data set
  • With tools like BrandIQ and ReviewIQ, brands can track and analyze consumer behavior and sentiment on marketplaces, in addition to tracking their own performance as well as benchmarking against competitors selling similar products

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”.

Customer reviews matter for brands selling online. Studies have shown an increase of 161% in conversion rates when adding user generated product reviews.

Amazon of course has become the gold standard for high quality user generated reviews. Unfortunately for brands in Southeast Asia, getting customers to leave reviews is hard. Users don’t proactively write reviews and when they do, the content is short and not very helpful.

In this article, we’ll look at some of the brands that are doing well in terms of ratings and reviews on Lazada Thailand and identify some ways for other brands to get more quality reviews.

How do Ratings & Product Reviews help brands?

Ratings and product reviews help brands increase sales on marketplaces in three ways:

  1. Getting more traffic

Products reviews are basically user generated content on a brand’s product detail page. This content helps increase the ranking of that particular page on Google, therefore driving more offsite SEO traffic, leading to more sales.

In addition, higher ratings and more content also help the brand rank higher in terms of onsite search, i.e. users searching while on Lazada or Shopee.

  1. Increasing conversion rates

High ratings and positive, holistic user reviews also help increase conversion rates from the brand’s product detail page into checkout. Based on ecommerceIQ research, social proof or friend and family recommendations is a top 3 customer acquisition channel for marketplaces like Lazada and Shopee, demonstrating how important reviews are for conversions.

  1. Improve and defend brand equity

Marketplaces attract grey sellers. Genuine reviews from real users help distinguish your products from those of grey sellers or knock-off products.

Findings from our study

For our research, we looked at how the top brands that have an official shop-in-shop presence on Lazada Thailand perform in terms of ratings and reviews.

Specifically, we looked at and compared the below metrics. (Please note that you’ll be able to download the full data set with all these metrics by brand at the very end of this article. Click here to go there right now.) Please keep in mind that the ratings and reviews data was collected separately over a short period of time so minor discrepancies are to be expected.

  • Quantity:
    • Number of ratings
    • Number of reviews
    • Number of SKUs with at least one rating
    • Number of SKUs with at least one review
  • Quality:
    • % of SKUs with at least one rating
    • % of SKUs with at least one review
    • Number of ratings with at least 3 stars
    • Average rating
    • Average length of reviews (character count)

Based on the above metrics, we identified the following patterns and findings:

  • Top 18 official shop-in-shops are responsible for 80% of all the ratings (out of 161 official shop-in-shops tracked in this experiment)
  • Top 22 official shop-in-shops are responsible for 80% of all the reviews (out of 161 official shop-in-shops tracked in this experiment)
  • Average length of a review is 83 characters
    • This is how 83 characters looks like (short right?):

      “Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula ege”

  • The top 3 categories with the most reviews are:
    • Health & Beauty (33,002 reviews, 46% of total)
    • Mother & Baby (23,970 reviews, 34% of total)
    • Bags & Travel (3,165 reviews, 4% of total)
  • The top 3 categories with the longest reviews are:
    • Health & Beauty (avg. 98 characters)
    • TV, Audio / Video, Gaming & Wearables (avg. 81 characters)
    • Mobiles & Tablets (avg. 76 characters)
  • The top 3 categories with the least reviews are:
    • Pet Supplies (7 reviews)
    • Sports & Outdoors (8 reviews)
    • Laundry & Cleaning (107 reviews)
  • The top 3 categories with the shortest reviews are:
    • Tools, DIY & Outdoor (avg. 37 characters)
    • Groceries (avg. 38 characters)
    • Cameras (avg. 45 characters)

Full table of data (best viewed on desktop or tablet)

Want do download the full Excel spreadsheet? Sign up here with your email and receive a download link.

Key Metrics By Category:

[table id=5 /]

Key Metrics By Brand:

[table id=6 /]

Full Raw Data:

[table id=7 /]

Want do download the full Excel spreadsheet? Sign up here with your email and receive a download link:

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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

Chinese ecommerce platform JD is lesser known amongst international audiences, but its mid-annual 618 shopping festival generated almost $25 billion in gross merchandise value this past June. The company has a 33% share of China’s B2C ecommerce market and generates more direct revenues than Alibaba. Google’s latest $550 million strategic investment in the company is the latest in a series of partnerships JD has orchestrated, as it seeks to challenge Alibaba and Amazon for ecommerce dominance in both China and the rest of the world.

JD’s Direct Retailing Model Gives it a Strong Competitive Advantage

JD’s business model is distinct from that of Alibaba’s in that it is a direct retailer – meaning that it purchases inventory wholesale and sells products directly to individual customers, rather than simply acting as an intermediary between buyers and sellers. Approximately 92% of its business comes from direct sales, whereas for Amazon this figure hovers around 50%.

JD stocks its own inventory in its vast proprietary network of nearly 500 warehouses across China, each of which is situated strategically close to consumers to ensure fast delivery. JD also employs an in-house delivery force of over 65,000 warehousing and delivery workers. During the 618 festival this year, JD was able to deliver 90% of its goods within two days.

This dedication to customer service requires a significant amount of capital to sustain, but JD has been able to stand out from its competitors.

JD claws its way up to a 33% market share in an industry where Alibaba was previously thought to be unbeatable.

Richard Liu, CEO of JD.com delivering goods during their ‘618’ Mid Year Sales Source: Internet

The Borderless Retail Alliance

To compete with Alibaba, JD has enlisted the help of numerous partners. In China, this includes internet giants Tencent and Baidu, in addition to its partnerships with the likes of vertical-focused ecommerce platforms Vipshop and Meili Inc. Tencent owns 18% of JD’s shares and partnered with JD to invest $864 million in China’s third largest ecommerce platform Vipshop this past December. JD made its claim to fame by selling electronics to a predominantly male user base, and such partnerships with Vipshop and Meili, both of which sell a combination of apparel and cosmetics, help the company appeal to a broader female base.

America’s largest retailer Wal-Mart owns 10% of JD’s shares and has been a strategic partner since 2016 when it first sold its ecommerce division Yihaodian to JD Google, despite having a limited presence in the China market, announced a $550 million investment in JD this past June. Both of these strategic partnerships will be key as JD prepares to expand its business overseas.

Google’s Data Will Help JD Catch Up Overseas

Ecommerce platforms such as JD spend an enormous amount of money on search ads every year, to ensure that their products show up in search results. As they grow bigger, however, internet users can go directly to ecommerce platforms to search for products, which presents a threat to Baidu’s and Google’s search ads business. Partnering with JD allows Google to hedge against this problem.

Google’s extensive ecommerce data can give JD better insights into the buying behavior of users, and JD will have a better idea of how to target users via Google’s broad ads network. This will be a significant asset as it attempts to catch up with local competitors in Southeast Asia, Europe, and the US.

Wal-Mart and JD Make the Perfect Couple

US retail giant Wal-Mart has been partners with JD since 2016 when it sold its online business Yihaodian to JD in exchange for a 5% equity stake worth $1.5 billion. That stake has since grown to 10%. In China, Wal-Mart leverages JD’s marketplace and users to sell directly to Chinese consumers online, complementing its offline business in the country. For JD, Wal-Mart is a key supplier for the JD Daojia platform, which is an on-demand delivery service that delivers groceries to customers within a one-hour time frame.

JD also sells its goods offline in Wal-Mart stores and uses them as distribution centers from which last-mile delivery can be carried out. Since JD is an online retailer without many offline retail stores, the addition of Wal-Mart’s physical locations across China is a considerable asset as it looks to expand its user base via omnichannel marketing strategies. JD is planning to expand to the US market by the end of this year, and the potential expansion of this partnership model means that JD may have a chance to catch up with Amazon, especially since the two can leverage economies of scale and source goods in bulk.

JD Dao Jia partnered with Wal-Mart on sales promotion Source: Internet

JD Goes Global

With an impressive set of partnerships under its belt, JD has the capability to challenge Alibaba and, potentially Amazon, on the global stage. JD has already set up international ecommerce site Joybuy in Spain this year and is looking to expand to Germany. JD has also launched local websites in Thailand and Indonesia under the JD brand. JD has publicly announced its intention to enter the US market by the end of 2018, with a beachhead office located in Los Angeles. The company plans to undercut its competitors and also help Chinese brands like Xiaomi expand to the US.

While it is still early stages, what is certain is that JD’s global expansion will be very interesting to watch going forward.

Written by Don Zhao, Co-founder and Executive Director of Azoya 

 

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