THE BACKGROUND

Chinese brand Huawei started as a producer of phone switches in 1987 before becoming the Information and Communications Technology (ICT) giant it is today.

The company builds products along the entire wireless communications chain: chipsets, network connectors, and handsets.

As Fortune puts it, “it’s as if General Motors had paved the Interstate Highway System, then started selling cars.”

Huawei recorded more than $42 billion in revenue for the first half of 2017 across its three main business units: Carrier, Enterprise, and Consumer Business.

Under its Consumer Business division, Huawei entered the smartphone market in 2010 and quickly rose to No. 1 in homeland China until Oppo took the title in 2016.

Nonetheless, the brand shipped 139 million smartphones in 2016 and controls 9.8% of global smartphone market share and around the world, the brand trails only behind Samsung and Apple as the No. 3 mobile phone vendor.

huawei premium strategy

Global market share by phone vendor, 2016. Source: IDC

THE CHALLENGE

Huawei’s rise to the top three was achieved in a very short time — less than five years – but the brand is struggling to catch up to its biggest rivals, especially in overseas markets.

Despite being a household name in China, the brand isn’t well known in Europe and the US.

A few issues have plagued the brand’s reputation: a general consensus that Chinese companies produce ‘cheap and copycat products, allegations of national cybersecurity breaching, and a investigation from the US government.

These issues have hampered the brand’s efforts to gain footing in the world’s biggest premium consumer market — the United States.

Huawei’s US sales totaled $1.3 billion last year, only a fraction of its worldwide sales of $32.4 billion.

In addition, the company has also faced difficulties winning emerging markets like India and Indonesia as most consumers favored devices below Huawei’s price tag where its budget phone handsets start from $170.

The company does not have the equivalent of Apple’s die hard fans nor Samsung’s superior phone features – they have “better value for money” as its differentiator.  

Without a customer niche, Huawei will find it difficult to boost sales and stay competitive. Although revenue growth was impressive in the first half of this year, it was the company’s slowest in four years.  

THE INNOVATION

In October 2014, Huawei launched a new brand of mobile phones that they called Honor and was sold direct to consumer through online channels to keep prices in the mid-range and targeted digital natives – young hipsters.

Huawei premium strategy

Huawei’s Honor flagship store in Germany

Launching a sub-brand is also a part the company’s efforts to emphasize the brand’s focus on quality.

The company also spent a large portion of its marketing budget on overseas promotion, including plastering major cities in Europe with advertisements.

Huawei premium strategy

Billboard of Huawei phone in Poland. Credit: Wade Shepard

To further familiarize Europeans with its brand, Huawei drew on the popularity of major sports clubs like Arsenal and AC Milan and reached the masses with several sponsorships.

Huawei premium strategy

The brand became the official sponsor of English football Arsenal to raise its brand awareness.

In 2016, Huawei struck a partnership with German-company Leica to develop a dual-lens camera system that resulted in the Huawei P9 smartphone, touting an innovative camera as one of its selling points. Apple rolled out the same feature shortly after.

Andreas Kaufman, Chairman of the Supervisory Board of Leica Camera, saw the potential to become the second leg of digital revolution in the photography space where smartphones were the new amateur camera.

Huawei was also chosen by Google to build its flagship Android device Nexus in 2015. The partnership is strategically important for both companies as they are leveraging one another’s credentials for a leg up in an oligopoly market.

To crack the US market and simultaneously beat Apple for market share, Huawei is collaborating with Amazon and Google in the launch of its updated premium flagship device, the Mate.

The device is the first of Huawei’s smartphone to come with voice-interactive app, Amazon Alexa, and is available for purchase in US through Amazon. The Mate 9 is also the first Google Daydream-ready device for users to explore immersive virtual reality (VR) content and experience.

With so many enticing features jam-packed into one device, the soon-to-be launch Huawei Mate 10 is expected to surpass the performance of Apple’s highly anticipated iPhone 8.

THE STRATEGY

A few years ago, Red Zhengfei, founder of Huawei, laid out the company’s strategy: Huawei must make progress in the mid and high-end range with high quality products and turn a profit.

In order to do this, the Chinese company has continued to sacrifice margins to spend on R&D, investing $11 billion (76.4 billion yuan) to further its business.

Huawei further announced that it will focus on the mid-high segment for higher profits.

“We are giving up the very low-end devices because of the margin in this is extremely low, and it’s not making enough profit for us,” said Richard Yu, CEO of Huawei Consumer Business Group.

Huawei premium strategy

CEO of Huawei’s Consumer Business Group, Richard Yu

“The priority is Europe, China, and Japan, where the economy is healthy and people are able to consume them.”

THE FUTURE

The company continues to works towards becoming the No. 1 smartphone supplier in the world within four or five years and seizing  20%-25% global market share by introducing visionary innovation to its products in order to charge a premium.

“In the past for the smartphone you could see Apple leading innovation,” said Richard Yu. “But in the future, you will see innovation led not by them but by Huawei.”

Outside of the world’s tech ecosystems, the digitization of retail hasn’t always been met with positive reviews. There is a fear of automation taking jobs away from humans, and that fear swells as brick and mortar stores go out of business. Are they warranted?

Research by the Bureau of Labor Statistics in the US and reporting by The New York Times show that ecommerce actually has added more retail jobs than traditional models over the last 14 years.

The large change in percentage of ecommerce related jobs in the US over 14 years. Source: The New York Times

During his meeting with the President of the United States, Alibaba founder and Executive Chairman Jack Ma shared his goal to create jobs in the US over five years to focus trade between the US and Southeast Asia.

“Alibaba will create 1 million U.S. jobs by enabling 1 million American small businesses and farmers to sell American goods to China and Asian consumers on the Alibaba platform,” the company said in a statement.

Although ambitious, it’s also quite possible for a company that had more than 10 million active sellers in 2015, and estimates its China retail marketplaces “contributed to the creation of over 15 million job opportunities.”

“Machines should only do what humans cannot,” said Jack Ma. “Only in this way can we have the opportunities to keep machines as working partners with humans, rather than as replacements.”

Not only has there been an increase in ecommerce related jobs in the last ten years, these jobs on average also come with a better pay check – roughly 30% more than traditional retail jobs as averaged by one economist (all based on US figures).

Taking into account only Alibaba stock given to in-house employees, Fortune reports each person was paid roughly $11,134 in the latest quarter, a 6% bump in bonus pay per head compared to the previous year – more than double the average American’s raise last year.

Comparison of jobs created by traditional retail models and ecommerce. Source: The New York Times

While ecommerce is growing, its labor force still represents a relatively small chunk compared to traditional stores but given how interconnected multi-channel retail has become,

How do you categorize a sales clerk that assists a shopper ordering online through an iPad?

And so, where do we stand?

Unsurprisingly, all of these conclusions have been met with skeptics but recent news reporting Amazon’s aim to hire 50,000 workers in one day is a positive sign that ecommerce will always have room for a human workforce.

To put this figure in relative terms, the US Labour Department reported that 220,000 jobs were added to the US economy in June. Amazon will fulfil a quarter of this total in a single recruitment event.

This Quartz headline puts it best,


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Financial technology is always evolving in Asia-Pacific Region.

Banks, local telcos, payment solutions providers alike are pushing to increase cashless payment acceptance and integration (e.g. credit cards, mobile wallets, and/or variations of online and offline).

However, a common roadblock faced by most payment systems is that they are often siloed and cannot interact across organizations (e.g. companies or brands) or jurisdictions (e.g. cross-border).

To break to silo? Payment providers across the region are looking to various types of solutions, including blockchain, a decentralized technology, as means to disperse functions and expand global market reach.

1[decentralized technology]: Cryptocurrency is a digital medium of exchange not controlled by any one group or agency and secured by cryptography. Block chains are politically decentralized (no one controls them) and architecturally decentralized (no infrastructural central point of failure) but they are logically centralized.

eIQ sits down with Vansa Chatikavanij, Managing Director of OmiseGO Pte. Ltd., an Omise subsidiary blockchain company, to learn more about the upcoming product, a recent $25 million ICO, and how companies can benefit from this new technology.

What is OmiseGO?

“To put it simply, OmiseGO is a decentralized payment and exchange network designed to disrupt the current payment landscape,” says Vansa.

“The idea is to enable users connected to the OmiseGO network to trade any value (e.g. currencies, store loyalty points, rewards, in-game points etc.) efficiently, securely and at low cost across the internet.”

To allow users to interact with the OmiseGO blockchain, the company will be making its first user interface application, the white-label wallet software development kit (SDK), available towards the end of 2017.

The SDK allows third party programmers to develop a wallet application for its own brand or integrated existing wallets onto the OmiseGO blockchain.

What functions could be possible for a wallet running on the OmiseGO platform?

The simplest application of the decentralized payments network would be transfer of funds between peers without the need of a bank account and/or incurring high third-party fees.

But peer-to-peer payments are only the beginning. The main use cases of OmiseGO appear to be:

1. Remittances
2. Loyalty points
3. Mobile banking
4. Asset tracking
5. Digital gift cards
6. Tokenized fiat

OmiseGO, ecommerceIQ, eIQ Insider

OmiseGO was designed with flexibility in mind.

Take for example two retailers each with a loyalty program. If both are operating on OmiseGO, their users could potentially cash in their rewards points interchangeable at either establishment; creating their own trading market.

Cross-platform transactions means grocery points could one day be exchanged for air miles.

One of the largest markets that OmiseGO will facilitate is cross-border remittance. The World Bank predicts remittances to low and middle income countries are expected to increase 0.8 percent to $442 billion.

“Through OmiseGO, senders and receivers will be able to safely transfer money locally and cross-border to their families, regardless of whichever wallet or payment platform they are on,” says Vansa.

“There is so much opportunity for companies to customize their target users and customers experience and reward online financial transactions,” says Jun Hasegawa, Omise Holdings Pte. Ltd. Group CEO.

“With addition of OmiseGO, we are taking concrete leaps towards realizing the Omise group’s mission of Online Payment for Everyone.”

“Through OmiseGO, senders and receivers can safely go cross-wallet and transfer money locally and cross-border to their families, regardless of whichever account or platform they are on,” says Vansa.

Use of ethereum blockchain makes exchanging digital currency easy and secure as each user has access to their own private keys, making it impossible to manipulate the data.

1[ethereum blockchain]: focuses on running the programming code of any decentralized application.

A $25 million boost for OmiseGO

The company recently made headlines after a successful ICO (initial coin offering) that raised $25 million by selling its OmiseGO network token – OMG tokens.

Similar to kickstarter crowdfunding, a piece of code is granted to contributors that gives them rights to earn fees by helping run the OmiseGO network.

The product sounds promising but having strong backing is useless without educating its users.

“The exciting challenge with OmiseGO is the newness of the technology. Majority of people have heard of blockchain but are either unsure how it can be used to their benefit,” says Vansa.

“Similar to when the internet first started, not many people could have imagined where it would be today.”

The long term goal for OmiseGO is to “Unbank the Banked”; become a new global tool to enable financial inclusion for both the banked and the unbanked.

Its success would be a milestone for financial technology in Southeast Asia but we will have to wait and see as OmiseGO network is slated to officially launch towards the end of 2018.

As of now, 53% of the population in Southeast Asia — more than 339 million people — are online. There are more people with access to the internet than without and the number is expected to reach 480 million by 2020.

A survey conducted to 1600 people by Limelight Networks in four Southeast Asian countries (Thailand, Singapore, Malaysia, and the Philippines) found that internet users are spending 16 hours per week on the internet outside of work purposes.

With so much time spent online, users are demanding more from their web experience and it is proven to affect their shopping decisions. What else was revealed from the survey?

16 hours doing what exactly?

From 1 to 5, with 5 being the highest internet activity, social media ranked almost 4. The second most popular was browsing through video heavy content sites like Youtube and news outlets.

Gaming sites and live streaming of sports events ranked the lowest in terms of online activity.

customer web experience

Moreover, internet users in Southeast Asia are relying more on the internet for product research.

17% of them will even engage with a company’s official social media accounts to inquire about a product.

32% of social media users use their networks to check product recommendations from their friends and family.

customer web experience

What keeps them glued online?

A smartphone is the dominant device used to access the internet in this region and laptop comes in second place.

84% of internet users expect a fast load time no matter how big the screen size of their device is.

43% of online shoppers state they will actually abandon the website, and buy from a competitor if the experience on the website is too slow.

customer web experience

Despite a customer’s increasingly high standard,  77% said they would likely give the company  another try in the future given the chance.

Other important factors to consider when creating a positive web experience:

  • Fresh and updated content from a website (46%)
  • Fast performance (38%)
  • Personalised experience based on previous visits (67%) by providing relevant product recommendations

What does this mean for brands?

Word of mouth is your best friend.

91% of the customers would recommend your service/platform to a friend if they had a positive experience. Even from the stone ages, this has always been one of the most effective marketing tools.

customer web experience

Read the full report from Limelight Networks here.

As retail preferences continue to shift in favor of online shopping, retailers are facing pressure to keep up with the latest technology to stay relevant to their customers’ expectations.

However, expanding business online is proving to be difficult and retailers are often faced with many challenges, be it from external or internal factors, that hinder efforts to provide a satisfying omnichannel experience.

What is the challenge these retailers are facing? And what can they do to improve their omnichannel experience? PwC has shared its latest insights based on a survey conducted globally to help the retailers make the digital leap.

What channels are retailers using to generate sales?

In addition to the offline store (79%), a website is the next popular platform for 73% of retailers to sell products.

Meanwhile, unsurprisingly mobile apps (24%) have become the next channel to reach a wider audience.

21% of retailers around the world are still using catalogs to promote their products and as much as 18% of retailers are still dependent on a call center.

improving omnichannel experience

What are the challenges to creating an omnichannel experience?

30% of the retailers surveyed stated ‘budget constraints’ as their biggest challenge.

Many of them don’t come from a global household name and find it challenging to devote their limited resources to manage another channel.

They also have to face challenges branching from the existing system. 13% of the leadership team doesn’t consider omnichannel as a priority and many are resistant to the idea of changing their legacy system (21%). Even when they are willing to, they find it difficult to integrate (20%).

The lack of talent and expertise in the field (16%) continue to be another bottleneck in online retail.

improving omnichannel experience

What can retailers do to improve?

With limited resources, retailers need to have smarter strategies to optimize budgets and reach the right audience. Omnichannel is not about favoring one over the other, it’s about the synergy of different channels to create a more satisfying customer experience.

A smarter strategy comes down to two things:

  • Mobile website, not app

Although in-store is still the most common channel for people to shop, mobile is an increasingly popular way to browse and shop and will continue to gain popularity in the future.

improving omnichannel experience

Keep in mind, a mobile strategy doesn’t necessarily mean investing in an expensive app, retailers can focus on improving their current website to be mobile-friendly.

The mobile app is becoming an unpopular method of reaching people as more individuals feel reluctant to download another application that they will not use regularly.

By making sure the mobile version of a website is easy to use and intuitive for both browsing and shopping – making sure the checkout and payment process is smooth-, customers will have a better experience with your brand.

  • Optimize in-store experience

The offline store is not going away anytime soon, people still want the physical experience of seeing the product before buying it.

This may be an advantage that traditional retailers have that pure-play online player doesn’t but the survey showed that there are many customers who feel unsatisfied with their in-store experience.

improving omnichannel experience

Training the sales associates to have a deep knowledge of the product range is a worthwhile investment as 78% of shoppers feel it’s an important experience to have in-store.

The ability to check inventory real-time is integral – i.e. knowing when an item will be back in stock – as customers coming to the store suggest an immediate need for the product. Shoppers are also craving a personalized experience when they’re visiting an offline store – this has been found to be especially true for luxury brands.

By using technology such as an integrated data platform for offline and online channels, customers can easily access inventory information and pick up their online purchases in the nearest store. Collecting this data also allows retailers to create a more personalized in-store experience with each customer visit.

PwC’s report can be found here.

[C]: Cynthia Luo, ecommerceIQ

[D]: Deric Loh, Mobifor

Transcript

[C]Welcome to ecommerceIQ’s podcast channel!

For those unfamiliar with us, we are Southeast Asia’s first market research portal dedicated to ecommerce – data, insights, important headlines, we’re focused on educating professionals in one of the world’s fastest growing industries.

A big thank you to our network consisting of DHL, Lazada, pwc, DBS, eBay and more.

Today we’re trying something different, having an open conversation about online retail and the challenges that ecommerce professionals are all trying to tackle.

Joining me today is Derich Loh of Mobifor, he is our first guest and I’ll let him begin with a quick introduction.

[D]: Hi Cynthia, thanks for the invite. I’m Deric, currently running Mobifor, a platform for designers to make their own ecommerce store. Glad to be here.

[C]: Thanks for being here. You’ve been in the industry for over ten years and I’m sure you’ve been watching this explosion of digital growth in Southeast Asia, can you share with me a few things you’ve witnessed?

[D]: Sure, it’s been quite some time. I can remember from the very early days, early 90’s, 2000’s, there wasn’t a lot of what we have today: hosting and ecommerce platforms to even what aCommerce is offering in the market today. It has evolved quite a lot. 

But people are starting to say hey, the ecommerce wave is coming on top, how do I ride it? 

I would say there’s still a lot of very conservative mindsets, especially for medium and large sized businesses. So in terms of change in management, how will it happen to become fully digital? How can front end retailers make use of data to ensure customer orders can be fulfilled all the way down to logistics? 

There are many areas to explore and improve. What do you think of the trends with clients?

[C]: Going digital means different things to businesses because it’s still so new in Southeast Asia. When businesses think of ecommerce, either big or small, they think “oh, I’ll launch a website and begin selling super quick and easy with all these templates that exist.”

But a lot of the times, they don’t stop and think about things like security and that’s a huge component because we’re collecting sensitive information from shoppers and they need to know that they’re protected

Are there any recurring misconceptions you find yourself having to explain to them over and over again? 

[D]: From a broader sense, the first question is “what is the goal of ecommerce or online?” Could it be a new platform for them to test out a new product launch? 

Or how can a retailer make it easier for customers leads? Can anyone open up the mobile to do research and purchase? There needs to be support from top management to decide how ecommerce will impact the company. 

How do you overcome the change in management issue or revenue cannibalization especially for people who have been in the industry for 10, 20 years?

They’re scared of online taking away their revenue instead of how everyone can work in the team in a similar direction. 

And going back to the security part, there’s quite a few issues that are overlooked such as taking credit card information in the final step of the purchasing funnel and the customer finds out the site isn’t very secure.

There’s no green bar or “SSL” certificate so if your company doesn’t have it, the customer could be saying “hey, your site isn’t secure, I won’t give you details.”

You got your customers all the way through to check out and then they drop off.

In terms of security, since last year, there’s an increasing number of hack attempts using WordPress loopholes to post malicious content or negative SEO.

For example, you’re selling fake products and making use of intrusions in other sites to post spam links to increase your own search rankings or cause a competitor site to shut down.

A lot of site technical administrators actually aren’t aware their site has been compromised so the first step would be to see if they have a firewall enabled to prevent the intrusion coming in.

Cloudfare recently had an intrusion in data, even the bigger boys like Uber are using their service, so now their sensitive data is going into the market. It’s important to have security measures in place to protect the brand name you’ve spent all this time building for many years.

[C]: I know we discussed this the last time we spoke, you told me that some hackers actually defaced over 1.5 million WordPress sites through a security flaw and this is something that can be easily prevented with an update of Wordpress.

According to Wappalyzer, WooCommerce, which is the shopping component of Wordpress, occupies 32% of the ecommerce market.

It’s [Wordpress] a popular content management system that a lot of businesses use because it’s very easy to teach and to work with but there are other popular tech platforms like Magento, Opencart and Shopify – what are a few effective measures companies, either big or small, can do to protect their own data and customer details?

[D]: I think the very first step is to assess whether they are PCI compliant to ensure data is secure and encrypted. You want to have an SSL certificate

What are some processes to identify fraud orders? What are the patterns?

  • Customers are using multiple usernames but similar addresses.
  • Customers using a different name but same email and different credit card. 

Let’s say volume is 100 to 1,000, it’s still small and you can handle orders but if it’s 10,000 or 100,000, you need a fraud management team to identify patterns and stop fraud orders going through platform.  

If there are too many at the end of the day, you’ll be getting charge back from banks and losing trust factor because they’ll know you’re not doing a proper job. What do you think or have witnessed with clients?

[C]: Well, for me [aCommerce], speaking to brands, big or small, they offload all of it onto their ecommerce service provider right? 

If you work with an ecommerce specialist, they assume we take care of everything and we do but it’s funny because I actually bought an airline ticket online. CheapOAir actually has a full fraud protection team but the process is so tiresome – I put credit card details into the system, they send me an email and call the number provided and then check with your bank and then email you again to ensure that this credit card is yours and not a fake.

They couldn’t connect with my international number and I called them back and explained my situation separately to seven different agents and each agent.

Fraud management needs to be there especially if you’re dealing with like you said larger order volumes or if you’re paying a lot of money you need to ensure that a customer feels they’re safe but at same time, if the process itself is too tiresomeI would have cancelled the entire order and moved on to someone else.

It’s important to get that balance right so if you’re going to implement fraud management, it needs to be seamless. Yes, that’s almost impossible but at least a process that’s not going to the deter the customer from thinking your brand isn’t that…great. I probably won’t be buying from them again and I hope my credit card details are safe with them. 

[D]: You want to have a process but not too much of a process.

[C]: Exactly, they were also asking for my credit card details over the phone so all of that was... a little bit sketchy as I would say. And they told me, oh, don’t worry, we have a privacy policy on our website and a quick Google search showed me that some people had a lot of problems with them.

They are a legitimate company but people were complaining how long everything took. Definitely need a balance. 

[D]: I agree, more brands should look into what is the proper compliance, especially in the early stage. Working with service provider and finance guy to know what is going on. Stores should know orders, fraud orders

A lot of communications internally and externally and with partners too to make it a better experience.

[C]: This is something that all companies should really keep in mind. I know that a lot of them are just thinking launch the site and forget about security, which is especially important because Southeast Asians are not very trusting in the first place of any sort of institution or they don’t want their details to be out there on the internet.

It’s something that we definitely can look forward to, I hope there will be more awareness about these fraud prevention tools.

[C]: Thank you so much for sharing Deric. All the tools you mentioned are below this transcript. I look forward to having you join me next time to tackle another topic. If you have any comments or issues you’d like us to cover, drop it into a comments section. 

#EcomAsiaChat

Tools URL links mentioned:

https://sucuri.net/
https://www.wordfence.com
https://www.sitelock.com/
https://www.pcisecuritystandards.org/pci_security/
http://www.accertify.com
https://www.maxmind.com/
http://www.the41.com/
http://www.kount.com/
https://signifyd.com/
https://www.cloudflare.com/
http://www.stripe.com/
https://www.pcisecuritystandards.org/get_involved/participating_organizations?category=Processor&region=&alphaFilter=#filterForm
http://www.cio.com/article/2384809/e-commerce/15-ways-to-protect-your-ecommerce-site-from-hacking-and-fraud.html