We conducted an online survey (“Mom & Baby Shopper Survey”) in February 2018 to understand the shopping behavior of Indonesian females (N=1,144), specifically mothers, when buying items in the Mom & Baby product category i.e. diapers, milk formula, toys, etc.

The results revealed whether these women preferred to buy baby products online or offline, how much they spent on average per order, what item they purchased on a frequent basis, their age, the family household income and what would convince them to increase shopping frequently.

The survey sheds light on the following topics:

  • What factors are causing consumers in the Mom & Baby category to continue to buy offline rather than online?
  • What aspects of ecommerce marketplaces are most important to Indonesian female shoppers and which marketplaces are most popular?
  • What items do Indonesian female consumers prefer to shop for online in the Mom & Baby category?
  • How do Mom & Baby category consumers start their online purchasing journey?
  • What is the shopper profile and annual spend of Mom & Baby shopper in Indonesia?

Chapter 1: The Online Potential for Mom & Baby Brands in Indonesia

The birth of a baby is a life changing event for a household in regards to its finances, hours of sleep received per night, and especially, the ongoing adjustment to becoming parents.

For every minute that passes, approximately 250 babies are born into the world.

Indonesia is a country with a population of more than 260 million and on average, 2.44 births per woman in 2015/2016 – the fourth highest among all Southeast Asian nations. It is approximated there are 1.6 million births per year in the country.

Figure 1: The average number of live births per woman in Southeast Asian nations. Source: Statista

To care for each new life, parents need to invest heavily in categories like diapers, milk formula, toys, clothing, education and especially, time. Over the next eight or ten years as the child grows older, starts school and requires different products and nutrition, certain shopping habits in the parents have already cemented.

This includes what brands they trust, what products they will recommend to friends and family and which channels to buy them from.
As the median age of new mothers in Indonesia at first birth is 22.8 years of age, younger than found in Thailand, Singapore and the Philippines, she is commonly already digitally savvy.

Indonesia is predicted to have the fourth largest middle-class consumption on a global scale by 2030.

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Figure 2: Middle class consumption around the world. Source: The Emerging Middle Class in Developing Countries, Brookings Institution

Considering the country’s middle-class household count is also expected to rise to 23.9 million in the next 12 years from 19.6 million in 2016, retailers are looking to capture common characteristics of middle class consumers – more spend on travel, holidays and family.

The purchasing power of Indonesians will also rise for the next two years as the country’s gross domestic product is expected to reach US$1.7 trillion by 2020 (Figure 2).

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Figure 3: Forecasted GDP of Indonesia is expected to reach US$1.7 trillion in 2020. Source: The Economist, World Bank, Badan Pusat Statistik Indonesia.

This is why companies are allocating massive budgets to build credibility with customers early in the journey of motherhood and more importantly, influence the behavior of future generations.

Not only does Indonesia house 132.7 million internet users, 1 out of 4 of the internet users in the country is a mother (Google & Kantar WorldPanel Indonesia). The number is expected to rise over the next three to five years as the majority of the population are females aged 10 to 19 years of age (Figure 3), meaning Indonesia can also expect a rise in new mothers.

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Figure 4: Indonesia’s demographic by age and gender. Source: Central Intelligence Agency

All of this makes the Mom & Baby category a highly attractive and rampant industry in Indonesia in the coming years.

How can companies capture new mothers and help them adapt to parenthood?

Sign up here to receive the full report of Digital Mom & Baby Shoppers Profile in Indonesia.

Uber seems to be doing well after its abrupt exit from the competitive Southeast Asia market after selling to local competitor Grab. The ride-hailing company made $2.5 billion in profit on $2.6 billion revenue in Q1 2018.

“Uber gained $2.9 billion after it merged its businesses in Russia and Southeast Asia with local competitors.” – Recode

How has Grab spent this time and opportunistic time to grow market share?

Well, the Singaporean based, ride-hailing Grab celebrates its sixth birthday this year and its founder and CEO Anthony Tan recently took the occasion to announce the launch of its new investment arm: Grab Innovate.

This is a good sign pointing to healthy coffers and without Uber, the company has a relatively a smooth path to a ride-hail/all-in-one super app monopoly in Southeast Asia markets (that are not Indonesia).

A lot has changed since Uber’s exit two months ago.

Grab’s Timeline Following Uber’s Exit

March 25th – Uber exits from Southeast Asia, sells to Grab
May 7th – Grab rolls back discounts for customers and incentives for drivers
May 7th – Grab Singapore launches three new services: GrabAssist, GrabCar Plus and GrabFamily
May 7th – Grab allows cash top up feature in the Philippines
May 17th – Motorbike taxi drivers protest in front of Grab Bike office in Bangkok
May 28th – Grab launches GrabFood in Singapore
June 4th – Grab announces launch of Grab&Go allowing riders to try up to four free samples such as cereal bars, shampoo, etc. during their rides
June 5th – Grab announces launch of Grab Ventures and Velocity

But there has been backlash from various communities – rider and drivers alike – who are disappointed with the company’s recent performance, user experience after only now being forced to use the Grab app.

What are customers unhappy about?

Based on an ecommerceIQ Community survey, the top two ride-hailing providers preferred by customers remain Grab and Uber.

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It is also important to keep in mind the top respondents reside in Singapore, Indonesia and Thailand that can skew the results as LINE and Go-Jek aren’t available in Singapore.

When asked about the other value-added services used in addition to ride-hailing, customers chose “Food delivery” and “Package delivery” in second and third place, respectively. Results also revealed the adoption of built-in e-wallets aren’t popular.

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And all hell broke loose when customers were asked to ‘speak their mind’ about Grab services in Southeast Asia. These were a few of the replies:

“Functionality not as good as Uber, but improving. Maps not as accurate, main gripe is timings – the estimated times are totally off so really hard to know when to book. Wallet has been useful at hawkers / festivals a couple of times, would use more if that expands.”

“Cannot change the pickup location (sometimes GPS is not accurate) – tried ordering food at 11AM and it said rider not available – got a lot more expensive and waiting got much worse after Uber’s exit.”

Prices has increased dramatically since the merger with Uber; what’s worse is, driver availability has also gone down since.”

Too expensive now. Confusing fare structure and flat rate charged before the trip are more expensive than taking a taxi. Losing UberEATS for GrabFood is the bigger disappointment though – at least Grab’s transport works, the GrabFood UX/UI is the worst app I’ve opened for four years and completely unfriendly to non Thais.”

And a single positive reply:

“Awesome.”

Most common complaints? Terrible UX, inaccurate Maps, lack of drivers and more expensive than before.

Go-Jek to the rescue?

Not quite.

While on-demand in Indonesia is essentially untouchable due to Go-Jek’s market dominance and customer loyalty, the company will struggle to convince other Southeast Asians to download yet another on-demand app when they expand.

But a window of opportunity may be wide open for them if Grab doesn’t improve its user experience (and quickly given Go-Jek’s long-awaited expansion).

ecommerceIQ

Source: GrabFood Apple Store reviews

During our intimate interviews with Jakartians who surprisingly use multiple digital payments, we discovered it is all due to convenience. Because they already use Go-Jek to order everything else on one platform – one app. They don’t want to install more applications on their mobile phones.

Let’s say Go-Jek is able to overcome tricky government regulations, assemble driver fleets, and jump through talent pool hoops, customers trying Go-Jek, already well-known in Indonesia for its superior UX/UI, have access to the company’s all-in-one app services – all in one.

This is an already added plus considering users need to download a separate GrabFood app to order food versus the built in function in Go-Jek’s app.

GoJek’s expansion will also mean users can enjoy lower prices as companies will likely revert back to heavy subsidies to win customers and leading to Grab dropping prices once again.

ecommerceIQ, Consumer Pulse

Source: ecommerceIQ Ride Hailing Survey 2018

Competition is a good thing

Competition encourages businesses to improve the quality of goods and services they sell to attract more customers and expand market share.

“Preparations are well under way and within the next few weeks our first new country launch will be announced. This will be followed by three other countries in Southeast Asia by the middle of the year.” – Nadiem Makarim, CEO and founder of Go-Jek.

Citing the financial and strategic backing of its local and global partners, he added: “We are confident that we have more than enough support to take one of the most amazing growth stories in the world from being an Indonesian phenomenon to a global one.”

Grab should be taking advantage of this brief moment of competitor-less time to become even more user friendly, push revenue limits and popularise its e-wallet, but based on survey results, forgotten to optimise its core value proposition – a seamless ride-hailing experience.

Brace yourselves everyone, we’re in for another on-demand showdown.

It seems every day is filled with announcements about fresh funding, joint ventures and market expansion in Southeast Asia’s digital economy.

Money, it seems, is not an issue for these internet companies.

There is instead an even bigger problem – a lack of a company’s most valuable resource: talent.

Every tech company I have interviewed operating in Indonesia, Thailand, Malaysia, Singapore, Vietnam, etc. has cited difficulty finding, recruiting and retaining top talent when asked about major challenges.

In a region abundant with people – 650 million – and rich resources, what in the world is going on?

Companies can’t find good talent

Through a short community survey last week, executives from companies such as Colgate, Grab, Facebook, Blibli, DHL and Abbott, shared the top traits they look for in a successful candidate and their thoughts on hiring in the region.

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Over 80% of respondents believe there is a talent challenge for some specified reasons below:

“Yes, there is certainly a talent challenge in Southeast Asia. Reasons being absence of educational institutions of global level that churn out quality graduates. Focus on localization than globalization and limited exposure.” – Reliv Pharma, Vietnam 

“Yes, the young generation lacks persistence and cuts corners.” – Self-employed, Thailand

“Yes, there is a lack of ‘soft’ skills or qualities required to be successful in a technology business. These include problem solving, creativity, self-starters, willingness to take initiative and ownership. Due to the large amount of tech companies headquartered in the region, there is also a job-hopping mentality meaning that younger talent does not stay in one place long enough to learn critical foundation skills.” – Cresco Data, Singapore

“Yes, lack of ability to understand the world of digital is not binary and you need to recognise shoppers are omni-channel more and more so.” – Abbott, Singapore 

“It’s apparent that there is a talent challenge when large companies like Central Group (Thailand), MAP (Indonesia) and SSI Group (Philippines) are often having to “import” expats into management or even senior management positions because they couldn’t source a candidate locally. More to the point, the ecommerce market is in its infancy in Southeast Asia, enforcing the point that talent from maturer markets is a viable option.” – aCommerce, Thailand 

“There should be a proper place to develop these talents.” – AmorePacific, Malaysia 

“Cultural difference and attitude.” – Grab, Thailand 

The other 20% were either on the fence and believed the struggle to hire was due to other reasons:

“No, there’s a pool of strong candidates but it’s quite tough to find someone who shares the same values and goals as the company.” – Clickasia, Malaysia 

“Not really, a lot of great candidates out there. The thing is, sometimes the recruitment process and the interview questions are ridiculous and those are eliminating the great candidates from the recruiter.” – Facebook, Indonesia 

A quick overview of the feedback reveals companies are experiencing the same problems such as inflated salaries, job hopping, and lack of ownership and strategic thinking.

There are a few explanations for this:

First, ecommerce in Southeast Asia is young. The concept of digital only arose six or seven years ago around the time Lazada was born. There was no demand for online jobs, why should students study computer science and digital marketing over finance and science?

Given the novelty of digital, not enough time has passed for any individual to become an expert in the local market and therefore, narrowing the pool of talent with on-the-ground experience. This also means companies tend to hire foreigners to fill senior roles but are usually on short contracts and don’t intend to stay for 5+ years in a developing country.

Second, education in Southeast Asia lags behind the developed world as observed by the World Bank,

“Much of what South Asian students are taught is “procedural” or rote based. Students are poorly prepared in practical competencies such as measurement, problem-solving, and writing of meaningful and grammatically-correct sentences. One quarter to one third of those who graduate from primary school lack basic numeracy and literacy skills that would enable them to further their education.”

Whereas youth in North America are expected to hold part-time jobs, complete internships and have work experience before they even start university, young people in Southeast Asia are deterred from work to focus on studying until graduation.

This means fresh graduates tend to lack basic skills entering their first job – ownership, professional communications, stress management, etc. – and are often overwhelmed at fast-paced companies with heavy KPIs i.e. digital startups.

The top three skills companies believe are crucial for successful candidates are problem solving, strategic thinking and willingness to learn. The first two are also the hardest to find in the region.

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Third, companies are still applying traditional recruitment practices that won’t work here unlike in the West. Simple supply and demand.

Unless you are a Google or Amazon, recruiters cannot expect candidates here to undergo lengthy interview processes because quality talent will get snatched up. As a senior manager once told me, “the interview works both ways, I’m also checking to see whether I like the culture fit”.

Recruiters also cannot solely rely on education as a benchmark for future success or neglect candidates without Ivy League Masters.

For many individuals fortunate and wealthy enough to be sent abroad for higher education, minimum ‘white collar’ wage in Southeast Asia is seen as pocket money. These young professionals aren’t incentivised to push themselves at work when they have family businesses to fall back on. This is not to generalise an entire generation as lacking ambition but to highlight how important it is to understand their backgrounds and aspirations.

It is often individuals with operational experience in APAC and industry knowledge that tend to perform better than MBA graduates. An employee at Alibaba Group sums up her experience with hopeful graduates looking for new jobs:

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We have established there exists a talent challenge in one of the world’s fastest developing regions, but so what? Can’t companies slowly develop and build their teams when education and experience catch up? What’s the big hurry?

Three small numbers: 996.

The Chinese are coming (here)

996 = 9AM to 9PM, six days a week.

This is the working mentality of employees in Chinese companies. As detailed during an episode of Economist Radio, a venture capitalist from China shared his surprise seeing empty parking lots at 5PM during a visit to Silicon Valley.

“Even in large corporations like Tencent in China, you will see taxis lined up at 2AM taking hard working engineers home when they totally run out of steam working 12 hour days.” – Kai-Fu Lee, CEO of Sinovation Ventures

The digital landscape in Southeast Asia is already saturated thanks to the influx of Chinese players and large sums of investment, but in order to win, it’s not about capital when everyone has millions in the bank, it’s about human capital.

Alibaba’s crackdown on Lazada has already started; Maximilian Bittner out, Lucy Peng in. And after three years in Indonesia, JD.com also plans to expand to Thailand sometime this year through a joint venture with Central Group.

Given the speed of the market’s competitive playing field, there is a huge opportunity cost when critical roles are left unfilled. The fear that someone else is building something better, smarter and faster.

ecommerceIQ

How can companies navigate the talent challenge?

In Southeast Asia, soft skills should trump hard skills every. single. time.

Companies can teach someone to navigate SQL, manage time and set up Adwords, but they will struggle to teach conflict resolution, self-motivation and problem solving.

Like all business strategies, recruitment efforts need to be adapted to the local market in order to be successful, whether through an in-house team or third party platform. These were hiring best practices shared with me:

  • A resume is not a 360° review of an individual, experiences and results count more
  • Fancy education doesn’t guarantee strategic thinking or grit, less experienced but hungrier candidates will go further
  • Update old application systems that require 10 steps to upload a CV
  • Tap into your C-levels to scout for talent as they are your biggest network of eager candidates
  • Rethink unrealistic qualifications (ex. 10+ years in digital, 7 years in ecommerce, etc.) or you will never find someone
  • Continue training your people and have an internal culture accommodating to the locals

Companies in developing markets like Southeast Asia often focus on high growth and cash burn to grab market share, but forget to build a strong, positive company culture so the top talent actually want to stay.

Understand the three crucial skills required to be successful in the role and how the individual demonstrated this through his/her past experience and forget about all the other bells and whistles.

At the end of the day, how defensible is your team?

Not commonly prevalent in the news, Rocket Internet’s venture Jumia (formerly known as Africa Internet Group) has managed to stay under the radar while slowly dominating one of the largest developing internet markets in the world.

Only after speaking with a team of Jumia Vendor Success Senior Managers was I able to realize the massive potential of the continent’s top ecommerce player, and how it is not so different from Southeast Asia.

“Like every other region, Africa has its own challenges but the internet users [in Africa] are more than that of the US, UK and actually, both of them combined,” said Gaurav Jain, Head of Vendor Success, Jumia Group. “The number is behind only India and China.”

ecommerceIQ

Source: Statista, Africa has over 360 million internet users

During a knowledge sharing session held at aCommerce fulfillment center in Bangkok, ecommerceIQ spoke with the Jumia team to understand the unique properties of their ecommerce ecosystem, and uncover why the company was more similar to Go-Jek than the commonly perceived Lazada of Africa.

Africa’s ecommerce behemoth: The sum of all parts

To understand the extent and ambition of Jumia’s business goals in Africa, it’s important to know that Africa is a continent broken up into 54 countries and according to the company, consists of 1.3 billion consumers and 17 million SMEs/merchants.

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Jumia, started in 2012, was initially an e-tailer selling only electronics and fashion items when it moved into a marketplace model in 2015. It has since become the largest internet player in Africa and first unicorn leading in six regions: Egypt, Ivory Coast, Nigeria, Kenya, South Africa, and Morocco.

The company not only operates in 23 countries, but has effectively squeezed out the ecommerce players that came before them, namely Kilimall and Konga.

It’s safe to say that Jumia Group is no longer a simple, horizontal marketplace and is responsible for pumping out ventures Rocket Internet is famous for copying and pasting in developing markets: Jumia Food (foodpanda), Jumia House (Lamudi), Jumia Car (Carmudi), Jumia Jobs, Jumia Deals, etc.

But launching online services in a region where ecommerce is only 0.5% of total retail sales is not cheap.

The company posted a Sh14.9 billion ($148 million) loss before tax and other costs in December 2017 compared to Sh11.3 billion the year before.

While it doesn’t paint the entire picture, severe losses was one of multiple factors that spurred the company to create the Jumia One app combining its top services in one place. The app launched in Nigeria earlier in March and allows customers to shop online, order food, buy airline tickets and pay cable and electricity bills.

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“People like to shop on the mobile app. They prefer to have ecommerce handy so they can place an order on the go. The Jumia One app is growing, 42% to 56% in terms of mobile share.”

Other factors for launching Jumia One included:

  • It makes more sense to invest heavily into a single platform versus managing and marketing multiple brands
  • Consumers don’t have enough storage on their mobile phones to download multiple apps as mentioned by a user
  • Mobile penetration in Africa is expected to reach 50 percent in leading countries over the next five years – meaning over 300 million smartphones will be added to the market
  • The app is another revenue stream as Jumia marketplace merchants can buy advertising space for their products
  • It also allows the company to cement themselves as a strong payments player, vital for mass adoption as demonstrated by Alibaba’s Alipay

The company will dabble in micro-financing to merchants given its rich data. A win-win to give merchants more capital to invest in their online businesses and drive more traffic back to its platform.

“We know the patterns, the revenue, the number of orders. We lend out money so they can manage their shops,” comments Gaurav. “It’s a growth opportunity to accelerate their growth as fast as possible.”

“They can use mobile money, not only cash.”

The all-in-one app draws parallel to one of Southeast Asia’s unicorns. Jumia is becoming the superapp in Africa – a Go-Jek for 1.3 billion customers.

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What are then the challenges holding back Africa’s enormous potential? The typical it turns out.

Challenges in Africa mirror Southeast Asia’s own struggles

Africa’s obstacles preventing exponential growth of ecommerce are the same that plague Southeast Asia’s internet economy.

  1. People still want to visit offline stores for the look and feel to buy products
  2. Lack of trust by both customer and merchants who don’t believe in digital transactions
  3. Fragmented markets, different languages, customs
  4. Cash based society
  5. Underdeveloped infrastructure
  6. Shortage of digital talent and training/education

“They need to know that ecommerce is not a Ponzi scheme. Trust is a large issue. We show them how their products will sell, we show them the importance of visibility and assortment until they have confidence in us and they grow their business so it’s mutually beneficial,” says Gaurav.

“Sellers with offline shops aren’t used to waiting for payment. Cash flow is a problem with our vendors,” says Damola Ajayi, Head of Vendor Success, Jumia (Nigeria), when asked about his challenges. “We guarantee a 7 day payment cycle from day of shipment and even daily for our gold vendors.”

The company paved the way for other ecommerce players to come in, but currently there is no standout competitor apart from the expansion efforts of Chinese companies and the country’s predisposition for offline retail.

Creating the next 500 millionaires in Africa

What was most impressive about Jumia wasn’t its ‘superapp’ or the sheer size of the African market, it was the dedication and enthusiasm exuberated by each Jumia employee I met.

ecommerceIQ, Jumia

They understood the massive challenges ahead and were candid about how to tackle them.

Lack of vendor trust, digital skills or education?

  • Launch training 2 to 3 times a month to advise on marketing, pricing, and inventory management
  • Maintain a ‘fair’ playing field by enabling local businesses to offer COD (cash on delivery), whereas cross-border merchants don’t have this option
  • Spend heavily on marketing for its high performing vendors
  • Share insightful data with vendors on a weekly basis about top selling products across multiple categories, propose assortment and price forecasts

Lack of talent?

  • “The company brought in expats who managed senior roles and groomed locals to move up,” says Damola. “This was necessary for our early growth.”

Lack of cashless adoption?

  • Add convenience through JumiaPay allowing payment by debit card or bank accounts
  • Offering cash on delivery

ecommerceIQ

“We are able to cover the entire vendor journey,” comments Gaurav. “We offer services at every point the customer needs.”

So how are these band-aid solutions working out? At the knowledge sharing session, top performing Jumia vendors shared their experiences with me:

“If you dedicate yourself to Jumia in top product categories, mobile phones, there is no need for you to go offline. You can grow 70% [in sales] if you know what you’re doing.”

“Target the demands of the market and Jumia helps you focus. They will give you foresight.”

“We started with Jumia since 2013, we were selling a small number of products. During Black Friday, we sold 1,000 phones but for “Mobile Week” in March, we sold 15,000 Xiaomi phones, and broke the record for the Middle East.”

The company, while struggling with the perils of other companies prioritizing high growth over all else, is taking baby steps to expose its merchants to the world’s possibilities.

“We [Jumia] want to enable African customers to enjoy best products from the world at their doorstep,” shares Gaurav.

What can I say? The more the merrier.

 

Editorial comment: a quote was adjusted April 22 8:51am

The big deal about Ramadan in Retail

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

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

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

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

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

The average Ramadan shopper profile

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

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

Ramadan 2018

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

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

Ramadan 2018

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

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

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

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

Shopping peaks during Ramadan

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

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

Ramadan 2018

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

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

Ramadan 2018

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

Capturing the Ramadan shopper

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

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

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

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

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

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

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

Ramadan 2018

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

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

Ramadan retail takeaways

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

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

If you’ve been in Thailand and toured its popular landmarks, it’s most likely you have passed by a store packed with Thais and tourists alike buying bags and bags of…well, bags. Crowded stores filled with unmistakable colorful patterns distinguish NaRaYa from other locally produced labels and its popularity among Chinese, Japanese and South Korean tourists speaks volumes.

The famous brand can be found at over 20 domestic stores scattered around Thailand and 13 international branches and after 30 years in the retail business, shoppers can finally go online to buy NaRaYa products.

ecommerceIQ sits down with the decision makers at Narai Intertrade Co,. Ltd. to understand what plans they have for 2018 and what their definition of successful retail is.

Obstacles to a fruitful online journey

For a brand that has enjoyed immense popularity among women in Asia across all age groups, it seems the company is actually late to the retail game given the prevalence of ecommerce in Southeast Asia.

A few factors explain why it took NaRaYa so long to finally focus on digital.

Narai Intertrade Co,.Ltd., the parent company of NaRaYa, is a family owned business established in 1989 and is the manufacturer, distributor and official retailer of its own brand, making the supply chain a tangled web of complexities.

But a common obstacle that keeps manufacturers and distributors from going direct to consumer is channel conflict. By selling online, the brand would be competing directly with its partners in other markets.

“Initially, we wanted to focus on selling traditionally in our physical stores, and on being a wholesaler for our overseas partners,” shares Mrs. Wasna Lathouras, President of Narai Intertrade Co.,Ltd.

“Doing ecommerce would mean cannibalizing our partners.”

“If you notice on our website, you will be directed to the online websites of our overseas partners such as in Japan. If we were to go online, our cost would definitely be cheaper but reduce the opportunity of our partners to market and sell our products in their local markets.”

So how did they get around upsetting current partners?

Simple.

“We launch ecommerce in markets where none of our dealers exist.”

Channel conflict aside, the owners share a few factors that drove them to tilt the scales in favor of ecommerce. One, it was hard for the company to ignore the pressure to sell online, especially as the executives took to social listening to understand the needs of its customers.

“We have really high demand for our products from customers that don’t live in major cities in Thailand. Being online, everyone with a mobile phone can get NaRaYa products in a few days,” says George Hartel, the company’s Chief Operating Officer. “It opens a new market and opportunity for us.”

Two, they found a partner able to handle multi-channel retail and provide enough flexibility to expand across the region when the company was ready.

Left to right: aCommerce Group COO Peter Kopitz, Narai Intertrade Co,.Ltd. President Mrs. Wasna Lathouras, Assistant CEO Mr. Pasin Lathouras, COO Mr. George Hartel

“Both NaRaYa and aCommerce need to grow together. That’s why we need to have our backend and distribution center ready for offline distribution, while aCommerce will take care of the online distribution,” says Mr. Pasin Lathouras, Assistant Chief Executive Officer.

Three, they realized what online could mean for new retail opportunities in the US, India and China markets and expansion even within home market Thailand.

“I would say that 80% [online revenue] will come from overseas, and 20% from Thailand,” shared George. “This is because Thailand is a tourism based country and ecommerce is relatively early in Thailand so primarily people are still shopping offline.”

And four, given their existing footprint, could they reach retail’s pinnacle, omnichannel?

“We are starting an evolution with pure ecommerce in the beginning and in the future, we could roll out an omnichannel experience, for example, tourists can preorder at the airport and deliver to hotels.”

But George is very clear in stating: “We are not substituting offline with online.”

NaRaYa offline also gets a makeover

The evolution of retail isn’t a sign that companies should close down shop and open webstores. What the headlines and trends instead point to are the expectations of a new shopper generation.

What factors will nudge Thais to spend their newfound middle-class income?

Shoppers waiting outside the mall with their bright yellow NaRaYa shopping bags.

Part of creating a wholesome and attractive brand is greatly affected by the user’s sensory engagement in brick and mortar stores. As one loyal NaRaYa shopper put it,

‘Every time I visit NaRaYa, it makes me feel relaxed and free to choose my new bags with quality staff, if you want any help you can talk with them.’

Enter the rise of ‘smart stores’ and new technologies bridging offline and online channels like RFID tags, smart mirrors in change rooms and even robots handing out cards to act as virtual baskets in Sephora’s case.

While Thailand’s commerce industry is not ripe for robots, NaRaYa has plans to heighten its in-store shopper experience.

Mrs. Lathouras shares details of the brand’s newest two-floor flagship store at ICONSIAM, scheduled to open in October of this year and estimated to span 1,450 sqm.

Not only will the flagship introduce four new brands, making a total of seven sub-brands available for long standing fans, it will also incorporate a cafe serving local tea.

The cafe will accommodate customers waiting for friends and family browsing in stores and offer a palatable drink menu suitable for its typical Asian shopper.

The care placed in the customer experience is vital to building any successful business but creating a memorable shopping experience doesn’t come cheap. The company plans to spend up to 2 billion THB ($64M USD) on its distribution channels, existing and new, to not only expand its presence offline but also modernize its traditional brand image.

ecommerceIQ

New Lalama product line by NaRaYa freshen the brand

“We want to rebrand our look and feel to be less housewives and domestic. We want to look modern and international but remain a luxury affordable brand.”

The company’s soft launch online will be on Lazada Thailand next week and offer an initial 300 SKUs, while the official launch scheduled for May will look to imitate what is seen in physical stores.

“NaRaYa wants global recognition, ultimately. Of course, it is a dream to see NaRaYa in fashion capitals but we are very conservative when it comes to our goals,” closes Mr. Pasin.