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Following in the footsteps of China and the U.S., Southeast Asia is on the cusp of an ecommerce golden age. With online shopping accounting for only 1 percent of retail today, the region is slated to reach double-digit China-esque numbers within the next 4-5 years.

With a population of 600 million — twice that of the U.S. — Southeast Asia is poised to eventually become the third-largest ecommerce market in the world, second only to China and India (and ultimately surpassing the U.S.).

But enough of the macro overview. How did 2015 turn out? And what will 2016 bring to ecommerce?

Local, regional and global players stepped up their games. In particular, we saw Indonesia rise this year: MatahariMall launched with big fanfare as the nationalist answer to Rocket Internet’s Lazada; Lazada, in turn, doubled-down on Indonesia with the return of previous CEO Magnus Ekbom; for the first time, aCommerce Indonesia surpassed Thailand in order volume; and, recently, China’s Alibaba competitor JD snuck into Indonesia and surprised everyone with the launch of JD.id. This has served to add to an immense amount of pressure and competitiveness in the pure B2C space.

2015 also was the year of M&As, as other players allied together or were absorbed in order to arm themselves against the behemoths mentioned above. First, Ardent Capital-backed WhatsNew acquired lifestyle vertical site Moxy in Thailand in January.

More recently, we witnessed an encouraging ecommerce exit as beauty site Luxola was acquired by French luxury superstar LVMH. And in December, aCommerce gave a 20 percent stake to a 150-year-old Swiss retail distributor, giving it access to more than a hundred of its Western brands and physical infrastructure in the region.

Unfortunately, the year did not pass without its share of casualties due to the hyper-competition in B2C ecommerce in Southeast Asia. Fashion retailer Paraplou Group shut down in October after two years (and having raised $1.5 million) due to lack of focus and deep pockets.

In March, SingPost and Indonesia’s mobile phone retailer Trikomsel announced a mysterious ecommerce partnership — only to have reports pop-up of the telco’s dire financial situation three months later, in addition to the sudden removal of Wolfgang Baier as Group CEO of SingPost in December.

If 2014 was the year of unprecedented capital injections to build Southeast Asian ecommerce businesses, 2015 was the year we saw the early rise, fall and transmogrification of players in the fragmented landscape as they vied for a piece of the rapidly growing ecommerce pie.

We expect to see serious movement in the region from offline players moving online.

In line with our annual tradition, we are giving you a sneak peek at what will be on the menu for next year. The conclusions were determined through extensive investor and executive interviews, as well as internal data and secondary sources from January 2015 to December 2015.

Because we work for a major Southeast Asian service provider, with the biggest ecommerce names in the region (such as Lazada, MatahariMall, L’Oreal and more), we are privileged to sit at the intersection of tech, logistics, retail, marketing and VC. We see where our partners are putting their money and where the investors are willing to follow.

As such, we are able to see with acuity where the growth will be. There’s no crystal ball or trusting a gut feeling here; we simply have the privilege of a bird’s-eye view that most players don’t have, and we’re providing projections here in the form of predictions.

1. Brand.com Is Poised To Be The New Black

The evolution of ecommerce commonly follows the trajectory of P2P and C2C to B2C to eventually Brand.com. The U.S. went from Craigslist and eBay to Amazon to brand sites like Nike, J.Crew and Gap. China went from Taobao to Tmall and JD to the many standalone and marketplace brand sites, like Estee Lauder, Burberry and Coach.

Today’s Southeast Asia is following a similar pattern, yet at a much faster pace due to “1 to n,” horizontal progress and the resulting leapfrogging behavior. In our region, we have P2P (OLX), C2C (Rakuten, Tokopedia, Shopee), B2C (Lazada, Zalora, MatahariMall) and Brand.com (L’Oreal, Estee Lauder) all happening at once within a very short time frame.

Even Unilever in Thailand has created an ecommerce division with revenue targets they expect to start hitting in 2016. We are seeing brands going online much earlier than one would normally expect.

It was no big surprise, then, when aCommerce recently landed a strategic investment from Asia’s biggest retail distributor, DKSH. Swiss-based DKSH owns distribution rights for some of the biggest brands in the region, such as P&G, Unilever and Johnson & Johnson.

This partnership validates the growing demand for brand ecommerce in the region, and will further expedite the process at which brands go online, whether on their own brand sites or on the many marketplaces in Southeast Asia.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

2. Omni-Channel Awakens: “There Will Be No More Ecommerce, Only Commerce”

This is what aCommerce Group CEO Paul Srivorakul said when ecommerce logistics player SingPost announced it would create a futuristic mall that combined online and offline shopping, in pursuit of the omni-channel retail dream — a dream that is quickly becoming a reality in the U.S. and China.

Referring to a seamless shopping experience across stores and the online channel, omni-channel retail is considered the elusive Holy Grail in retailing due to the politics and logistical challenges of integrating often independent online channels with their brick-and-mortar counterparts. But so far, Southeast Asia has been late to the game, with its focus (reasonably so) on building up pure-play ecommerce first.

In 2016, we expect to see serious movement in the region from offline players moving online, and vice versa. 2016 will be the year in which offline brands will go online due to the plethora of online marketplaces available, as well as the presence of full-service ecommerce enablers.

Southeast Asia is on the cusp of an ecommerce golden age.

For B2C players, the appeal of adding offline operations to the mix includes enabling faster last-mile fulfillment and delivery. In Southeast Asia, Vietnamese electronics retailer Nguyen Kim (acquired by Central Group) is able to pull off same-day, 4-hour deliveries because of the massive offline retail footprint it has.

Ecommerce players with a traditional offline arm, such as MatahariMall, Cdiscount and Central, will be in an advantageous position to execute on this. However, 2016 will also have B2C pure players looking into this, as logistics and last-mile in Southeast Asia increasingly struggles with industry-wide capacity bottlenecks.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

3. Niche-Commerce Models Will Evolve To Avoid The B2C Bloodbath

In our 2015 predictions, we discussed how B2C ecommerce is a long-term, cash-intensive, winner-takes-all game. Companies trying to battle it out in this space better have deep pockets (see Lazada, MatahariMall, and JD) — or face extinction (see Paraplou Group).

In his seminal essay “Ecommerce is a Bear,” Andy Dunn, founder and chairman of Bonobos.com, elaborates on why B2C ecommerce is a winner-takes-all game, and what options remain for other players who don’t have the luxury of deep pockets or a sugar daddy.

Much of this comes down to a “David versus Goliath,” Peter Thiel-esque contrarian approach to ecommerce. The U.S. ecommerce scene has been dominated long enough by Amazon to witness some of these models coming to fruition over the last several years: 1) Proprietary Pricing (think flash sale, Gilt Groupe), 2) Proprietary Selection (ModCloth, NastyGal), 3) Proprietary Experience (Rent the Runway, Birchbox), and 4) Proprietary Merchandise (Warby Parker, Bonobos).

This will be the year where more creative ecommerce models emerge. Companies like Pomelo and Sale Stock Indonesia have already adopted the proprietary merchandise approach toward achieving a competitive advantage. They do this by designing their own fashion and gradually moving upstream to include manufacturing.

Moxy has staked their flag as the “Everything Store,” but focused on women. We also may see the return of subscription-commerce business models with retailers like Central, impacted by a dip in foreign shoppers, seriously considering a Gilt-style flash sales model to get rid of excess inventory.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

4. Cross-Border Ecommerce Will Be Driven By Silk Road 2.0, Not AEC

Despite all the media hype and lofty expectations (even our own predictions last year), the ASEAN Economic Community (AEC) will not have a significant impact on ecommerce in 2016.

Governments are too fragmented on policy; coupled with the immediate growth opportunity within the domestic markets, it doesn’t make sense to focus on cross-border within ASEAN, as evidenced by companies such as Lazada and MatahariMall doubling-down on Indonesia’s ecommerce opportunity.

Cross-border ecommerce in 2016 will be driven mainly by what we call “Silk Road 2.0.” These are Greater China-based companies that will bring their products into Southeast Asia, laying the foundation for our generation’s version of the Silk Road and attempting to expand China’s soft power and hegemony through commerce and digital.

Southeast Asia is poised to eventually become the third-largest ecommerce market in the world.

China’s JD is a classic example. The No. 2 online retailer in China just recently set up shop in Indonesia and will be expected to leverage their 40+ million SKU product assortment and China-Southeast Asia supply chain to compete with the likes of MatahariMall and Lazada. Alibaba investing almost half a billion into SingPost clears the way for Alibaba, Tmall and Taobao packages to smoothly enter Southeast Asia.

5. Payments: COD Will Continue Its Reign While Third-Party Payments Struggle

The next double-digit billion dollar opportunity in Southeast Asia ecommerce is the third-party online payment space. U.S. has PayPal and China has AliPay; what does Southeast Asia have?

Contrary to what many people believe, building a successful payment product isn’t about technology, it’s about distribution. Payment technology is a commodity; everyone’s building the same thing, including banks (SCB UP2ME), telcos (TrueMoney, PAYSBUY), media (Line Pay, AirPay by Garena), retailers (helloPay by Lazada) and payment-focused startups (2C2P, Omise).

The hard part is distribution. How do you reach critical mass in order to cruise off network effects? Until this happens, COD will remain the dominant payment method in Southeast Asia. Based on aCommerce’s latest aggregated numbers, COD made up 74 percent of transactions in Southeast Asia, up from 53 percent the year prior. This validates the importance of COD to ecommerce in our region, and already exceeds the COD penetration rate at the height of its popularity in China back in 2008.

Eventually, COD will naturally reach its shelf life and be replaced by a “modern” third-party online payment product. Even then, the most likely scenario will be one leading payment product per country in Southeast Asia due to the region being fragmented.

Until then, good luck “killing off” cash on delivery, Mr. Jon Sugihara.

6. The Fizzle Of Fast Fashion E-Tailers

We’ll see mass, fast-fashion players like Zalora struggle and either fizzle out or be rolled into cousin Lazada. People familiar with the history of ecommerce in China will see similarities between Zalora and VANCL. VANCL, a mono-brand fast-fashion retailer founded by Chen Nian (who sold his previous business, Joyo, to Amazon), rose to prominence in 2009, raised up to $570 million and even planned for an IPO, but then gradually faded away. Selling your own fashion products is less about retail economics and much more about brand building.

In addition, VANCL suffered from competition from Taobao merchants who sold similar products for higher quality at lower prices. Replace Taobao with Instagram and Facebook and you’ll understand the pain that Zalora and other mono-brand, mass-fashion retailers are going through in Southeast Asia.

Ecommerce companies need to understand that this is a long-term game.

Following the natural progression of ecommerce, fashion will start becoming a more popular category for online shoppers, especially with the rise of richer female consumers in Southeast Asia. Fashion brands currently have the choice of selling on the many marketplaces in Southeast Asia and/or selling via their own brand sites. We’ll expect them to set up shop on their own brand sites or specialized, fashion-friendly marketplaces.

However, premium fashion brands may be hesitant to set up shop on mass marketplaces like Lazada and Rakuten because of the risk of being perceived as a mass brand. After many years of courting fashion and luxury brands, Amazon is still struggling. Don’t forget, most of Amazon’s premium fashion sales today are generated via Shopbop, a fashion-only destination that the company acquired in 2006.

7. New Channels Will Emerge To Challenge Google And Facebook’s Dark Side

When you’re digging for gold in the remaining ecommerce gold rush on the planet, you better be equipped with the best picks and shovels available. Unfortunately for ecommerce players in our market, the range of weapons available is quite limited due to historical and socio-economic factors unique to Southeast Asia. The appearance of a “no-tail” landscape in terms of publishers severely hampers the effectiveness of traditional tools, such as affiliate marketing and programmatic display.

In Southeast Asia, players are already exhausting the “usual suspect” channels, such as Google Search, Facebook and Criteo, with the result being CPCs rising to all-time highs and companies tapping into offline marketing to seek better returns. This is Andrew Chen’s “Law of Shitty Clickthroughs” in full effect.

Companies and savvy entrepreneurs will start addressing this gap by designing and building new demand-generation platforms to offer an alternative to the Googles and Facebooks out there. Expect to see more ecommerce firms adding channels such as price comparison, coupon sites and cash-back sites, as well as innovative affiliate marketing solutions to balance their media mix. 2016 will give us the excavators and bulldozers to complement today’s picks and shovels.

8. The Battle For The Last Mile Continues As 3PLs Fail To Adapt

In 2016, we will see companies like Lazada (LEX), MatahariMall and aCommerce investing in building out their own delivery fleet in order to help relieve the industry-wide capacity issues and serve the anticipated record-breaking transaction volume. The pressure will only become bigger in 2016 as transaction volume is expected to hit record highs in Southeast Asia.

Challenges with last-mile delivery in Southeast Asia, if not addressed properly, will become the biggest bottleneck to ecommerce growth in the region. The industry is currently witnessing industry-wide capacity bottlenecks beyond what the JNEs, Kerry Logistics and DHLs of this world are able to handle.

Part of this is the poor infrastructure to begin with. China, the world’s largest ecommerce market, never really had this issue because of the socialist and central government mindset of prioritizing infrastructure investments. By the time ecommerce took off, the infrastructure was already there, which resulted in last-mile delivery becoming a commodity service.

Also, many existing delivery companies were never built for B2C deliveries to begin with. Their core competencies are in B2B deliveries, which typically don’t face B2C headaches, like returns management, reverse logistics, pre-calling, multiple delivery attempts and cash on delivery.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

9. Channel Management Will Be The New “Programmatic” Ad Agencies Still Stuck In 2011

Year in, year out, brand advertisers, agencies and adtech sales execs rave about programmatic display advertising and DSPs being the future of digital marketing. However, few actually have been outside their ivory tower in Singapore long enough to realize that “no-tail” has essentially killed off any promise of “programmatic” advertising in Southeast Asia outside of Singapore and Malaysia.

The real “programmatic” opportunity in Southeast Asia will be in ecommerce, not in display advertising. With the advent and fragmentation of online marketplaces, the challenge for brands will be to choose on which channels to be present and what products to push in each of these channels.

One of the biggest issues faced by all ecommerce players in Southeast Asia is the lack of talent.

2016 will see the emergence and adoption of next-generation channel management platforms, which are essentially “ecommerce DSPs.” These products will help brands enable omni-channel retailing across all major marketplaces, while also offering traditional programmatic benefits such as a dynamic optimization engine and plug-and-play integration with multiple first- and third-party data sources for better targeting, personalization and optimization.

10. The Talent War Will Inflate Salaries Faster Than Uber’s Valuation

One of the biggest issues faced by all ecommerce players in Southeast Asia is the lack of talent. In 2015, it was common to see employees being poached left and right with new salaries of 1.5-3x. Obviously, this isn’t sustainable, but it is the current foundation of the talent war in Southeast Asia.

Opportunistic professionals, often young, jump to roles where their skills, experience and leadership don’t match the package and title. “The most important thing to optimize for on your first job is growth. Growth is king, queen, and emperor combined. Optimize for growth above compensation, above location, above lifestyle, and above anything else,” says Auren Hoffman, former LiveRamp CEO who founded and sold five companies.

Ecommerce companies need to understand that despite all of us being in the midst of a Gold Rush, this is a long-term game. To attract and retain the best talent, more and more ecommerce companies will be buckling down on culture and building an appealing work environment. aCommerce in 2016 will be relocating its headquarters to the Ecommerce Valley of Bangkok — Emquartier (also home to Lazada’s regional headquarters).

11. Amazon Will Enter Southeast Asia

Not. Sorry, Jeff.

By Sheji Ho & Felicia Moursalien

Please share your feedback to @ecomIQ@sheji_acommerce and @LilFel

This article originally appeared on TechCrunch Dec 24. 

Thai protests in Bangkok

Despite barricades all around the city, Thai businesses found a way to carry on.

In an interview with BBC News, aCommerce Founder and Group CEO Paul Srivorakul talks about setting up a company in the middle of a political coup and how, despite the turmoil, the tech logistics startup managed to find a silver lining during a tumultuous situation.

paul_bbc

People stayed at home. They were scared to go out and shop, therefore they did more ecommerce.- Paul Srivorakul

The experience showed the American-Thai CEO that businesses should not be reliant in one area, especially in a developing country such as Thailand, where risks are higher. Diversification of services offered, as well as geographical diversity can also enhance business visibility and minimize risk when there is an issue in one market.

Siam Piwat Group, a Thailand based shopping mall and real estate enterprise also has a policy of actively trying to invest and expand in a time of domestic turmoil. Siam Piwat owns and manages Siam Paragon, one of Bangkok’s most iconic luxury shopping center. CEO Chadatip Chutrakul says this decision makes sense, as it is the cheapest time to do so.

All the construction costs go down. When we build, it takes around two to three years to complete. By that time, the economy would catch up, which it did everytime- Chadatip Chutrakul, CEO of Siam Piwat Group

Despite Thailand’s political instability, growth in the country remains relatively robust. Thailand’s GDP grew 3.2% year-on-year in Q1 of this year, up from the previous quarter’s 2.8% growth. During times of turmoil, private companies mostly continued operating as normal, with ongoing instability making companies more efficient. Ho Ren Hua, CEO of Thai Wah Group, a large food products business with operations across Asia, credits Thailand’s private companies as growth enablers.

The role of the private sector is to continue to help deliver economic growth, innovating new jobs and services.- Ho Ren Hua, CEO of Thai Wah Group.

With two government overthrows in the span of six years (2006 and 2014), Thailand has indeed been a politically volatile country, a factor that may scare off short term investors. However, as Thai companies and CEOs continue to successfully find opportunities despite government issues, it continues to makes for a interesting economic landscape.

A version of this appeared in BBC News on June 28. Read the full article here.

 

 

Why you’re reading this article

Harvard Business Review calls it a “management revolution”. McKinsey released a whopping 156 page report touting it as “the next frontier for innovation, competition, and productivity.” Palantir, a startup that used it to help the US government track down Osama Bin Laden, is now one of the hottest companies in Silicon Valley valued at $20B based on their latest funding round. Forget Google, Facebook, and Twitter, bright college grads have already shifted their sights set on Palantir. Big data has become the new black.

The big data wave isn’t simply creating companies slated for multi-billion dollar IPOs and exits, it has also created new job opportunities. What used to be a boring number crunching chore is now called data science, which Harvard Business Review coined the “sexiest job of the 21st century”. Every cool startup now boasts a data science team led by some chief data scientist. As usual, digital agencies are jumping on the bandwagon with some of them creating new units that supposedly “bring together data sciences, social, new age content, and emerging marketing technology with sound business thinking to create a proposition that’s truly integrated.” Whatever that means.

“There’s gold in the streets, just waiting for someone to scoop it up.” – Walter White in Breaking Bad

Using big data to look at big data, Google shows that search volume for ‘big data’ follows a nice hockey-stick trajectory envied by many startups. It’s pretty clear – big data is big business.

The Real Reason why you’re reading this article

“Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it…” – Dan Ariely

Despite all the media hype about big data, the sad reality is that no one actually truly understands it. What’s causing all this misunderstanding and why are we long overdue for a paradigm shift in big data?

Mythbusters: Debunking Big Data myths

1. Big Data requires an expensive enterprise platform

The biggest lie in big data is that it’s complicated and tech-heavy. It’s also the primary reason why companies fail to adopt big data. We’re talking specifically about fear of technology and/or obsession with technology. The notion that big data requires a tech-savvy professional puts off a lot of people and prevents them from taking initial baby steps towards working with data in their organizations. On the other hand, there are those that focus too much on technology for technology’s sake. Big data platforms are a means to achieve business goals, not an end in itself.

Peter Thiel, the billionaire venture capitalist who founded Paypal and Palantir, argues against over-emphasizing technology. In his bestseller Zero to One: Notes on Startups, or How to Build the Future, Thiel says that “we’ve let ourselves become enchanted by big data only because we exoticize technology. We’re impressed with small feats accomplished by computers alone but we ignore big achievements from complementarity because the human contribution makes them less uncanny.”

Only until people see through this smokescreen of big data complexity created by what we’d like to call the “Big Data-Industrial Complex” – the sum of companies with three-letter acronym names that peddle big data technology products – we’ll be able to move on towards addressing the real challenges of big data.

Doing a simple search on Google for ‘big data’ shows how competitive this space is and how much money is at stake for the Big Data Industrial Complex.

This supplier-side bias is compounded by a consumer-side that’s often clueless about big data. CXOs in Fortune 500 companies insist on purchasing the latest big data platforms and technologies in order to ensure their “competitive advantage”. In reality, most of what these companies are trying to achieve can be done at a fraction of the technology and cost. The reason why people still go for the flashiest platforms is because of fear – “a fancy tool just gives the second-rater one more pillar to hide behind,” says Hugh MacLeod, blogger, cartoonist, and best-selling author.

2. Big Data needs a lot of data (Duh?)

The second myth in big data is that we need to have a lot of data in order to do “big data”.

“Today’s companies have an insatiable appetite for data, mistakenly believing that more data always creates more value. But big data is often dumb data,” says Peter Thiel.

The reality is that most companies don’t need that much data. If your company is not in the business of finding a cure for cancer or tracking down terrorists; there’s no need for mountains of data to properly sell your product.

The reason why people in mostly large companies end up obsessing over endless data is very simple: it’s because they’re afraid. Afraid of making decisions based on less than perfect data. Afraid of having to do actual work. Afraid of taking responsibility because they can hide behind the smokescreen. People fail to realize that the real value lies in the action that comes after analysing the data set, big or small.

“Companies brag about the size of their datasets the way fishermen brag about the size of their fish. They claim access to endless terabytes of information. The advantages seem obvious: the more you know, the better,” says Slater Victoroff in his brilliant TechCrunch article.

Not enough data Just enough data

Like the Lean movement that encourages companies and employees to take an “MVP” approach towards building businesses and products, big data is long overdue for an MVP revolution. You don’t need a lot, you simply need enough.

3. Big Data is the domain for data scientists

There are countless cases where companies invest millions of dollars into big data tech but still fail because they don’t have the right people in place to analyse and execute. As Thiel said, “Computers can find patterns that allude humans, but they don’t know how to compare patterns from different sources or how to interpret complex behaviors. Actionable insights can only come from a human analyst.”

According to McKinsey,

There will be a shortage of talent necessary for organizations to take advantage of big data. By 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.”

Data Scientists are not the solution

Hiring ‘sexy’ data scientists won’t fix the problem. According to Josh Attenberg and Foster Provost who teach the practical data science course at NYU Stern, “one of the complaints about the data scientists trained in computer science departments is that they’re “just technical”, understanding algorithms well, but lacking important skills in problem formulation, evaluation, and analysis generally. On the other hand, those trained in business schools tend to have underdeveloped technical skills.” Getting organizations up to speed on working with big data requires more than just hiring traditional data scientists or MBAs; instead, everyone needs to be able to work with data.

There have been positive changes though, especially in marketing. “The new job title of “growth hacker” is integrating itself into Silicon Valley’s culture, emphasizing that coding and technical chops are now an essential part of being a great marketer. The role of the VP of Marketing, long thought to be a non-technical role, is rapidly fading and in its place, a new breed of marketer/coder hybrids have emerged,” says Andrew Chen who popularized the term growth hacker.

Auren Hoffman, CEO of LiveRamp, shares on Quora: “The role of the chief marketing officer (CMO) is changing dramatically and is becoming “moneyballed” and very data oriented. Today’s Moneyballer CMO plans her marketing initiatives the way Billy Beane built the Oakland A’s. She leverages granular data on customer actions to expand beyond the traditional CMO role, influencing product strategy, customer service, and optimized sales pitches.”

Buzz words aside, a quick look at job postings for marketing positions at Facebook and Uber for example illustrates the transformation we’re going through. Uber’s growth marketers are expected to use tools like Tableau and understand languages like Python and SQL in addition to being able to process and analyze complex data sets. Where to find these folk? Graduates with majors in engineering, computer science, math, economics, or statistics. Meanwhile, traditional digital agencies are still stuck in 2005 and hiring communications majors for “performance marketing” roles (good luck with that).

Ashley Madison leak reveals if bigger is better…

To illustrate our point that a smaller data, people-focused, and lean approach can lead to useful insights, we’ve analyzed the leaked Ashley Madison data dump to answer the following four questions:

  1. Are Sagittarius men more likely to cheat?
  2. What are the most popular sexual kinks?
  3. Do sexual preferences change over time?
  4. What is the churn rate and LTV (lifetime value) of Ashley Madison users?

Tools and technologies used: MySQL, Python, PHP, Excel, Notepad++

Q1: Are Sagittarius men more likely to cheat?

“He’s the main cheater of the zodiac. He may espouse high morals, but these can loosen when he sees a pretty face or nice body. Tie your Saggi to the bedpost,” says one believer.

But is this really true? After running our SQL query, we get the results below. There’s obviously one outlier, Capricorn, caused by the default month and year settings in the (previous) Ashley Madison registration dropdown menu. After removing the Capricorn outlier, we see that contrary to popular belief, Saggies are not the biggest cheaters in the zodiac.

Q2: What are the most popular sexual kinks?

When signing up on Ashley Madison, users indicate their sexual preferences. We used a combination of SQL and Python to parse the preferences and map them out by gender.

Q3: Do sexual preferences change over time?

Yes, apparently they do. By mapping out sexual preferences by birth year, we found that the younger generation is more open to experimenting and one-night flings whereas older people enjoy cuddling and naughty talk.

Q4: What’s the churn rate and LTV (Lifetime Value) of Ashley Madison users?

As marketers, we’re naturally interested in measuring churn rate and LTV because these numbers can make or break a business. According to Andrew Chen, investors usually don’t fund dating startups because of the built-in (and typically high) churn rates as well as high customer acquisition costs (CAC) associated with the industry. Typical annual churn rates can go as high as 93%. Looking at the Ashley Madison data, we’re seeing churn rates of 80%.

Ashley Madison LTVs are roughly $400 USD. Their monthly cohorts show a jump in user quality starting October 2013. This could be due to new product initiatives such as pay for mobile access, business travel, pay to get noticed, and, ironically, pay to get your account fully removed.

A few parting words

Everyone can utilize big data as long as you emphasize people over platforms, processes, and politics and understand that small (data) can be beautiful if you know minimal SQL and/or Python. Don’t be afraid, learn the critical tools, and make big data your friend.